President Obama's Mortgage Relief Plan
- The plan would help borrowers who owe more than 80% of their home's value to refinance and reduce their loan payments.
- You must be current on your payment and your loan must conform to Fannie Mae and Freddie Mac standards.
- Finally, you can't owe more than 105% of the current market value.
- Program starts March 4, 2009.
- $75 billion has been set aside to reduce monthly payments for at-risk borrowers by subsidizing interest rates. The goal would be to reduce monthly payments to 31% of the borrower's income.
- The lenders would alter the loans, either by interest rate or principal adjustments, so that the payment is no more than 38% of the borrower's income. Then the government would subsidize the interest rate or principal adjustments necessary to get the debt-to-income ratio to 31%.
- Several measures are being put in place to strengthen the two firms' balance sheets and ability to assume mortgages.