By Eugene T. Lowe
March 9, 2009

President Barack Obama announced two weeks ago a general overview of his Homeowner Affordability and Stability Plan. Details of the plan were released on March 4 of what is being called the “Making Homes Affordable” program. A Treasury Department press statement said that the program will ”help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure such as lower housing prices, increased crime and higher taxes.”

The plan will provide assistance to seven to nine million homeowners. Those families – four to five million homeowners who have kept up with their payments on a mortgage owned by Fannie Mae or Freddie Mac – will receive assistance through the Home Affordable Refinance program. Many of these borrowers would normally be unable to refinance their loans due to the falling value of their homes. But under the Home Affordable Refinance program, they will be able to refinance “an adjustable-rate mortgage into a more stable mortgage such as a 30-year fixed rate loan.” The program will be available through June 2010.

The Home Affordable Modification program designed to reduce monthly payments would help an additional three to four million homeowners who are at risk of foreclosure. The Federal Housing Administration (FHA), the Veterans Administration (VA), the U.S. Department of Agriculture (USDA), the Federal Housing Finance Agency and the Treasury Department announced the guidelines that “they expect will become standard industry practice in pursuing affordable and sustainable mortgage modifications.” The Hope for Homeowners program will be expanded to work with the new homeowner modification program.

Servicers are being urged to “begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.” For more information on the program, visit the website www.treas.gov.