New Homeowner Program for Underwater Mortgages

Obama's got a new program, HAMP, to help homeowners who are behind on their mortgages. Details are at makinghomeaffordable.gov.

The Administration’s goal is to promote stability for both the housing market and homeowners. To meet these objectives, the Administration has developed a comprehensive approach using state and local housing agency initiatives, tax credits for homebuyers, neighborhood stabilization and community development programs, mortgage modifications and refinancing, and support for Fannie Mae and Freddie Mac. The Administration’s efforts for homeowners have focused on giving responsible households an opportunity to remain in their homes when possible while they get back up on their feet, or to relocate to a more sustainable living situation. Today, mortgage rates are at record lows and, thanks in large part to these programs, more than four million homeowners have refinanced their mortgages to more affordable levels helping to save more than $7 billion annually, more than one million are saving an average of over $500 per month through the Administration’s modification program, home equity increased by more than $12,000 for the average homeowner in the last three quarters last year and the economy is growing.

Even with this success, we continue to see challenges. Servicers were slow to implement HAMP, resulting in a slow start for the program. Recent improvements in the program have accelerated the pace of modifications, and the adjustments announced today will improve performance. But our strategy to address the crisis must evolve because our challenges have also evolved.

Our housing initiatives must balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone. The President has said: “We can’t stop every foreclosure.” And in fact, we can’t maintain the balance described above if we assist every borrower. For example, investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes. Some people simply will not be able to afford to stay in their homes because they bought more than they could afford. Instead, the Administration must focus on providing responsible homeowners opportunities to obtain a modification or to refinance and prevent avoidable foreclosures and, when necessary, must facilitate the transition to a more sustainable housing situation. The adjustments announced today are tailored to accomplish these goals by helping a targeted group of borrowers.

Eligible homeowners for modifications under HAMP must, for example: live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship. The new flexibilities for the modification initiative announced today continue to target this group of homeowners.

The FHA refinance options being announced today will provide more opportunities for lenders to restructure loans for some families who owe more than their home is worth. This is a voluntary program for lenders and homeowners. The population eligible for a FHA refinance must be current on their mortgage. This rewards responsible homeowners and creates stabilizing incentives in the housing market.

Taken together, the Administration’s broad housing initiatives and the new flexibilities announced today will offer a second chance to millions of responsible, middle-class American families struggling to stay in their homes and will help to stabilize our households, neighborhoods and communities.

Obama Signs Homeowner and Fraud Legislation

WASHINGTON – Today, President Obama will sign the Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act into law.

"These landmark pieces of legislation will protect hardworking Americans, crack down on those who seek to take advantage of them, and ensure that the problems that led us into this crisis never happen again," said President Obama.

The Helping Families Save Their Homes Act is an important step towards stabilizing and reforming our nation’s financial and housing markets – helping American homeowners and increasing the flow of credit during these difficult economic times. This legislation will strengthen our nation's housing sector and facilitate the goals of the Administration's Making Home Affordable Program by helping millions of American homeowners stay in their homes.

The Fraud Enforcement and Recovery Act will protect the American people by giving the federal government new tools and resources to prevent fraud. This reform bill will help the federal government keep markets free and fair, so that American consumers can thrive. White House

Read the fact sheets on both of these laws here.

Treasury Cracking Down on Foreclosure Rescue Scams and Loan Fraud

This from Lynn Sweet:

WASHINGTON - The U.S. Department of the Treasury, the U.S. Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission and the Attorney General of Illinois will announce a new effort to align responses from federal law enforcement agencies, state investigators and prosecutors, civil enforcement authorities and the private sector to protect homeowners seeking assistance under the Administration's Making Home Affordable program from criminal actors looking to perpetrate predatory schemes at a press conference at 10 a.m. Central Time (11 a.m. Eastern) on MONDAY, April 6, 2009 at the Department of the Treasury.

WHO: Timothy F. Geithner, Secretary, Department of the Treasury
Eric Holder, U.S. Attorney General, Department of Justice
Shaun Donovan, Secretary, Department of Housing and Urban Development
Jon Leibowitz, Chairman, Federal Trade Commission
Lisa Madigan, Attorney General of Illinois

WHAT: Press conference announcing new multi-agency crackdown on mortgage loan modification fraud and foreclosure rescue scams.

New Housing Plan Site: MakingHomeAffordable.gov

The site allows you to see if you are eligible for loan modification and offers refinancing information.
From the White House:

At midnight last night the Treasury Department took a great step to ensure that everybody who can take advantage of the President housing plan can do so, helping to put the brakes on the foreclosure crisis, launching MakingHomeAffordable.gov – a site where you can find out everything you need to know about the President’s plan and whether you qualify.

Hotline:

Yesterday Marketwire reported that the Homeowner's HOPE Hotline (888-995-HOPE) is being overwhelmed with calls – more than 124,000 homeowners have called in looking for help since the President announced his housing plan.

Obama Kicks Off Home Foreclosure Prevention Program

First, if you need mortgage help, this site, set up by the Obama administration, explains the plan, eligibility and what to do.

Here's some news and reaction about the Making Home Affordable Refinance and Modification Options plan:

The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.
Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.
Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.
"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."
There was also skepticism that banks would be willing to participate.
"I've just seen so many of the programs not work," said Pava Leyrer, president of Heritage National Mortgage in Randville, Mich. "It gets borrowers hopes up. They call and call for these programs and we can't get anybody to do them." AP

Planet Money's first take:

So far, much of the conversation on Planet Money has been about whether homeowners who owe more than their houses are currently worth -- the 20 percent of families thought to be underwater -- can be enticed to stay in their homes, even with lower monthly payments.

I wouldn't expect any given person with an outsize mortgage to be persuaded to stay put, just for the good of the neighbors. But I do think it's interesting to watch President Obama sell the plan to America that way. He's got two jobs: Get the homeowners to stay, and get the public to support his approach.

Freddie Mac's statement:

"Freddie Mac wholly supports President Obama's groundbreaking effort to stabilize our communities by helping millions of distressed homeowners obtain more affordable and sustainable mortgage terms. Bringing needed financial relief to America's homeowners is critical to the recovery of the economy here at home and across the world.

Freddie Mac's resources are aligned to make the Obama Administration's Making Home Affordable program a success. We look forward to working with lenders, servicers, nonprofits, the Administration, and the Federal Housing Finance Agency, over the coming months as this vital initiative is fully implemented and injects new stability into the nation's housing market."

To determine their eligibility under Making Home Affordable program, borrowers should contact their mortgage servicer, the company where they send their monthly mortgage payments. For more information about Making Home Affordable program go to www.financialstability.gov.

A summary of the details at WSJ.

A look at underwater owners (8.3 million owe more than the house is worth):

CitiBank launches homeowner assist program. Before you watch, know that a cram down, now in front of congress, is a court-ordered reduction of the secured balance due on a home mortgage loan. Banks don't want that: