With millions of Americans facing foreclosure today, many homeowners turn their eye towards Washington for what the White House will be doing for them.
Details regarding the Obama administration’s housing plan became clear Wednesday as the government finally issued the guidelines that state which homeowners will qualify and how lenders will be managing refinancing mortgages.
While this might sound as good news to the 9 million borrowers that the $75B housing plan aims to help, the White House isn’t sure on how it will concretely help troubled homeowners. Treasury officials will not be able to say for sure how long these people will have roofs over their heads.
According to the plan, mortgage services will have to apply a standard test to be able to give investors the best option – whether to foreclose or be issued a new loan. This safeguards investors into being suckered for more money by some enterprising groups. The government will also be setting up an automated system to determine home values instead of having properties appraised individually.
The program also aims to lower maximum monthly payments to 31% of borrower’s gross monthly income. This, according to the feds, will help identify which homeowners can still be realistically helped or not. Borrowers only get a one-time chance on modifying their terms and the plan only covers first-lien loans made January 1, 2009 and earlier.
Source: MSNBC
