A purported life buoy is being thrown to struggling owners of Denver CO real estate through the Homeowner Affordability and Stability Plan. This section of the new “stimulus” legislation includes initiatives that promise to assist some residents of Denver CO homes to keep their Colorado properties. In addition, to head off future foreclosures, the U.S. President is encouraging another plan that targets struggling borrowers who are not yet behind on mortgage payments for their homes.
The government plans to explain details of the Homeowner Affordability and Stability Plan on March 4, 2009. What we do know now is that it outlines three initiatives for owners of real estate in Denver and the U.S.A.
- Refinancing program targeted for those without 20-percent home equity
- Program to lower monthly payments
- Support for low mortgage rates
The refinancing program is specifically targeted to people without 20-percent home equity—those who are not able to refinance because they do not have enough equity to qualify. In order to take advantage of the historically low interest rates, this segment of homeowners is being thrown a life buoy. According to an e-communication by Lori Richardson of Cherry Creek Mortgage Company, the people must be “creditworthy” and “responsible” folks who do not have 20 percent or who owe more than their home is worth.
These people will be able to refinance their mortgages into 30-year or 15-year fixed-rate loan products based on current market rates. The provision is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac and who owe up to 5 percent more than their home is worth. This could help homeowners reduce house payments by hundreds or thousands of dollars each year.
There are limitations and fine print as usual including the exclusion of prepayment penalties and balloon payments. We’ll wait for more information on March 4.
The purpose of the Stability Initiative is to reduce foreclosures and to stabilize home prices in neighborhoods. It does not apply to investment properties, however. Struggling homeowners who have wanted to sell their homes may be helped with this initiative. Homeowners do not have to be delinquent to apply for this program.
As the homes have dropped in value, the initiative rewards lenders who help reduce the amount that borrowers must pay each month. Lenders are encouraged to lower interest rates to as low as 2 percent or to reduce payments by extending the term of the loan. They may also choose to lower the principal owed and the government will share in the expense.
In support of low mortgage rates, the Homeowner Affordability and Stability Plan will increase funding to Fannie Mae and Freddie Mac to help maintain mortgage affordability for responsible homeowners and confidence in the mortgage market. Many homeowners will hopefully be saved by these measures.
For more information about farms, horse properties, and real estate in the greater metro area, call Michael Paul of Realty Oasis at (303) 268-6052.
