Obama plans to package $75 Billion cost with $50 billion coming from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion coming from Fannie Mae and Freddie Mac, all within a larger housing bill that lets bankruptcy judges alter mortgages (the excess of the mortgage over the matket value of the home becomes unsecured debt in the bankrupcy) and lower interest rates for troubled homeowners. Such a bankruptcy provision requires legislative approval on Capitol Hill.
Homeowners that have Fannie Mae or Freddie Mac loans, who owe more than 80% of the value of their homes, would be eligible to refinance with the refi program.
The loan modification program will, via government subsidies to lenders and borrowers, involve lenders reducing the interest rates (for a minimum of 5 years) so as to produce a monthly mortgage payment that is no more than 38% of borrowers pre-tax income. The government would then sunsidize a further reduction to bring the homeowner's payments down to 31% of their pre-tax income.
There is also a separate renters program to help renters displaced by foreclosure to relocate, costing $1.5 billion, and a $2 billion program to stabilize neighborhoods with high levels of foreclosure
Obama plans to package $75 Billion cost with $50 billion coming from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion coming from Fannie Mae and Freddie Mac, all within a larger housing bill that lets bankruptcy judges alter mortgages (the excess of the mortgage over the matket value of the home becomes unsecured debt in the bankrupcy) and lower interest rates for troubled homeowners. Such a bankruptcy provision requires legislative approval on Capitol Hill.
Homeowners that have Fannie Mae or Freddie Mac loans, who owe more than 80% of the value of their homes, would be eligible to refinance with the refi program.
The loan modification program will, via government subsidies to lenders and borrowers, involve lenders reducing the interest rates (for a minimum of 5 years) so as to produce a monthly mortgage payment that is no more than 38% of borrowers pre-tax income. The government would then sunsidize a further reduction to bring the homeowner's payments down to 31% of their pre-tax income.
There is also a separate renters program to help renters displaced by foreclosure to relocate, costing $1.5 billion, and a $2 billion program to stabilize neighborhoods with high levels of foreclosure
