The Obama Housing Plan is Unveiled

The number of mortgage foreclosures and loans that are in trouble showed another jump this month, unfortunately. Nationwide, approximately 12% of all mortgage loans are 30 days or more in arrears. 8% of all loans are in some stage of foreclosure proceedings while an additional 4% of all loans are now in bank ownership (foreclosed). In states like California, Nevada and Florida, the percentag of foreclosures and loans in arrears is signifcantly larger (21% of all loans in Florida are 30 days or more behind on payment).
There are approximately 72 million single family homes in the USA. Approximately 30% of these (22 million homes) are owned free and clear (no mortgage). About 14 million homes of the 50 million homes with mortgages are "under water" - i.e. have a mortgage that is larger than the value of the home today. The new Obama housing plan addresses some of these situations, but only some. It will not help many homeowners in California's high-cost areas except at the lower price tiers of the market. To qualify for the new plan you must prove a financial hardship, have monthly payments that currently exceed 31% of your pre-tax monthly income, your home must be your primary residence, it must be a single-family home (no duplexes, etc. qualify), have an unpaid balance on your mrotgage of less than the new Fannie Mae limits if $729,750 and the mortgage must have been obtained prior to Jan. 1 , 2009. IF you meet ALL these requirements (and a few more quirky ones!) you can qualify for a modification of your loan terms.
Homeowners with jumbo loans are not going to be helped with the new plan. Neither are second homes or investor-owned properties. If your loan has been packaged into a security that forbids loan modification, no matter if you meet all the other requirements, your loan will not qualify for modification.
If you do qualify, then your lender may modify your loan terms so that your monthly payment is less than 38% of your monthly income at which point the government will step in and subsidize the loan so that the monthly payment is further reduced to no more than 31% of your monthly income. Some modified rates could be as low as 2% and/or payment terms can be lengthened to as much as 40 years. For those home-owners who do qualify, the new plan could be the difference they need to stay afloat and in their home.