Facts about Homeowner Affordability and Stability Plan
As part of the American Recovery and Reinvestment Act of 2009, which was passed by the Congress over the weekend and signed into law by President Obama yesterday, the Treasury Department today released a fact sheet on details of the Homeowner Affordability and Stability Plan (PDF file) that will help struggled homeowners to fight foreclosure. The plan, as Obama described, “will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild.”
The Homeowner Affordability and Stability Plan has three parts. According to the Treasury report, the goal is to help up to 9 million homeowners either refinance their existing mortgage to reduce monthly payments to or modify their loans so they can stay current with their mortgage payment and won’t lose their homes to foreclosure. It will also support the recovery of the housing market by strengthening Fannie Mae and Freddie Mac so that they can keep providing low rate mortgages to potential homebuyers while reducing monthly payments of existing homeowners. In summary, the plan will
- Provide access to low-cost refinancing for responsible homeowners suffering from falling home prices: This part of the plan is for those homeowners who owe more than 80% of the value of their homes. Falling home prices make them difficult to refinance their existing mortgage. Up to 4 to 5 million homeowners can benefit from the plan.
- Use a $75 billion homeowner stability initiative to prevent foreclosures and help responsible families stay in their homes: This plan calls for cooperation between the Treasury Department and other federal agencies such as GSE and FHA to help up to 3 t0 4 million homeowners, whose homes are at risk, prevent foreclosure by modifying their existing mortgage.
- Support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac: This part of the plan will increase government funding to Fannie and Freddie so they can keep mortgage affordable to potential home buyers.
Now we have the money, hundreds of billions of dollars, and we have the plan, not just one, but a few of them, in place, how soon will the housing market rebound when millions of people have lost their jobs and home prices and new home construction permits keep plunging? Without a recovery in the housing market first, the economy won’t be back on track any time soon.
BTW, check out this Rick Santelli of CNBC “Chicago Tea Party” video. He sure has a point!
*Photo from Activerain.com
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