The new plan is a wide reaching effort to expand refinancing opportunities for up to 5 million loans and encourage the modification of up to 4 million additional loans.
The plan is broken into 4 key parts:
Increase Refinancing Opportunities - through Fannie/Freddie with expanded qualification criteria including first mortgage LTV up to 105%.
Encourage loan modifications through a combination of:
Financial payments to lenders & borrowers to complete a modification and perform on the loan over time.
Standardized guidelines for loan modification. These guidelines will be posted on the Internet. (more to come)
Forced participation for banks receiving aid or institutions that are federally supervised.
Some form of forced judicial modification during bankruptcy.
Maintaining low mortgage rates by providing additional support and capacity for Fannie & Freddie.
Some key features of the plan include:
No Reduction of Principal Balance
Primary Residence Only
Borrowers Who Are Still Current Are Fully Eligible to Participate Including Additional Financial Incentives for Modification of Current Loans
Modifications Do Not Apply to 2nd Mortgages
Today's announcement didn't include specific details about how these programs will work. Additional details will be released between now and March 4th, by the Administration. Stay tuned!!
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