I ripped this from an email I just received.

The following is a summary I prepared of the Presidents Housing Plan. There is a lot of information but the best advice I can give is to call your lender to find out how or if they are participating. Note that guidelines will not be issued until early March. Finally, if you have any questions I will be happy to try and answer them. I can be reached at (602) 803-9660. Take care!

Homeowner Affordability and Stability Plan (HASP)

1) Goal is to lower payments long term for ” responsible homeowners” with either 15 or 30 year fixed rate loans.

2) Homeowner can be current or delinquent.

3) First mortgages only second’s will have to be subordinated.

4) Loan must be held or guaranteed by Fannie Mae or Freddie Mac (GSE’s).

5) Max loan to value (LTV) cannot exceed 105% including refi costs.

6) There will be no principal balance reduction.

7) I have heard that credit scores will be adjusted to help more qualify, there will be less documentation and the property value will be determined by an automated valuation method (saving the cost of an appraisal).

8) Guidelines will be published by the GSE’s (Government Service Enterprises) March 4, 2009.

Homeowner Stability Initiative (HSI)

1) Goal is to lower payments for next five years for ” at risk” homeowners.

2) Homeowners can be current or delinquent.

3) First mortgages only second’s will have to be subordinated.

4) Interest rate would be reduced to a level where the mortgage payment is no more than 38% of income.

5) The government would subsidize the further reduction in payment to 31% of income.

6) Servicers can reduce the loan balance to get to the affordability levels mentioned above. The government would share in this cost. No details are yet available as to how this would work.

7) Those homeowners with total debt at up to 55% of income would also be eligible but would have to take a debt counseling program before modification.

8) Servicers would get $1,000 for each loan modification PLUS another $1,000 per year for 3 years if the borrower stays current.

9) Servicers would also get $500 per loan if they modify an ” at risk” loan before it falls behind (mortgage holders would get $1500).

10) If the borrower stays current on their payments they will get up to $1,000 to be applied to the loan balance per year for five years.

11) Guidelines will hopefully be available sometime in March.

Other components of the Plan include;

The Administration going to Congress for an amendment to the bankruptcy law allowing a judge to modify a mortgage;

$10 Billion insurance fund to be used to pay mortgage holders based on declining property values (Home Price Decline Reserve);

The Treasury Department will develop uniform guidelines for loan modifications and any institution getting money from the government (re.TARP) would be required to participate;

The Treasury Department will also provide another $100 Billion in additional funding to both of the GSE’s;

The government will continue to buy Mortgage Backed Securities (MBS) issued by the GSE’s to help keep rates low.

Finally, there will be an effort to upgrade the failed Hope for Homeowners (H4H) program by lowering fees borrowers pay, increase flexibility for lenders to modify, allowing higher debt ratios and providing for payments to servicers.

Burt Carlson
Mortgage Consultant
Smart Financial Mortgage
1715 W Northern Ave Suite 100
Phoenix, AZ 85021
(602) 803-9660 (cell)
(602) 889-2242 e-fax