$75B Mortgage Bailout Detailed, as Foreclosures Clog Courts
As President Barack Obama today announced a $75 billion federal mortgage bailout plan intended to help up to 9 million homeowners avert foreclosure, courts are already busy dealing with a deluge of pending foreclosure cases for which such measures appear to have come too late.
And the Homeowner Affordability and Stability plan he describes may offer a greater number of favorable mortgage refinancing opportunities to those who are current on their home loans and are at least close to having some equity, rather than those who are truly struggling in untenable situations, according to the Washington Post.
For example, an owner with a $210,000 loan on a home worth $200,000 could qualify under one key component of the program, which allows lower-interest refinances of mortgages on owner-occupied residences at up to 105 percent of equity, the newspaper explains. Under standard underwriting, lenders expect to see 80 percent equity for a refi.
Meanwhile, the program, which is scheduled to launch on March 4, comes in the wake of a Wall Street Journal (sub. req.) article yesterday that describes Florida courts so clogged with foreclosures that some “rocket docket” judges are hearing nearly 1,000 cases daily. At that pace, they are allotting less than a minute to many hearings in which owners are given 60 days to reach a resolution with their lender or vacate the family home.
It appears that the Obama plan, however, is encouraging lenders to implement or extend a temporary moratorium on mortgage foreclosures on owner-occupied homes. Among those who have just announced such programs are:
Bank of America, Citigroup and JP Morgan Chase, until either March 6 or March 12 (Residential Real Estate Examiner); Citizens Bank and PNC Financial Services Group Inc., in Pittsburgh, until March 12 and 13, respectively (Valley Independent); First Federal, in South Carolina, until May 1 (WCSC-TV); and Wells Fargo Home Mortgage, the nation’s biggest lender, until March 13 (Portland Business Journal).
Additional coverage:
Detroit Free Press: “Obama seeks to keep millions of Americans in their homes”
Economix (New York Times): “Obama’s Housing Plan: Who Will Benefit?”
Reuters: “Obama unveils plan to tackle housing crisis”
Reuters: “Factbox”
U.S. News & World Report: “The Obama Housing Fix: 5 Things to Know”
