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.
President Obama requested that Congress allow the Federal Housing Administration to refinance privately held mortgage loans in a program which will be paid for by a fee charged to large banks based on their size and the riskiness of their portfolios. It is estimated that this could cost $5- to $10 billion. Only houses with values that fall within FHA guidelines would qualify. The bank fee would be used to insure the FHA against the credit risk of taking on these new mortgages.
Also included in the Obama Mortgage Relief Plan are Fannie Mae and Freddie Mac. These programs have already eased some of their restrictions for refinancing. However, the President and White House want to see more. According to the Federal Reserve, some of the barriers in these programs are unjustifiable.
It is the intention of the Obama Mortgage Relief Plan to force some competition into the refinancing market. It will give even those who currently owe more than their home’s worth an opportunity to refinance. That is a category currently shared by approximately 10 million homeowners. Many of them are trapped in their current mortgage because of this reason.
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.
Loan-to-value ratios are another criteria to be met. If the loan-to-value ratios are above 80% on your mortgage, normally you would not qualify for refinancing. But with the Obama Mortgage Relief Plan legislation homeowners in this category get a second chance. This could mean lower mortgage rates and stable interest rates if you qualify.
One of the most popular home foreclosure prevention initiatives ever undertaken by the U.S. government, the Obama Mortgage Relief plan could help millions. It is not surprising that it is popular given the sheer number of homeowners struggling in today’s economy. The plan will offer many the chance to save face during these challenging times of home ownership. More importantly though, it will give them the chance to save their homes as well as their pride.
I’m a loan officer specializing in HARP mortgages. You may also be interested in reading more information about refinancing.