Housing plan 'should get ball rolling'
WASHINGTON -- The Obama administration Wednesday outlined details of a $75 billion housing rescue plan expected to help as many as 9 million American homeowners rework mortgages into more affordable monthly payments.
The program will apply to loans made on or before Jan. 1, 2009, and modifications will be allowed only once. Mortgages with a first loan of more than $729,750 do not qualify.
The plan runs through 2012 and starts immediately.
"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive," Treasury Secretary Tim Geithner said.
Sinking home prices and mounting foreclosures are dragging down the economy. By the end of last year, at least one in five U.S. homeowners with mortgages, or about 8.3 million people, owed more than their homes were worth, according to data released by First American CoreLogic.
"Today's announcement means you should call your lender to find out if you qualify," says Lawrence Yun, chief economist at the National Association of Realtors. "This should get the ball rolling."
Details:
•Loan refinancing. Up to 5 million homeowners with a solid payment history on mortgages held or owned by Freddie Mac and Fannie Mae will be eligible to refinance into more affordable terms.
People will be able to refinance even if they have less than 20% equity in their homes, and an appraisal may not be necessary.
•Loan modifications. Lenders and other servicers can immediately begin making modifications that could help up to 4 million at-risk homeowners stay in their properties.
To be eligible, homeowners with a first loan can have an unpaid principal balance up to $729,750. (Higher limits will be allowed for owner-occupied properties with two to four units.)
Incentives also are provided to get lenders to modify mortgages if a borrower isn't late on payments but is at risk of default.
