February 18th, 2009
Obama’s Foreclosure Plan
President Obama to set aside $75 billion to slow foreclosures! Goal to bring mortgage payments down to 31% of income!
The Obama administration has rolled out a plan to help 9 million troubled homeowners modify their mortgages at a cost of $75 billion to taxpayers. There are two parts of the plan to help:
#1 To help refinance 5 million home owners in trouble with loans owned or guaranteed by Fannie Mae or Freddie Mac.
#2 To make loan modifications with government subsidies to lenders to reduce monthly interest payments.
Some highlights….
- Make lenders responsible for bringing down interest rates so the monthly mortgage payment is no more than 38% of pre-tax income.After that the government would match the amount reduced by the lender to bring the payments down to 31% of their pre-tax income.
- Offer a $1,000 incentive for loan services for each successful loan modification and additional funding for each month the borrower stays current on its loan. Homeowners would also receive $1000 a year for five years, as long as they stay current on their loan payments.
- Offer other types of incentives to mortgage lenders who modify risky loans before the borrower has problems.
- As part of the larger housing plan, it is expected that there will be an announcement that lets bankruptcy judges alter mortgages and lower interest rates for troubled homeowners
Check out great article on MarketWatch on Obama’s plan to help slow down foreclosures!
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