Good news for homeowners? Those with loans guaranteed by Fannie Mae or Freddie Mac could be eligible to refinance — even if they owe more than their home is worth.
The newly announced Obama mortgage plan aims to aid as many as 9 million households in fending off foreclosures. Here are its key elements:
- Allows 4 million–5 million homeowners to refinance via government-sponsored mortgage giants Fannie Mae and Freddie Mac.
- Establishes $75 billion fund to reduce homeowners’ monthly payments.
- Develops uniform rules for loan modifications across the mortgage industry.
- Bolsters Fannie and Freddie by buying more of their shares.
- Allows Fannie and Freddie to hold $900 billion in mortgage-backed securities — a $50 billion increase.
According to the White House blog, eligible loans cannot exceed 105% of the current market value of the property. Visit the White House blog entry.
J.P. Morgan Chase CEO Jamie Dimon, whose bank received $25 billion in bailout funds from the government,showed less sympathy for homeowners:
“I don’t think just because someone’s underwater they say I don’t have to stay there. But they’re supposed to pay the mortgage, and we should teach the American people, you’re supposed to meet your obligations, not run from them. Because you have a mortgage doesn’t mean you should run away as it goes down.” (CNBC)
It’s time to call your mortgage servicer
If you think that you can benefit from these new rules you need to first find out if you have a Freddie or Fannie loan or if your loan is nonconforming. If you called your servicer before and you were rejected, call back again because the rules potentially have changed. Have all your documentation in order, including paycheck stubs and tax files. If you’re not getting an answer, write to the president of the bank. If that doesn’t produce results, write your Congressman.
And also write and less us know at the Inspired Economist. We are tracking our readers’ stories and would love to track yours too. Click here to send us an email.
Image credit: www.abc.net.au