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Obama's $75B Housing Plan to Assist 3-4 Million Homeowners

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The Obama administration unveiled a $75 billion housing plan on Wednesday, which it says will help seven to nine million American families avoid foreclosure.

In a White House press release, the Obama administration said the mortgage plan will boost confidence by creating lower mortgage rates and will allow refinancing for four to five million homeowners and assist another three to four million "hard pressed" homeowners.

As part of the plan, the U.S. Treasury will increase its stock purchases of Fannie and Freddie by up to $400 billion, or $200 billion each - double the original level. The Treasury will also boost its purchase of Fannie and Freddie's mortgage portfolios by $50 million each to $900 billion.

The administration said the move will strengthen confidence in Fannie Mae and Freddie Mac, and will ensure mortgage stability.

The $75 billion initiative will be available only to owner-occupied homes and aims to modify loans to reduce payments to more affordable levels, the administration added.

By Stephen Huebl and edited by Sarah Sussman
©CEP News Ltd. 2009

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Jim Parker  |  Contact or Connect with this Member
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Hopefully, this shall actually help the economy and won't be part of the old joke punch line: "I'm from the government and am here to help you". We shall see.................
Gary Powell  |  Contact or Connect with this Member
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The proposal also includes a mortgage cram down provision. That's one thing that MBS investors have been sweating bullets over. I haven't seen whether there is a time limit on that. If so, it would not be an issue on newly issued MBS. I guess we are all in a wait and see mode right now. I've been watching CNBC and they have covered the program in broad strokes.
C Adams  |  Contact or Connect with this Member
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Gary are you speaking of the effect on banks with respect to 'cram down provision?' To the naysayers that warn that banks cannot handle mortgage refinances, or can't deal with judges restructuring loans, I wonder why we aren't talking more about the 'mark to market' balance sheet asset rule. It is because banks have to write down the home values to the market (rather than their cost) the banks' balance sheets are swaying in the wind with not only the market but also restricting the ability to restructure portfolios. We must remember that when people lose their homes, everyone loses.
Kemmer Matteson  |  Contact or Connect with this Member
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Minimizing losses is what this plan is about. If banks are writing down partial losses this saves reserves and bank ratings. With support of lower rates and not allowing "no point" Loans to be priced competitively, allows lenders to make profits in a refi boom by charging points on these refi's. With a standardization of Loan mods and incentives to the banks this will insure that Lenders make more modifications. The end result is less foreclosures thus a decrease in inventory witch will support stabilization.
Moises Miranda  |  Contact or Connect with this Member
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The mortgage plan will boost confidence by creating lower mortgage rates and will allow refinancing for four to five million homeowners and assist another three to four million "hard pressed" homeowners? These "hard pressed" homeowners credit rating went down to what the underwriting guidelines are today and they are also upside down in their loan...so how lower credit will boost refinance for these so called "HARD PRESSED" homeowners? This is just a way to regulate the foreclosure procedures and will not help the current housing crisis at all. Rates are at all time low and only the "few the proud" homeowners those with qualifying income and credit rating are the only one who qualify to refinance with lower rates and that is if their are not upside down and have equity in their homes. Another area in which the Federal Government can't get into is to reduce local property taxes and home hazard insurance to make more affordable for homeowners to stay in their homes. This is a big issue in Florida, the Gulf Coast States and California.
Gino Napolitano  |  Contact or Connect with this Member
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Affordability and Stability Plan. Am I missing something? Eased restrictions on loans for borrowers and cash bonus incentives for the lenders that make these loans. Isn't this how this industry happened to get in trouble in the first place? Gino (NapoGino) Napolitano http://chicagowholesaledeals.com
Israel Moreno  |  Contact or Connect with this Member
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Im no expert but am wondering. In my case I bought in May of 2006; I would say that around that time home values peaked right before they bega to plummit. I have a high payment, two loans (1 fixed for 5 years the other variable). Ive been fortunate enough to keep up with my payments,however, the property value has dropped dramatiaclly. Any thoughts about the possability of readjuscting all the loans that caused all of these problems into current property values. Wouldn't that be benefitcial for economic growth?
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