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White House Starts Mortgage Rescue Plan

By Harry Kimball,  Newser Staff

Posted Mar 4, 2009 2:21 PM CST
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(Newser) – 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.

Budget Director Peter Orszag, right, and Treasury Secretary Tim Geithner, center, look on as President Barack Obama speaks.
Budget Director Peter Orszag, right, and Treasury Secretary Tim Geithner, center, look on as President Barack Obama speaks.   (AP Photo)
Graphic shows how struggling homeowners could reduce mortgage payments under the White House homeowner plan.
Graphic shows how struggling homeowners could reduce mortgage payments under the White House homeowner plan.   (AP Photo)
Obama's plan attempts to stave off the raft of recent foreclosures.
Obama's plan attempts to stave off the raft of recent foreclosures.   (AP Photo)
Treasury Secretary Timothy Geithner.
Treasury Secretary Timothy Geithner.   (AP Photo)
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More on how the plan could help homeowners
Reuters

Can plan untangle securitized mortgage mess?
Becker-Posner Blog

Good start, but is it enough?
New York Times

 
mortgage • Treasury Department • mortgage lender • negative equity • payments • Obama administration • President Obama • Timothy Geithner • foreclosures

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