Obama's plan is not a perfect plan but it's the only game in town, and the best anyone has offered so far–the first offering that asks anything from the big banks.
Meanwhile the Virginia General Assembly has refusd to close corporate tax loopholes and raise revenue in either the House or Senate budget. Instead, the House is proposing that the state raid the foreclosure settlement fund for Virignia's homeowners. This money is supposed to help Virginians who have been the victims of foreclosure fraud, not help legislators get out of making better choices with the budget.
Four million Americans have been foreclosed on since 2007, and about one in five Americans owes more on their home than the home is worth. “Collectively, their negative equity is almost $700 billion… or $50,000 each.”New York Times, 2/8/12.
What is the Obama plan?
* President Obama and 49 state attorneys general have reached a landmark settlement to help struggling homeowners.
* The agreement involves a $26 billion payout by the country’s five largest home loan servicers: Ally/ GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.
What will it do?
The Agreement provides direct relief to nearly two million American homeowners who were hurt by the housing market collapse, implements fairer standards and practices, implements new and expands existing services to homeowners. See details below:
* Broad-based refinancing:Homeowners who are current on their payments for at least six months will have an opportunity to refinance at record-low interest rates.
* Homeowner Bill of Rights:Lenders and borrowers will play by the same easy-to-understand and easy-to-follow rules (See last week’s info sheet, “Homeowners Rights,” for more detail on this).
* A year of forbearance for unemployed borrowers:Major banks and GSEs (Government Sponsored Enterprises, i.e. Fannie Mae or Freddie Mac) will give up to 12 months of forbearance (non-payment) to unemployed borrowers.
* Expanded eligibility for the Home Affordable Modification Program (HAMP):This programhelps homeowners avoid foreclosure by modifying loans to a level that is affordable. Note: To qualify for HAMP borrowers must be at risk of default, the home must be a borrower’s primary residence, the unpaid balance under $729,750, and the mortgage must have begun before 2009.
* Project Rebuild: This ambitious program will put people back to work rehabilitating neighbor–hoods and helping homeowners rebuild equity.
* Sale of foreclosed properties:The Federal Housing Finance Agency (FHFA), along with the Treasury and Housing and Urban Development (HUD) will hold a pilot saleof foreclosed properties that will then be transitioned into rental housing.
* The President’s plan requires an investigation into mortgage industry abuses:The investigation into misconduct will be under the joint leadership of federal and state co-chairs.
* FYI: Oklahoma is the only state not participating in this program.
I'm glad that Obama left open the opportunity for further investigation into abuses by the banks.
This factsheet was written by Fredericksburg Virginia Organizing Leader Ginny Downie for her website: