President Barack Obama will be in Mesa Arizona today to discuss his new program to help homeowners. Reading the White House Blog this program may raise more questions than it answers. This is a summary of some vital information from the White House Blog, to read the full blog post you can go here.
One of the primary objectives of the plan is to provide an easier way for homeowners to refinance their loans if they have a Fannie Mae or Freddie Mac loan. To qualify for this refinance program your current first loan on your home cannot exceed 105% of the current market value. Looking at the local Mesa housing market that program will provide little help as most home buyers who purchased their homes between 2004 and 2007 are the ones who need the most help and most of them will owe well over the 105%. If you are current on your payments and you do owe less than 105% of your homes value there may be a good chance to refinance your loan in the current months to a lower interest rate.
If you are currently at a risk of foreclosure you probably will not qualify for the above program and may be wondering what is in the plan to help you and your situation? The government will be providing mortgage lenders with “financial incentives” to modify existing first mortgages. While there will be incentives, there will not be any mandatory obligations for the lenders to work with the homeowners so you will need to check with your lender about your situation. Banks will be smart to work with homeowners as it is in their best interest to keep you in your home, keeping a payment coming in and keeping your home off the foreclosure market which will help home values recover more quickly. But there are no guarantees.
To qualify for a payment reduction you will need to live in the home as your primary residency, your mortgage payment must be greater than 31% of your gross monthly income and your loan must not exceed current Fannie Mae and Freddie Mac loan limits. If you owe more than your home is worth and are facing foreclosure it will be up the lender if they want to work with you in restructuring your loan or not.
For even more information check out the White House Blog on this subject and the Presidents speech in which he will be delivering today. As always, when more information or details become available we will provide you with details on this space.