On Wednesday, February 18, 2009, President Obama’s $75 billion plan which is set to ease and reduce the foreclosure crises in the country was unveiled to the nation.  The President’s three part plan, The Homeowners Affordability and Stability Plan, is said to help up to 9 million homeowners refinance or adjust their mortgages to avoid foreclosure.

How will the president’s new plan help Ventura County Homeowners avoid foreclosure on their homes?

The Homeowners Affordability and Stability plan offers some hope to Ventura County homeowners who are current on their mortgage and to those Ventura County homeowners who have defaulted on their loan.

The three components of the Homeowners Affordability and Stability plan are as follow:

• Refinancing for homeowners who are current on their mortgage:

This portion of the plan is directed towards homeowners with conforming loans who are current on their loan but are unable to refinance their home because they have less than 20% equity in their home or owe more than their home is worth.  These homeowners are now given the opportunity to refinance their loan into a 15 or 30 year fixed rate loan.  Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

Which Ventura County Homeowners Qualify for the Refinancing Plan?

• Ventura County homeowners who are current on their loan
• Ventura County homeowners whose loan is issued by Freddie Mac or Fannie Mae
• Ventura County homeowners who owe more than 5% more than their home is worth
• The property has to be your primary residence

When Can Ventura County Homeowners apply for the Refinancing Plan?

As early as March of 2009, Ventura County Homeowners are encouraged to contact their current lender for a refinancing package.

• Homeowner Stability Initiative:

This section of the Homeowners Affordability and Stability plan offers help to Ventura County homeowners who are behind on their mortgage payment or who have a hard time paying their monthly mortgage payments.  Under the Stability Initiative the lenders are encouraged to lower homeowners’ payment to 31% of the homeowners’ income.  The Stability Initiative provides mortgage lenders a financial incentive to modify existing first mortgages.

“Servicers (companies that collects mortgage payments) will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success” fees — awarded monthly as long as the borrower stays current on the loan — of up to $1,000 each year for three years.”

“To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.”

Source: United States Department of Treasury

The Stability Initiative will also create a loan modification guideline for all lending institutes to follow.

If you need any help or assistance with modifying your current mortgage please don’t hesitate to contact me, Mana Tulberg: (805) 443-8898.

• Supporting low mortgage rates by Strengthening Confidence in Fannie Mae and Freddie Mac:

In order to promote liquidity in the market, the Treasury Department is planning on doubling their Preferred Stock Purchase Agreement with both Fannie Mae and Freddie Mac from $100 billion to $200 billion.  The Treasury will also continue purchasing Fannie Mae and Freddie Mac mortgage-Back securities to support and promote liquidity in the marketplace.

The question now is will the Homeowners Affordability and Stability plan work? If homeowners continue to lose their jobs, and consequently their source of income, no government plan, interest rate reductions, or loan modifications will help these homeowners.