The White House today kicked off its $75 billion plan to curb mortgage foreclosures, the Wall Street Journal reports. The federal dollars will both push lenders to lower monthly payments and help homeowners keep paying. “Today, we are providing servicers with the details they need to begin helping eligible borrowers,” Treasury Secretary Timothy Geithner said. Here are the details:
- Loans made before January 1, 2009 are eligible for modification.
- For a mortgage to qualify, the lender must lower the monthly payment to 38% of a borrower's income. The program will match, dollar-for-dollar, a reduction down to 31%, achieved partly through reducing interest rates as low as 2%
- Loan servicers will receive $1000 for every mortgage they modify, and $1000 for every 1 of 3 years the borrower stays current.
- Borrowers will get $1000 for each of 5 years they stay on track.
- Lenders will also get incentives for modifying mortgages on the brink.