Obamas Housing Plan

American Recovery and Reinvestment Act will help up to nine million families facing foreclosure.

The President outlined a plan that will provide options to many homeowners on the brink of defaulting.

Part of his plan includes loan modification programs aimed at 3.5 million people. This modification fund would make available 75 billion dollars assisting homeowners reduce their monthly mortgage payment by interest rate modifications,principle balance reductions and loan term extensions.

Federal Housing Finance Agency, Freddie Mac,and Fannie Mae, implemented the new (SMP) program December 15, 2008 to help stop foreclosure for American homeowners. The Streamlined Loan Modification Program is an important new tool to help prevent foreclosures. The Federal Housing Finance Agency, Fannie Mae, Freddie Mac and a number of major mortgage loan servicers, developed this new program.

Under the new SMP, banks will use expedited process to modify, or restructure, a mortgage allowing the homeowner to afford their monthly payments. This streamlined process will apply to high risk borrowers 90 days or more late on their existing mortgage. The Streamlined Loan Modification Program will only apply to mortgage loans owned by Fannie Mae, Freddie Mac or leader/services participating.

After reviewing the homeowners information, banks and lenders will use a simple reducing the borrowers monthly mortgage payment to no more than 38% of their monthly income. This will include any of the following combination's (1) extending the number of years of a loan,(2)reducing the interest rate into a fixed loan,and or (3) reducing a portion of the balance owned on a home. If these preventive measures cannot decrease the homeowners monthly payment to a manageable level, the homeowner will receive an additional loan audit to evaluate any other options preventing foreclosure.


Mortgage Foreclosure Help for the Homeowner

Declining home values have been the number one offender within the finical sector. More than 1 million have lost their homes, and President Obama said a "further six million homes were at risk of foreclosure". All of us are paying for this home mortgage crisis," The President said.

He also revealed an addintional $200 billion in Treasury funding allocated to Fannie Mae and Freddie Mac, which are responsible for funding more than 1/2 of United States mortgages.

Fannie Mae and Freddie Mac will also have to re-think the underwriting requirements placed on ( non cash out ) refinances, explained the President...FHA has already made adjustments with the roll out of the FHA Modernization Act.

While many lenders have used some combination of the SMP components up to now, the real benefit of the program will be the simple and uniformed applying to loan modifications. This is expected to streamline the process significantly. The Streamline Loan Modification Program accompanied by President Obama Housing Plan should provide homeowners with confidence that the mortgage banking industry wants to help them avoid foreclosure.