President Obama announced a $75 billion plan on Wednesday that he said would help as many as 9 million Americans avoid foreclosure.
Not all of the details are public, and we’re expecting to hear more on March 4. For now, though, the below list of Frequently Asked Questions reflects what we’ve been able to find out so far.
Q: Which mortgage borrowers qualify?
The Homeowner Affordability and Stability Plan is limited to loans held or securitized by Fannie Mae or Freddie Mac, which as of January 1, 2009 have been capped at $417,000 for most areas of the United States and $625,500 for what are called “high cost” areas. There are higher limits for Alaska, Guam, Hawaii and the U.S. Virgin Islands. Mortgages that are linked to Fannie and Freddie are known as “conforming” loans.
Q: If I’m current on my mortgage but my home has decreased in value since I bought it, can I benefit by refinancing?
Perhaps. First, you have to hold a Fannie or Freddie conforming loan. Second, your house can’t be too far underwater. The Treasury Department says: “Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105 percent of the current market value of the property.”
Translated: If you owe more than $210,000 on a house that’s now worth $200,000, you’re out of luck.
Q: Couldn’t I already refinance a Fannie and Freddie mortgage?
Yes, but there was a specific loan-to-value ratio that was required. A senior administration official who did not want to be identified said on Wednesday that the loan-to-value criteria would be waived.
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