Let the games begin! Today, March 5 is the official first day that home owners can call their mortgage companies to apply for mortgage relief under the new Homeowner Affordability and Stability plan by the Obama administration. Administration Officials said that homeowners could actually start making calls yesterday and banks like JPM Chase and SunTrust reported call volume increases of 150 and 50 percent respectively. Homeowners will need to be patient as lenders scramble to get their systems in place to handle the huge increases in call volume. Some callers have reported waiting for several hours before getting through to speak with a real person. Banks such as Bank of America and Wells Fargo have given high marks to the plan along with many economists who think that the new guidelines will help with the current crisis. Under the plan homeowners with loans as large as $729,750 may see their interest rates cut to as low as 2 percent. The refinancing part of the program is expected to reduce payments for up to 5 million homeowners but is limited to loans owned or backed by Fannie Mae and Freddie Mac. Homeowners must also apply by June 2010.
The new plan will also include incentives for lenders second position in order to encourage them to release of their claims. If this is successful it could provide relief for many homeowners who leveraged equity from their homes to start business or maintain their ho mes. According to data released by First American CoreLogic, at least 1 and 5 homeowners owe more on their mortgage than what the property is worth. That percentage amounts to almost 8.3 million households across the country.
Their may also be some relief for investors or so called speculators. Fannie and Freddie have announced that they will also refinance loans for second homes and investment properties. This is good news for many prudent investors that have been hit hard by the economy.