Obama unveils plan to help 'underwater' homeowners
President Barack Obama on Monday unveiled a new plan to provide mortgage relief to hundreds of thousands—perhaps millions—of American homeowners who find themselves “underwater,” owing more on their home than it's worth. The new plan is a modified version of the Home Affordable Refinance Program, or HARP, which was launched in 2009 but was not as effective as hoped. It let homeowners refinance their mortgages at lower rates by allowing them to bypass the usual requirement on borrowers to have at least 20% equity in their home. But many underwater borrowers couldn't qualify under the program because it excluded those whose home value was no more than 25% below what they owed. Under the new plan, homeowners' eligibility won't be affected by how far their home's value has fallen. There are still some qualifiers, however, and the complete details have not been released. One of the requirements for participation will be that borrowers must have loans owned or backed by Fannie Mae or Freddie Mac, which the government took control of three years ago. Fannie and Freddie will issue the full details of the plan on Nov. 15, officials say, and the revamped program could be in place for some lenders as early as Dec. 1. Roughly 22.5% of U.S. homeowners, or about 11 million, are underwater, according to CoreLogic, a real estate data firm. Estimates on how many homeowners could participate in the plan range from hundreds of thousands to a couple million.
Today’s poll question: Do you think President Obama’s latest plan to help underwater homeowners will help stabilize the housing market?
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