From The Heart Of Silicon Valley

Home Owner Affordability and Stability Plan…
President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.
The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. First is an incen-
tive for homeowners who have less than 20% equity in their homes, or who owe more than their home is worth. The
second attempts to lower monthly payments for homeowners at risk of losing their home. Here is a brief overview of
both initiatives.

Less than 20% equity in your home? Under current rules, those families who own less than 20% equity in their homes
have a difficult time taking advantage of the historically low interest rates. This initiative is open to homeowners who
have conforming loans that are guaranteed by Fannie Mae and Freddie Mac. The plan would enable them to move to a
new loan for up to 105% of their homes value. According to the plan, “credit-worthy” or “responsible” homeowners can
refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The new loan, however,
cannot include prepayment penalties or balloon payments. For many families, this low-cost option may help reduce their
monthly payments by up to thousands of dollars per year. As with the rest of the plan, details about this initiative will be
released at a future date-including what, if any, credit score requirements will be included.

On the verge of default? This initiative aims at providing help to individual families as well as entire neighborhoods by
helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford
their monthly payments, but cannot sell their homes because prices have fallen significantly. The goal of this initiative is
simple: “reduce the amount homeowners owe per month to sustainable levels.” Homeowners who are current on their
loans but are struggling can still apply for this program. As such, this is one of the few programs designed to help home-
owners who may face delinquency soon, but are current at the moment.

Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. These
plans-combined with today’s historically low interest rates-have created an unprecedented opportunity for homebuyers.

via:
Jeff Krum
Senior Mortgage Planner
408-377-4124 Direct
408-313-2400 Cell
jkrum@thehontegroup.com