Reaction is mixed to President Obama's plan to prevent up to 4 million homeowners whose mortgages are underwater from defaulting on their loans over the next three years. New mortgage program offers lower payments. The federal government on Wednesday announced a new loan modification program designed to help many more.
President Obama Announces New Program to Help Struggling Homeowners. LM Otero/AP Photo. President Obama today announced a new proposal to alleviate the pressure on homeowners who are under water, as he traveled to Nevada, the ground zero of the housing bust. The program also eliminates some risk- based fees for borrowers. The plan falls under the Home Affordable Refinance Program, which, the agency estimates, has helped already 8. Only those homeowners whose mortgages are backed by Fannie Mae and Freddie Mac will be eligible for refinancing. Borrowers must have good credit and must have kept up with their mortgage payments, with no late payment in the past six months and no more than one late payment in the past 1. Additionally, the mortgage must have been sold to the agencies before May 3. Home Affordable Refinance Program. The loan- to- value ratio has to be greater than 8. Others say the restrictions are too stringent and automatically cut out those under- water homeowners who have bad credit. Homeowners are going to save on their mortgage payments but there. Investors and lenders, people who fund the mortgages, are going to suffer. Even those with buying power are facing a hard time obtaining loans because banks have tightened their restrictions after the mortgage meltdown. The large inventory of distressed homes continues to put downward pressure on prices, according to the report. But critics of the plan say it artificially inflated the housing market and pulled those buyers into the market who would have brought in later months or years. In fact, many homeowners who took advantage of the program ended up defaulting again on their mortgage. Others say the administration, instead of cracking down on banks, did the opposite by paying them to change mortgages of struggling homeowners. Much more needs to be done. If it continues to weaken, it will weigh on the economy and, in turn, consumer confidence.
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