Foreclosure Prevention Plan

Along with the stimulus package, President Obama has made up to $200 billion available to boost investor confidence in the mortgage secondary market. He also made available $75 billion in incentives to encourage lenders and borrowers to refinance troubled loans. This is critical because of the destabilizing impact of high foreclosures and disresses sales, according to The National Association of REALTORS.
Plan details include the following:

  • Help for home owners making their payments but at risk of default. Home owners with a conforming loan could be eligible to refinance as long as their mortgage doesn’t exceed 105% of the home’s current market value
  • Help for home onwers already in default and in need of loan modification. For lenders that voluntarily agree to lower a borrower’s payment so that it makes up no more than 38% of the borrower’s income, the government would share the cost of lowering the mortgage burden further.
  • Doubled resources to Fannie Mae and Freddie Mac. To encourage investors to buy the secondary market companies’ mortgaged-backed securities, the government promises to back them to up to $400 billion, twice the current amount.

The stimulus package and foreclosure plan are a good beginning to help solve the nation’s economic distress. “By helping good people caught in bad mortgages, we are keeping inventory from being added to a market already under stress,” commented NAR 2009 president Vick Cox Golder.

Go to the National Association of REALTORS website for more information

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