More Help for Battered Housing Market Announced
Treasury, Housing Secretaries Address Foreclosure Crisis
May 14, 2009
The Making Home Affordable program, a plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by:
- strengthening confidence in mortgage giants Fannie Mae and Freddie Mac;
- creating a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and
- a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners.
Facilitating Quick Home Sales
“Historically low interest rates are allowing Americans to refinance and save money, and modifications are helping homeowners avoid foreclosure," said Treasury Secretary Timothy Geithner said in a Treasury Department news release May 14. According to Geithner, the new program features will help homeowners obtain modifications in areas suffering from home price declines.
“If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” Geithner said in a statement in the news release.
Housing and Urban Development Secretary Shaun Donovan said in the same news release that his department has requested a $100 million investment in its Housing Counseling Assistance Program for fiscal year 2010, a $35 million increase from its 2009 budget.
“This investment will help further support the work of our 2,600 HUD-approved housing counselors across the nation … who play a key role in ensuring that borrowers can take part in the modification and refinancing options made available through Making Home Affordable,” Donavan said in a statement.
Foreclosure Alternatives
The new features of the Making Home Affordable program are:
- Foreclosure alternatives that provide incentives for servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases, as well as borrower incentives to cover relocation expenses to homes that are affordable, and streamlined processing.
- Home price decline protection incentives that will provide lenders additional incentives for modifications where home price declines have been most severe and lenders fear these declines may persist.
Majority of Mortgage Services Participating
A Treasury Department fact sheet accompanying the news release said that 14 mortgage servicers, including the five largest, have now signed contracts and begun modifications under the Making Homes Affordable program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75% of all loans in the country are now covered by the program.
The 14 participating servicers have extended offers on over 55,000 trial modifications and mailed out over 300,000 letters with information about trial modifications to borrowers, the Treasury fact sheet said.
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