The Obama Mortgage Relief Plan offers hope to millions of American homeowners. Nine million homeowners are estimated to potentially benefit from this program. It was originally introduced in 2009 and is designed to help people keep their homes and avoid foreclosure. This will be accomplished by refinancing and modified loans which will lower monthly payments.
Congress has been requested by President Obama to allow the Federal Housing Administration to refinance privately held mortgages in a program to be paid for by charging a fee to the banks based on their size and the riskiness of their portfolios. The program could cost up to $10 billion. Houses falling within the F.H.A. guidelines would be the only ones to qualify. The credit risk of taking on these mortgages would be insured against by the F.H.A. with the bank fee charged.
The Obama Mortgage Relief Plan also includes Fannie Mae and Freddie Mac loans. Some of the restrictions on refinancing have been eased by these programs already. President Obama and the White House want to see them do more however. Some of the barriers to refinancing are unjustifiable according to the Federal Reserve.
The Obama Mortgage Relief Plan is designed to bring some competition into the refinancing market of the mortgage giants. Even if a homeowner owes more than his home is currently worth, this plan will give them an opportunity to refinance or modify their loan. Over 10 million American homeowners now find themselves in this position. Due to this, many are trapped in their current homes for better or for worse.
Not every homeowner in trouble will find relief through the Obama Mortgage Relief Plan. Of course, there are many criteria that must be met. One important criteria is that the homeowner must be current on their mortgage. This one criteria will prevent many from receiving the assistance they are in need of to save their homes, but many will still benefit.
If your home that you need to refinance is your primary residence, then you may be able to qualify for the Obama Mortgage Relief Plan program. This is a commonly seen requirement for those with FHA loans. Holders of commercial loans though might be surprised to find out about this requirement. The Obama mortgage is not intended to help with secondary homes.
Another criteria to be dealt with is loan-to-value ratio. Normally you would not qualify for refinancing if the loan-to-value ratios are above 80% on your mortgage. A second chance for homeowners in this predicament is available through the Obama Mortgage Relief Plan. It can mean lower mortgage rates as well as stable interest rates for those who qualify.
With the real estate and homeowners alike struggling in these economically challenging times, the Obama Mortgage Relief Plan was destined to be popular. It is one of the most popular home foreclosure prevention initiatives ever undertaken by the U.S. government. Struggling homeowners can take advantage of the program and save face in these tough times. And more importantly, they can save their homes.
I’m a financial advisor specializing in Federal Housing Administration Loans. You may also be interested in reading more information about USDA loans.