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 March 18, 2009

The Home Owner Affordability and Stability Plan: How it can help you
The Obama administration has recently created a new plan intended to assist homeowners who are faced with foreclosure. The plan is called the Home Owner Affordability and Stability Plan. This new plan offers a lot of assistance to homeowners who are in or are in danger of losing their homes to foreclosure. The plan helps families who are currently delinquent on their payments, it offers assistance to those who are current, yet their homes have devalued to the point of being dangerously upside-down in the value of their loan, and it also offers aid to those who desire loan modifications, before they get in trouble.
The plan consists of three categories of assistance:

1. The plan will allow nearly three to four million responsible home owners opportunities to obtain low-cost loan modifications and refinancing. This will lower monthly payments on a loan which reflects the current value of their home.

2. Seventy-five billion dollars of aid will be available to assist home owners who are current on their loans but in peril of becoming delinquent on them. This situation is caused mainly due to falling home values which are prohibiting owners from selling their current homes. The main intention of this part of the plan is keep people in their current homes and in turn, protect neighborhood home values. These loan modifications will be offered to owners before they fall behind on their payments. Assistance of this kind has not yet been offered in any previous plans. Both lenders and borrowers alike will be offered incentives which have never before been available. Lending institutions will receive incentive for every loan modification they grant, and will also receive fees on a monthly basis for a three year period as long as the borrower remains current on their payments. Loan service providers will also receive incentives for each loan modification which is granted to a borrower who is current on their loan, but in danger of becoming late on payments. Borrowers can also receive incentives as well. If the borrower remains current on the loan, they can receive up to one thousand dollars per year for up to five years. After just five years, borrowers can have five-thousand dollars taken off the principal of their loan balance!

3. The last big category of the plan involves the creation and implementation of clear and consistent guidelines which must be adhered to by all lending institutions. All lenders will have to follow the same set of rules and regulations. Strict reporting to the Treasury Department, the Department of Housing and Urban Development and the Federal Reserve will be a requirement. In bankruptcy cases, judicial modifications of existing home loans will be allowed. Renters whose owners fall to foreclosure will be offered financial assistance to help with moving costs. The plan will also support keeping mortgage rates low, and work to restore confidence in both Freddie Mac and Fannie Mae. The intent here is to increase liquidity and stability in mortgage backed securities. Also to help stabilize the overall housing market.