President Obama’s mortgage plan aims to keep up to 9 million families from losing their homes to foreclosure.
President Obama’s mortgage plan aims to keep up to 9 million families from losing their homes to foreclosure.
His plan intends to help 4 million to 5 million “responsible homeowners” refinance. It also is designed to help another 3 million to 4 million homeowners by reducing their default risk through a $75 billion initiative that will help lower their mortgage payments, according to an announcement by the Department of the Treasury.
As part of the initiative, lenders will reduce their interest rates for a buyer so that the monthly payment is reasonable for the borrowers. The Treasury will share the costs behind lowering these monthly payments.
The plan may also offer a $6,000 buffer against the average home’s declining value.
Additionally, the program will try to restore confidence in Fannie Mae and Freddie Mac. The Treasury Department said that it will raise its preferred stock purchase agreements to $200 billion each, from the original $100 billion, using funds that were authorized for that purpose in 2008. Both Fannie Mae of Washington and McLean, Va.-based Freddie Mac will have the size of their retained mortgage portfolios stepped up to $900 billion, an increase of $50 billion.
Mr. Obama’s foreclosure plan is part of his overall $787 billion economic-stimulus bill, a combination of tax breaks and federal spending to jump-start the economy and rescue some 3.5 million jobs. He signed the bill yesterday in Denver.
Mr. Obama is set to unveil his foreclosure plan, dubbed the Homeowner Affordability and Stability Plan, today at 12:15 EST in Mesa, Ariz.
