Obama’s Mortgage Relief Plan

Under the Housing Affordability and Stabilization Plan,  lenders will be given incentives to try to slow foreclosures.  The plan may help up to 5 million homeowners refinance mortgages, which they have been unable to because they owe more than 80 percent of the home’s value.

The plan also provides incentives for lenders who modify the loan of borrowers that can no longer afford their monthly payments and are close to defaulting.   In order to qualify, your monthly housing payment must be more than 31 percent of your gross monthly income.

Most mortgage lenders are expected to adopt the plan.  Lenders are not required to reduce mortgage principal.  The reduction in monthly payments comes from refinancing at sub-prime mortgage rates and extended loan terms up to 40 years.

Related posts:

1. Coalition Proposes Mortgage Principal Reduction Plan

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