President Obama is expected to announce a new mortgage relief program that members of the military and homeowners with government-issued loans can take advantage of. The program, which is his administration’s latest effort to address the housing crisis, is expected to save the average homeowner more than $1,000 a year.
President Obama Offers New Mortgage Refinancing Option
In his first full news conference of the year, President Obama is set to announce plans to let borrowers with Federal Housing Administration (FHA)-insured mortgages refinance at lower rates.
Under the terms of this refinancing program, FHA-insured borrowers will be able to refinance their loans at half the fee that the FHA currently charges. FHA borrowers interested in refinancing now must pay a fee of 1.15 percent of their balance every year.
Since these fees are unappealing to many borrowers, the new mortgage relief plan is to reduce the charge to 0.55 percent. For a borrower with $175,000 owed on a loan, the monthly payments could be reduced by about $100 per month.
An estimated 2-3 million borrowers will be eligible for the program, but administration officials don’t know how many will actually seek assistance.
Mortgage Relief Also Offered to Military Personnel
Also, Obama will announce information detailing a mortgage relief agreement with major lenders to compensate service members and veterans who were wrongfully foreclosed upon or denied lower interest rates.
Those wrongfully foreclosed upon will be paid their lost equity and be entitled to an additional $116,785 in compensation. Lenders will also compensate service members who lost value in their homes when they were forced to sell them due to military reassignment.
These new housing relief efforts will be limited in comparison to the mortgage relief program announced early last month.
The details of Obama’s announcement were disclosed to The Associated Press by a senior administration official, on the condition of anonymity as details were released ahead of the announcement.