Obama’s plan is expected to help between 7 Million and 9 Million homeowners.
The New York Times has a neat chart which tells who qualifies and who does not.
Here is a summary:
Allows “responsive homeowners” - those who are paying their mortgages on time but whose property value has dropped so the loan balance is now 80% to 100% of the current fair market value - to refinance at a lower interest rate.
But it appears this option is only available to borrowers whose loans are held by Freddie Mac and Fannie Mae.
“Responsible homeowners” - those whose loan balance is 105% or more of the current market value can not take advantage of this program.
Folks with loans above $417,000 can not take advantage of this program.
“At-risk” homeowners who arer owner occupants can hope to have the interest rate on their loans reduced to 38% of the gross income. Additional reductions in interest rate to a 31% of gross income amount may be made by “matching” contributions from US govt and lender. Again loans above conforming limit do not qualify.
My educated???? guess is that many many folks in trouble with their mortgages will NOT be able to take advantage of this program. This program will have only a limited impact on the problem.
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