The ‘Rescue Plan’ for mortgages
Q: Bob, there are so many programs that have been discussed. What is your suggestion on the program discussed about “The Rescue Plan” for mortgages?
Dan C.
A: Dan, there are so many programs trying to be put into effect, maybe (from your description) this is what you are referring to – hopefully?
The president’s $75billion plan to stem the tide of foreclosures is designed to provide more affordable mortgage terms for up to nine million homeowners.
It is meant to help families that are facing foreclosure, as well as those that are struggling to keep up with their payments even though they “played by the rules,” in President Obama’s words.
People who aren’t specifically targeted for assistance under the plan, called the HOME OWNER AFFORDABILITY AND STABILITY PLAN still may benefit. Obama has said by bolstering the finances of government agencies Fannie Mae and Freddic Mac – and thereby restoring confidence in them – the plan will lower mortgage rates across the board and begin to stabilize home values.
Answers to the most commonly asked questions about the program:
OPTIONS
Who will benefit directly from the home owner assistance plan?
The program has two parts. One offers “low cost” refinancing for mortgage holders who otherwise would not qualify for a new loan because their homes have lost value. The second offers loan modification-which involves altering the loan’s terms, such as its interest rate-for those who are either missing payments or at risk of doing so because their mortgage bill eats up more than 31 percent of their gross monthly income.
n When does the plan kick in?
Homeowners began applying for help under the program on March of last year (sorry just received the question). You/They have until June 2010 to get refinancing and until Dec. 31, 2010, for loan modification.
n Are real estate investors eligible for this type of assistance?
Only on a home that is the person’s primary residence. Properties with up to four units (such as an apartment building) may qualify as long as the owner lives in one of the units.
Refinancing rules change
n Who is eligible for the refinancing part of the plan, and how does that work?
Essentially, lenders will waive the 80 percent loan-to-value ratio commonly required for refinancing. Under the plan, you may qualify for refinancing if you owe up to an amount that is 5 percent higher than what your home is worth. To be eligible, your mortgage must be a conforming loan held by Freddie Mac or Fannie Mae, which means it is capped at $417,000 in most of the U.S. “$729,000 in certain areas such as Los Angeles and the New York City area” and somewhat higher in than the amount in Alaska, Guam, Hawaii and the U.S. Virgin Islands. (Call your lender to check whether Freddie Mac or Fannie Mae holds your mortgage.) You must also have a good mortgage payment record (no more than 30 days late on a mortgage payment in the last 12 months), you must be able to afford the new payments.
Under standard rules, monthly payments should not require more than 31 percent of your gross monthly income.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-549-5724 Office, 239-542-7760 Fax