Obama Reveals Mortgage Help Plan
Regulators revealed plans on mortgage help today, promising $75 billion to help homeowners and the housing market.
It’s a 3 pronged attack:
Affordability: Help homeowners refinance if they otherwise can’t. Some people have loan to value ratios that make it hard to get a mortgage. The plan will help 4 to 5 million of these people refinance and get into better (lower-risk) loans.
Loan Modification: Help homeowners change the terms of their mortgage. This includes borrowers who have not yet defaulted on their loans. The goal of loan modification is to prevent defaults, not just clean them up. To grease the skids, loan servicers and holders will get an incentive payment for each modification they approve. Additional measures incentivize successful modifications that don’t subsequently fall apart.
Liquidity: Keep money flowing so that loans can happen. They’ll pump money into the system and attempt to improve the strength of Fannie and Freddie.
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