In his State of the Union address earlier this month, President Barack Obama outlined what he called a “Blueprint for an America Built to Last,” and a major part of that plan includes another mortgage refinancing program.
The president’s plan includes “broad based refinancing,” which is designed specifically to help consumers who have seen the value of their homes slip below the amount they still owe on their home loans, as long as they have been responsible in continuing to pay their bills, the White House said. Borrowers who are current on their mortgages will be given the chance to avoid some red tape when attempting to refinance their current home loans to make them more affordable. Through the plan, underwater homeowners will be able to save an average of $3,000 per year on their home loan payments.
“There are more than 10 million homeowners across the country right now who, because of an unprecedented decline in home prices that is no fault of their own, owe more on their mortgage than their homes are worth,” Obama said during a speech to unveil the plan in Falls Church, Virginia. “It means your mortgage, your house is underwater.”
The other major aspect of the plan is the creation of Homeowner Bill of Rights. This will create a single set of lending standards so that both borrowers and mortgage lenders are able to better understand the rules. For example, this includes a simpler mortgage disclosure form that will make it easier for borrowers to understand the terms of the loan they’re seeking, and tells them everything they need to know about all fees and penalties associated with their new account. It will also set guidelines for lenders that prevent conflicts of interest, provide support for responsible homeowners when their property is in foreclosure and protect homeowners against improper seizures that includes the right to appeal.
In the past few years, the federal government has unveiled a number of other mortgage and refinance assistance programs designed to help homeowners with various economic problems related to their home loans. However, these programs were often criticized as being too difficult for even the most troubled borrowers to qualify for, and as a consequence, helped far fewer Americans stay in their homes than were originally intended.