The “Homeowner Affordability and Stability Plan”
By Don | February 18, 2009
President Obama just concluded his speech in Mesa, Arizona, and announced another leg in the stool of attempting to curtail the housing crisis. Here are the salient points of the plan.
First, it’s a $75 billion plan in an attempt to help between 7 – 9 million homeowners refinance or restructure their loans to prevent new foreclosures.
A big part (buried down deep) is the intention of the Administration and Congress to change the law and allow bankruptcy judges the latitude to modify home loans – something that has been adamantly opposed by the mortgage industry in general.
There’s too much detail to report here, but here are salient facts from HUD and the Treasury department:
- An Executive Summary of the plan (these are all pdf files)
- A fact sheet of the plan (somewhat similar to the above)
- A Q&A for interested borrowers
- Three examples of how the plan might work
Filed under article topic: The Economy/Economics,The Fed & Housing policy
March 1st, 2009 at 5:52 pm
Two questions: has this been signed into law yet, and are there clauses included that help first-time homebuyers?
March 2nd, 2009 at 10:03 am
Hi Marc,
In answer to your first question, the technical answer is yes, because these funds were part of TARP funding under the Bush administration last Fall. It doesn’t directly help first time home buyers. To address your second question, a stated goal of the Stability Plan is to lower interest rates. We saw a big drop of over 1% from last Fall and the idea was floated to get interest rates down to 4.5%. They aren’t there yet but FHA loans have been hovering recently in the low 5% range. There is great political pressure to keep interest rates low but it is the secondary market that ultimately determines where interest rates will be because it is investors who demand a certain rate for their perceived risk.