Bullet Points For The
Homeowner Affordability and Stability Plan
Fact Sheet
The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country. Millions of responsible families who make their monthly payments and fulfill their obligations have seen their property values fall, and are now unable to refinance to lower mortgage rates. Meanwhile, millions of workers have lost their jobs or had their hours cut, and are now struggling to stay current on their mortgage payments. As a result, as many as 6 million families are expected to face foreclosure in the next several years, with millions more struggling to stay current on their payments.
The present crisis is real, but temporary. As home prices fall, demand for housing will increase, and conditions will ultimately find a new balance. Yet in the absence of decisive action, we risk an intensifying spiral in which lenders foreclose, pushing home prices still lower, reducing the value of household savings, and making it harder for all families to refinance. In some studies, foreclosure on a home has been found to reduce the prices of nearby homes by as much as 9 percent – creating the potential that even borrowers who make every payment suffer from an increase in foreclosures in their community.
The Obama Administration’s Homeowner Affordability and Stability Plan will offer assistance to as many as 7 to 9 million homeowners making a good-faith effort to stay current on their mortgage payments, while attempting to prevent the destructive impact of foreclosures on families and communities. It will not provide money to speculators, and it will target support to the working homeowners who have made every possible effort to stay current on their mortgage payments. Just as the American Recovery and Reinvestment Act works to save or create several million new jobs and the Financial Stability Plan works to get credit flowing, the Homeowner Affordability and Stability Plan will support a recovery in the housing market and ensure that these workers can continue paying off their mortgages.
By supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac, providing up to 4 to 5 million homeowners with new access to refinancing and enacting a comprehensive stability initiative to offer reduced monthly payments for up to 3 to 4 million at-risk homeowners, this plan – which draws off the best ideas developed within the Administration, as well as from Congressional housing leaders and Federal Deposit Insurance Corporation Chair Sheila Bair – brings together the government, lenders and borrowers to share responsibility towards ensuring working Americans can afford to stay in their homes.
Homeowner Affordability and Stability Plan
1. Refinancing for Responsible Homeowners Suffering From Falling Home Prices.
2. A Comprehensive $75 Billion Homeowner Stability Initiative
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A Loan Modification Plan To Reach 3 to 4 Million Homeowners
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-Shared Effort with Lenders to Reduce Interest Payments.
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-Incentives to Servicers and Borrowers .
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Clear and Consistent Guidelines for Loan Modifications
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Required Participation By Financial Stability Plan Participants
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Modifications of Home Mortgages During Bankruptcy
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Strengthen Hope for Homeowners and Other FHA Loan Programs
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Support Local Communities and Help Displaced Renters
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3. Support Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac.
Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices:
- Provide the Opportunity for Up to 4 to 5 Million Responsible Homeowners Expected to Refinance:
- Reducing Monthly Payments:
A $75 Billion Homeowner Stability Initiative to Prevent Foreclosures and Help Responsible Families Stay in Their Homes:
- A Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
- Clear and Consistent Guidelines for Loan Modifications
- Requiring That Financial Stability Plan Recipients Use Guidance for Loan Modifications
- Allowing Judicial Modifications of Home Mortgages During Bankruptcy When A Borrower Has No Other Options
- Require Strong Oversight, Reporting and Quarterly Meetings with Treasury, the FDIC, the Federal Reserve and HUD to Monitor Performance
- Strengthening FHA Programs and Providing Support for Local Communities
A Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners:
Who the Program Reaches:
- Focusing on Homeowners At Risk:
- Reaching Homeowners Who Have Not Missed Payments:
- Common Sense Restrictions:
- Special Provisions for Families with High Total Debt Levels:
How the Program Works
- The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. This program will bring together lenders, servicers, borrowers, and the government, so that all stakeholders share in the cost of ensuring that responsible homeowners can afford their monthly mortgage payments – helping to reach up to 3 to 4 million at-risk borrowers in all segments of the mortgage market, reducing foreclosures, and helping to avoid further downward pressures on overall home prices. The program has several key components:
i. Shared Effort to Reduce Monthly Payments:
ii. “Pay for Success” Incentives to Servicers:
iii. Responsible Modification Incentives:.
iv. Incentives to Help Borrowers Stay Current:
v. Home Price Decline Reserve Payments:
How It Will Be Effective
- Protecting Taxpayers:
- Counseling and Outreach to Maximize Participation:
- Creating Proper Oversight and Tracking Data to Ensure Program Success:.
- Limiting the Impact of Foreclosure When Modification Doesn’t Work:
B. Clear and Consistent Guidelines for Loan Modifications: .
-Developing Clear and Consistent Guidelines for Loan Modifications:
-Applying Guidelines Across Government and the Private Sector:
C. Requiring All Financial Stability Plan Recipients to Use Guidance for Loan Modifications:.
D. Allowing Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run of options
-How Judicial Modification Works: Bolster FHA and VA Authority to Protect Investors and sure Loan Modifications Occur:
E. Strengthening FHA Programs and Providing Support for Local Communities
-Ease Restrictions in Federal Housing Administration Programs, Including Hope for Homeowners:
-Strengthening Communities Hardest Hit by the Financial and Housing Crises:
-Support Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac:
-Ensuring Strength and Security of the Mortgage Market:.
-Provide Forward-Looking Confidence:
- Promoting Stability and Liquidity:
- Support State Housing Finance Agencies:
- No EESA or Financial Stability Plan Money:
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