Details Unveiled for Obama’s Foreclosure Avoidance Plan

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On February 18, President Obama unveiled the Homeowner Affordability and Stability Plan, the administration’s $75 billion effort to help up to 7 to 9 million families avoid foreclosure by refinancing or modifying their mortgages. Today we heard the asministration’s details on how the “Making Home Affordable” program will work.

While you can read the summary or the entire set of guidelines, the three key elements are:

  1. The Home Affordable Refinance Program. Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.
  2. The Home Affordable Modification Program. This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.
  3. More Support for the GSEs. President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth. The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

The government has established the financialstability.gov site to help consumers navigate the different options and determine eligibility for any of them. You can also review the following resources that offer more specific details on each program.

Posted by Scott Sherrin at 3:58 pm

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