Hi and Happy March!
It seems that we are approaching the date (March 4th) when the government releases the final details of the plan to increase homeowner's stability and affordability.
To summarize the article below, there are 2 main initiatives devoted to helping homeowners who are currently struggling. One is a refinancing program for the people who have been trying to refinance but can't because they don't have enough equity. The second initiative is going to help people who need a lower monthly payment on their current mortgage in order to keep their home (lenders will try to reduce the payment to 31% of the homeowner's income by lowering the loan interest rate to as much as 2% in some cases).
There is a third initiative that involves supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac. More details on this will be released on March 4th and we will do our best to keep you informed.
We believe that we all realize that there's a substantial mess that was made and it will take some time to clean it all up. It won't happen immediately but eventually things are going to start getting better. These will be the first steps of many to ensure that people stop losing their homes, equity, and sense of stability all together. We're looking forward to the future and hope to see remarkable results in the next several years to come.
Have a GREAT week ahead and contact us with any questions!
Best,
Dom & Josh
To preview the finest real estate and the best deals on the Westside of Los Angeles including Pacific Palisades, Santa Monica, Malibu, Brentwood, Bel Air, Beverly Hills, West L.A., Marina Del Rey & Mar Vista please visit our website: http://www.westsidehomefinder.com/ When you are ready to view the properties or just have a question, please contact us: 310.459.8191 or info@wsprops.com
Obama Unveils Homeowner Affordability and Stability Plan
Revised February 20, 2009
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.
Many of the plan's details are still being worked out and will not be announced until March 4, here is an overview of the plan's main components.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
According to the plan, "credit-worthy" or "responsible" homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.
As with the rest of the plan, details about this initiative will be released at a future date-including what, if any, credit score requirements will be included.
Stability Initiative
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners owe per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs.
Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.
Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:
Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
Supporting Low Mortgage Rates
As part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.
The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.
Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf
We will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, we'd be happy to sit down with you. Just call or email us to set up an appointment.
Dominic Naidoo
Joshua Barre
Westside Properties
Office: 310.459.8191
EMAIL: info@wsprops.com
The finest compliment we can receive, is the referral of your friends and family. Thank you for your trust.
