Treasury Secretary, Tim Geithner put out the details of the foreclosure assistance program today, March 4, 2009. The program can be studied in detail in the Wall Street Journal.
To homeowners who are current on their mortgage payments, this is an excellent opportunity to modify your mortgage to 31% of your income with an interest rate of 2% for five years. These loans have to have been made before January 1, 2009. The Loan Modification Plan will be in existance until December 31, 2012.
There is an incentive of $1500 to each homeowner who modifies his or her loan. Every year for five years, the homeowner will receive $1000.
The government wants to avoid more foreclosures. It is encouraging any mortgage holder who is struggling, to see a loan officer, as soon as possible to discuss loan modification.
This is good news! There will be those who say this is too expensive for the government to do, and they have already began saying it as soon as the news broke. But, I believe it is a good thing for the housing market. For every foreclosure there is a loss of value in the adjacent homes. If this plan avoids more foreclosures, property values will have a chance to recover.
Contact me with remarks or questions…I will be glad to discuss this or offer guidance.