How will the "Homeowner Affordability and Stability Plan" offer assistance to as many as nine million homeowners?
1) Under the plan, homeowners who have conforming loans owned or guaranteed by Freddie Mac or Fannie Mae will be allowed to refinance their homes even if they do not have the customary 20% equity in their home.
2) The Homeowner Stability Initiative will help those homeowners who are "underwater" on their mortgages. This $75 million initiative will bring lenders, servicers and the government together to share in the loan modifications. The homeowners do not have to be delinquent in their payments to participate.
3) The third component of the Plan will consist of strengthening Freddie Mac and Fannie Mae by the government purchase of mortgage-back securities, and increasing government funding and increasing the government preferred stock purchase agreements with Freddie Mac and Fannie Mae.
Meanwhile, Fannie Mae, Freddie Mac and many banks are halting foreclosures through March 6 to allow time for the government to work out the details of the housing plan.
Not all is good news. Beginning April 1, Fannie Mae and Freddie Mac will be increasing mandatory fees and tightening credit score and down-payment rules.
Home buyers will be charged more for a down payment of less than 30%. Three-quarters of a point will be charged to home buyers with a FICO score between 700 and 720. And, condo buyers will be penalized for not buying a single-family home by being charged a three-quarter point, regardless of FICO score if the buyer does not have a 25% downpayment.
Buyers of duplexes, where one unit is owner occupied and the other is rented, will be charged a flat 1% add-on from Fannie Mae, even with FICO score above 800 and a 50% downpayment.
Apparently the fees are being added to counter the higher risks and losses with some loan products and credit scores and downpayment ratios.
For more information, and how the above information applies to you, consult your favorite lender.
