The Need-To-Know Aspects of President Obama's Refi Plan

• February 1st 2012

by UrbanTurf Staff

Earlier today, President Obama officially announced his administration’s new refinancing plan. In short, the goal of the plan is to allow borrowers to lower their monthly mortgage payments by taking advantage of low interest rates through refinancing. UrbanTurf picked out the aspects of the plan that we deemed most important.

• Everyone Can Participate, Except FHA Borrowers — The Home Affordable Refinance Program (HARP) currently only allows borrowers who have loans backed by Fannie Mae and Freddie Mac to refinance. Part of the president’s new plan would be to allow homeowners who have privately-backed loans to refinance. However, borrowers with loans backed by the Federal Housing Administration (FHA) couldn’t participate.

• Who is Eligible — Borrowers who have private mortgages and have made their last six payments and have one delinquency or less during the prior six months would be eligible. Borrowers would also be required to have a minimum credit score of 580 and loan amounts would have to fall within the FHA limits (between $271,050 to $729,750). Lastly, the loan being refinanced must be for a single family, owner-occupied principal residence.

• How Will It Work — According to a White House press release, borrowers would apply through “a streamlined process” and would not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, all a lender will need to do is confirm that the borrower is employed. Unemployed borrowers may still be eligible if they meet the requirements above and present “limited credit risk” but the lender would need to perform a “full underwriting.”

• Who Would Pay — The price tag for Obama’s program is expected to be between $5 and $10 billion, which would be covered by a fee placed on large financial firms.

The proposal, which is part of a larger plan that Obama has in the works to help homeowners, has a long ways to go given that it has to make it through a Congress that has found it tough to agree on anything in recent months.

This article originally published at https://dc.urbanturf.com/articles/blog/the_need_to_know_aspects_of_president_obamas_re-fi_plan/5042.