The housing market is in the biggest crisis it has ever seen before and there are many people struggling to stay in their homes. Due to the current housing status President Obama and his administration have announced the “Home Affordability Plan” stimulus plan. The stimulus plan should be able to help 1 out of every 9 homeowners avoid foreclosure or easily modify or refinance their current mortgages. This can be done even if the homeowner owes more on the home than it is actually worth.

President Obama has already released a stimulus bailout plan of $787 billion and has announced that $75 billion of that money will be used on the housing and mortgage problems.

The administration carefully laid out this plan so it would not seem like the government was rewarding irresponsibility or recklessness of homeowners or lenders. Since this is the message they are trying to have come across the plan will first help those who have remained current for 12 months minimum. However there will be options for those who have not been able to remain current on their payments.

The administration has estimated that this stimulus plan will benefit as many as 9 million homeowners and it has two main components.

First thing is banks, lenders and any other financial services will be given government incentives for offering mortgage refinancing and modification to at risk homeowners and also for loosening their otherwise strict requirements. These homeowners will be required to sign a hardship affidavit detailing their current hardship. After this is done homeowners can see their rates drop as low as 2%, have their mortgage term lengthen or other methods that can reduce your cost monthly. This all will be done to reach an amount that does not exceed 31% of your total monthly income. Also along with the above mention the home loan can not exceed for a single family home $729,000.

The government incentives for the banks and lenders will include up to $3500 for participating in the program and also the lenders and banks will be matched dollar for dollar in other circumstances. Some homeowners will also be eligible for $5,000 to help ease any other debts and outstanding balances. Those homes that were purchased for second homes or as investments however are not eligible for participation in the plan.

This stimulus plan will also call for Fannie Mae and Freddie Mac, both government run lenders, to allow millions of struggling homeowner to refinance. These lenders will have to allow the borrowers to refinance or modify their current mortgage loans regardless if they are having problems or not. There is no limit on the mortgage amount if they were issued by either Freddie Mac or Fannie Mae.

The “Making Home Affordable” enacted by President Obama and his administration will help save millions of people from losing their homes and save them hundreds of dollars on their mortgages. Contact a mortgage lender to see how you can benefit from this new stimulus plan.

-M Petrone

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