HUGE Announcement by Fannie, Freddie and the Federal Housing Finance Agency !!!!!!

Today the US govt. announced more sweeping changes in the mortgage industry. Together with Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (which oversees Fannie and Freddie now) have put in place provisions to help troubled homeowners. This new policy is the most aggressive yet.

The plan is to help current homeowners who cannot afford to make their monthly mortgage payments and curb the steep rise in foreclosures nationwide. The ways that were announced are as follows:

• Modify the borrowers loan into a fixed product from an ARM
• Extend re-payment terms out to and up to 40 years at most
• Reduce the interest rate on their mortgage as low as 3%
• Possibly allow a lump sum principal reduction of the balance of the loan in areas where housing values have plummeted
  • Portions of this reduction could be required to be repaid by the borrower at time of sale if there is enough money from the sale, but in the meantime the new payment would be based off of the lower principal

The main goal is to get the borrowers DTI (Debt to Income) to 38% by one, or a combination of the above provisions. The Federal Housing Finance Agency (FHFA) feels that a 38% DTI is optimal for most borrowers to be able to live and make regular payments on their mortgage.

You might be saying, this sounds like a good idea and how can I take advantage of a possible 3% interest rate. As with any assistance there are requirements, as there should be.

• The borrower must currently be behind on 3 months worth of payments
• The home must be their primary residence
• The borrower must owe more that 90% of the homes current value

This new policy will take effect December 15^th of this year. It is unclear how long the provisions will last. What is known is that it should be able to help over 1 million homeowners in the next year avoid foreclosure based off of current and projected stats.

I cannot express how important this announcement is. Not only will it help save homeowners who cannot pay their mortgage, it will also help keep our home values up across the US. This has been something that needed to be done according to the govt., I have my own personal opinions but we will keep those for a later entry.....

Since this announcement just came out today at 2 pm EST, there are still a lot of blanks to be filled in. Stay tuned....