After signing the $787 billion economic stimulus bill in Denver, President Obama is scheduled to head to Phoenix Wednesday to unveil his housing plan.
The president is expected to propose anywhere from $50 billion to $100 billion to help stem the tide of home foreclosures.
One component of the plan would lower the average homeowner's mortgage payment, which can easily take up 38 percent of a family's income. The goal of the plan is to lower most homeowners' mortgages to 31 percent of their income.
A family with a household income of $50,000 will, on average, put $19,000 toward their mortgage. Under the president's plan they'd pay $15,500 toward their mortgage for a savings of $3,500.
Lenders would also be required to write down a mortgage principal rather than interest rates, with the goal of helping to reduce the chances of default.
The plan would also allow bankruptcy judges to modify mortgages, but only mortgages closed before the law is enacted are eligible.
Homeowners would also need to inform their lender or loan servicer in advance of their intention to file for bankruptcy protection.
Courtesy: ABC News
*Brokerlady's Take*
This stimulus package is a very ambitious plan to tackle all phases of the American economy. The provisions outlined in the package for homeowners are just the start of the plan to re-open the credit markets, make lending easier to access for America's middle-class, as well as help to keep families in their homes and off the foreclosure list.
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