Housing Stimulus Plan

Making Housing Affordable Program

There are three elements to this plan (Refinance, Modificate and support for lower interest rates)

1. Refinance - (Fannie Mae or Freddie Mac loans)This is for homeowners who are current on their loan, have 80-105 loan to value and have steady income. 15-30 year fixed loan will be available.
To find out if your loan is secured/insured by a GSE :
For Fannie Mae
o 1-800-7FANNIE (8am to 8pm, EST)
o www.fanniemae.com/homeaffordable

For Freddie Mac
o 1-800-FREDDIE (8am to 8pm EST)
o www.freddiemac.com/avoidforeclosure

2. Modification - For borrowers who are in default or are endanger of default.
Incentive in place to help mortgage companies reduce the borrowers monthly payments from 38 percent of the borrowers gross monthly income to 31 percent.
(The mortgage companies will be responsible for cost associated with getting the borrow down to 38 percent program will assist in getting to 31 percent) The interest rate may be reduced to 2 percent for 5 years (will increase no more than 1 percent a year until market rate as of the date of the modification). The term of the loan could be exteneded to 40 year. In addition if necessary, the servicer may forebear principal. There is no cost to borrowers for the program.

Incentives are in place to encourage the lenders to do a modification.
o $1,000 up front for each qualified loan modification. If the borrower stays current: fees up to $1,000 a year for 3 years.
o As an incentive to borrowers to stay current, borrowers may receive a monthly reduction in their mortgage balance, up to $1,000 a year for 5 years.
o Additional incentives are given to the lender if they modify borrowers before the become delinquentd .
o The Treasury Department will establish an insurance fund to discourage lenders from foreclosing on mortgages, by limiting their lose if home prices decline more than expected.

3. Supporting Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac The Obama Plan beefs up the current support for the GSEs. The Treasury Department will increase investments into the Government Sponsored Enterprises (Fannie Mae and Freddie Mac) to help drive down and maintain low rates.

What are your thoughts on the plan?