Obama unveils $75B mortgage relief plan
(AP) - Under pressure to stem the foreclosure crisis,the Obama administration launched a plan Friday to reduce theamount some troubled U.S. borrowers owe on their home loans andgive jobless homeowners a temporary break.
Administration officials cautioned that the plan won't stop allforeclosures or help all troubled homeowners. Instead, officialssaid their goal is to meet their original target, announced lastyear, of helping 3 million to 4 million borrowers avoidforeclosure.
The new effort is designed to help two groups:
- Borrowers who owe more on their loans than their houses areworth. Nearly 15 million homeowners fall into this category,according to Moody's Analytics. About 10 million of them owe atleast 20 percent more than their house's current value. These people would be helped in either of two ways: Theirmortgage companies can cut the total amount they owe on theirmortgage. Or they can refinance into loans backed by the FederalHousing Administration, which insures loans against default. TheFHA will get $14 billion in incentive money from the federalbailout fund.
- Unemployed borrowers. People receiving unemployment benefitswould see their mortgage payments drop to no more than 31 percentof their monthly income - but only for three to six months. That'sintended to give homeowners more time to find a job. Once they do,they may qualify for a loan modification that would permanentlyreduce their payments.