Obama’s Plan To Help Homeowners: Refinance Underwater Homes

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From The Nation:

President Obama detailed his administration’s new housing plan in Virginia today, a little over a week after announcing it in his State of the Union address. The crux of the plan is providing help to underwater homeowners—which, in turn, could also boost the economy.

The plan works like this: everyone who has a mortgage with a non-government sponsored enterprise (GSE), like Fannie Mae and Freddie Mac, is eligible to refinance under this plan if they meet the government’s criteria. (There are also features to further incentivize help for those with GSE loans—more on that later). Non-GSE homeowners must be current on their payments, meet a minimum credit score and be a single-family, owner-occupied home within FHA loan limits to get help under the new plan. (The idea is to target aid to families that aren’t already quite wealthy and are trying to stay in their current homes).

Crucially, however, it doesn’t matter if the homeowner is underwater on their mortgage (meaning they owe more than their home is worth). This is important because underwater homeowners typically can’t refinance, which creates a vicious economic cycle for the country: with high mortgage payments, people have less money to spend and so the economy suffers. But a suffering economy pushes home prices downward, meaning underwater homeowners are sunk even deeper.

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  • Rosantina goforth

    We are financed by beneficial or Hfbc whichever they choose to use since it jumps daily. We are upside down and they that is Joy said that even if President Obama called himself they would not remove a deferred interest we accumulated by paying before the due date monthly which I just learned is an irrelevant date to them a date they said is governed by the state that all loans must have a due date. I have to wonder. Does beneficial / Hfbc follow the government rules or not. What separates them.

  • Schrad5

    No one should buy into the refinance under such programs with the private sector.  Bank of American only gets 10% of the loan modifications approved while telling customers to miss payments, make lower payment so they can foreclose on them in the end. Amoral corruption!