Homeowners in trouble are having mixed results applying for President Obama’s foreclosure prevention plan.
(Source: CNN Money)
In the four months since President Obama unveiled his foreclosure prevention plan, troubled borrowers have descended on their mortgage servicers looking for help. Most institutions only started accepting applications in April and report that they are overwhelmed by the response.
Under the administration’s plan, people with little or no equity in their home can refinance to take advantage of today’s lower rates. The plan waives the requirement that homeowners have at least 20% equity in their home, allowing them to participate even if they have loans of up to 105% of the value of their property, as long as they meet other criteria. This aids those who are current in their payments but have seen their home values decline.
Also, eligible borrowers who are in or at risk of default may be able to lower their monthly payments to no more than 31% of their pre-tax income. This can help those who are not making as much at their jobs or who have monthly payments they can’t handle. Homeowners, servicers and mortgage investors can receive incentives to entice them to participate in the program.
Homeowners report mixed experiences. Some have sailed through and say their lower payments have allowed them to keep their homes and their sanity. Others, however, have gotten nothing but grief from the process. They report that the servicers require they send in their information over and over again and then don’t respond to their calls. Some are ready to throw up their hands and go into foreclosure.
Read Tami Luhby’s full article “Is Obama’s foreclosure rescue plan working?” in CNN Money (June 16, 2009).