Obama’s Homeowner Affordability and Stability Plan: Who Is Eligible?

Here’s what you need to know about President Barack Obama’s new Homeowner Affordability and Stability Plan (HASP) to help stabilize the housing market and help millions of struggling borrowers keep their homes. What is it? Who is eligible? How will it directly impact you and your family?

The first portion of HASP, the Homeowner Affordability arm, will offer struggling homeowners three basic, home-securing tools:

1. A refinancing program for those who owe more than their home is worth or have less than 20% equity in their property

2. Lower monthly payments for at-risk-of-foreclosure homeowners

3. A lower mortgage rates initiative aimed at rebuilding consumer trust in lenders like Fannie Mae and Freddie Mac

The goal of the second portion of Obama’s HASP initiative, the Stability arm, is to curb the tide of foreclosures and stabilize home prices. Those expected to benefit most are homeowners who can’t afford their mortgage payments but aren’t in a position to sell because their home’s value has dramatically dropped in the wake of the credit crunch and economic downturn.

The Stability portion of Obama’s HASP plan will:

Lower the amount home loan borrowers pay per month to more reasonable dollar amounts. Lenders are encouraged to reduce payments by 31% of homeowner’s incomes by extending the terms of the loan or reducing interest rates all the way down to 2%. Also, the Treasury can share the cost of lowering the borrower’s principal.

Who can apply for the Homeowner Affordability and Stability Plan?

Investors with investment properties will NOT be eligible. Only credit-worthy, responsible homeowners struggling to make mortgage payments but who are still current can take advantage of the plan.

In other words, if you are nearing loan default but haven’t missed payments yet, you are eligible to apply for HASP.

Borrowers who owe up to 5% of their home’s value and have guaranteed conforming loans through Freddie Mac and Fannie Mae will likely be able to refinance. Based the current market, they could be looking at 30- or 15-year, fixed-rate loans, excluding balloon payments or prepayment penalties.

Stay tuned for the latest details on Obama’s Homeowner Affordability and Stability Plan. I’ll continue following the plan as new information becomes available. If you have questions on how this will specifically impact you, feel free to call or email me.
Your trusted connection to Southern California’s foreclosures market,

Mark Shandrow
REO Broker-Associate
The Shandrow Group
Keller Williams Realty
markshandrow.com