Obama’s Loan Modification Program
Assistance For Homeowners Facing Bank Foreclosure: The Homeowner Stability Initiative
The current economic recession, which began in December 2007 according to the National Bureau of Economic Research, has created grim conditions for some homeowners and neighborhoods throughout the country.
On February 18, 2009, President Barack Obama unveiled the Homeowner Affordability and Stability Plan, a $75 billion dollar program intended to assist homeowners facing bank foreclosure. The loan modification plan promised to “help between seven and nine million families restructure or refinance their mortgages,” Obama said. Funded by the second half of the $700 billion Troubled Asset Relief Program bailout plan authorized by Congress in October, the Homeowners Stability Initiative fulfills a TARP provision for homeownership preservation by implementing loan modifications.
President Obama said the Homeowner Affordability and Stability Plan “will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. The goal of this loan modification program is to bring down the foreclosure rate, and it should help to shore up housing prices for everyone.”
The plan had three main goals:
- Providing access to low-cost loan modification for responsible homeowners
- A $75 Billion Homeowner Stability Initiative to assist between 3 to 4 million homeowners in danger of bank foreclosure
- Strengthening Fannie Mae and Freddie Mac to support low mortgage rates and confidence in the housing market
The Treasury Department was to develop guidelines for Fannie Mae and Freddie Mac and all lenders that receive financial assistance from the government, enabling as many as 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac in danger of bank foreclosure to request loan modification and refinance their mortgages.