President Obama’s plan for mortgage

Create a new Federal Housing Administration Housing Security Program. The Senator supports the efforts of Senate Banking Committee Chairman Chris Dodd (D-CT) to create a new program that will incentivize lenders to buy or refinance existing mortgages and convert them into stable 30-year fixed mortgages with a federal guarantee provided for the resulting loans. President Obama called this a “backstop” not a “bailout.”
Ask lenders to write down loan amounts for more conventional borrowers. Lenders should take action to restructure loans as early as possible when borrowers are at risk of financial trouble or when housing prices plummet. To alleviate lender concerns over tax and legal issues, the Senator’s plan also calls for legislation that will clarify the ability of servicers to act on behalf of the loans investors/owners.
Closing the bankruptcy loophole for mortgage companies. Under current Chapter 13 rules, judges cannot modify the terms of home mortgages, even if the loan was unfair or predatory. Making this change could prevent as many as 600,000 foreclosures.
Create a new mortgage interest tax credit which will assist homeowners who do not itemize their taxes. This would involve a 10 percent universal mortgage credit which will, effectively, cut 10 percent off of the interest rate paid by 10 million, mostly low income, home owners.

Provide an additional $10 billion of Mortgage Revenue Bond (MRB) authority. These are used to refinance subprime loans and provide mortgages for first-time homebuyers but are currently over-subscribed in most states.

Combat mortgage fraud and predatory subprime lending by defining mortgage fraud on the federal level, increasing funding for federal and state law enforcement programs and creating new criminal penalties for fraud.
Require more accurate and understandable loan disclosure documents.

Click Here for the President’s Plan

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