Obama Unveils Two New Housing Initiatives
March 6, 2012
President Obama announced two new housing initiatives to aid struggling homeowners and members of the military. As many as 3 million FHA borrowers would be eligible for the new terms under the agency’s “streamline” refinance program.
The FHA’s “streamline” refinance program would allow borrowers with loans backed by the agency to apply for new loans with a simplified process that tries to remove many of the hurdles to borrowing, including appraisals and credit checks. It applies to loans taken out before June 1, 2009.
The new plan will also cut refinancing fees for any loan insured by the Federal Housing Administration (FHA). The plan reduces the up-front costs on FHA mortgage insurance premiums to 0.01% from 1% of a borrower’s loan balance for refinancing. It also cuts the annual fee for these loans half to 0.55%.
The president also outlined a new agreement with banks and lenders to conduct a review of foreclosure practices for military members. Any service member or veteran whose home has been wrongly foreclosed on since 2006 will receive compensation equal to a minimum of $116,785 plus any home equity lost since the foreclosure. This compensation will come from the mortgage servicers who conducted the foreclosures. Any service member who was wrongly denied the opportunity to refinance will receive a refund of money lost.
Neither proposal requires Congress’s approval.