Obama's Mortgage Rescue Plan

President Barack Obama’s Homeowner Affordability and Stability Plan, is an effort to overcome what Obama called “a crisis unlike we’ve ever known.”

The question that has come to mind for many of us is, who can get help through this program?

Some people with high payments will be able to have their loans modified to get lower interest rates.  If your monthly payment on your primary home is greater than 31 percent of your monthly gross income, there’s a good chance you could qualify. It also depends on whether your lender participates in the program.

Others, with mortgages owned or guaranteed by Fannie Mae or Freddie Mac, could get help to refinance, meaning they would get a new loan with better terms.

If a lender agrees to bring a mortgage payment down to 38 percent of the borrower’s income, the government and lender will split the cost of going down an additional 7 percentage points, down to 31 percent of the individual’s income.

Only primary residences are eligible for this program. However, a duplex with 2, 3, or 4 units is eligible if you live in one of the units.

With a loan modification it’s more likely that the lender would lower your interest rate and not reduce the amount owed. However, the government will provide incentive payments to borrowers that make timely payments on modified loans. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of the period.

At this time, more than 300 banks have received TARP funds and they are required to participate in the loan modification program. Any other lenders would participate in the program voluntarily. The government is offering substantial incentives to lenders to do so, and expects that most major lenders will participate.

Most mortgage lenders will send letters to potentially eligible homeowners sometime after March 4, when the program started.

Some $75 billion is going toward the loan modification program. Of that, $50 billion will come from the $700 billion bailout fund created last year, known as the Troubled Asset Relief Program, or TARP. The remaining $25 million will come from Fannie Mae and Freddie Mac.

People whose payments were less than 31 percent of their income would not qualify to have their loans modified. But they might qualify for refinancing to take advantage of low interest rates.

To meet the eligibility requirements, homeowners need to be current on their payments and have mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Your income and history of mortgage payments will be considered.

For more information regarding the President’s stimulus plan go to How Obama’s Stimulus Plan Will Help Homeowners.

If you are in fear of foreclosure click on the following link to find helpful information Are You at Risk of Foreclosure?

To find out all the benefits and options for preventing foreclosure, go toForeclosure  Prevention Team Ready to Help in Hudson County contact Eddie Perez, Broker-REALTOR®, CDPE or Anoir Redouane, REALTOR®, CDPE.  Their market includes Hoboken, Jersey City, Weehawken and Union City.  They can be reached at 201-344-2886 or at eddie@InvestHoboken.com