Foreclosure Can Wait!

February 20, 2009 · Print This Article

If you are facing foreclosure there is good news for you! Let me explain how the bailout may help you.

$50 billion of the financial bailout package will go to fund the loan modification program. Freddie Mac and Fannie Mae along with HUD will add another $25 billion for a total of $75 billion toward helping those at risk of having their mortgage foreclosed on. So, how might this help you?

Who is it for?

Homeowners who have less than 20 percent equity in their home or who owe more than their home is worth.
Homeowners who cannot afford to continue to pay their mortgage payment.

What does it do?
The specifics are still to be determined and will be revealed on March 4th. However, it consists of two parts, one is a refinancing program and the other is a payment reduction plan. The Washington Post did a great job of explaining the two parts very clearly. They said…

“Borrowers can refinance into a 30- or 15-year, fixed-rate loan based on current market rates. According to Freddie Mac’s weekly survey, the average interest rate for a 30-year, fixed-rate mortgage last week was 5.16 percent and 4.81 percent for a 15-year, fixed-rate loan. It is unclear what, if any, credit score requirements the plan might include, but the White House said in a summary of the program that it would apply to “creditworthy borrowers.”

In the refinancing program “lenders are encouraged to lower homeowners’ payments to 31 percent of their income. That could come from lowering the interest rate to as low as 2 percent or extending the terms of the loan. Lenders could also lower the principal owed by the borrower or stop charging interest on a portion of the loan, known as principal forbearance.”

Other specifics…

You may be eligible for the program if you are current on your payments but may not be for long. This might be becauseof job loss or a change in interest rate.
To take advantage of this program your loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
Applications will be taken starting in March. To prepare you will need to collect your financial information, recent income tax returns and paycheck stubs.
“Homeowners who stay current on their mortgage after the modification will be eligible for an incentive payment of up to $1,000 a year from the government for five years. The bonus would be applied to the borrower’s mortgage to lower the principal balance.” According to the Washington Post.
This program is not available for investment properties.

This foreclosure prevention program is an exciting plan. Many people will be watching carefully as the final touches ironed out. This could help the Charlottereal estatemarket as well as the real estate market of the country in general.

Keep checking back for more information as this program is finalized. Or, sign up to get automatic emails whenever new posts are made on The Ramsey Group website… YourCharlotteConnection.com

Written by Mark Ramsey