Obama's Housing Relief Plans for Servicemembers and FHA Borrowers
By: Esther Cho
President Obama is announcing two steps that will be taken to assist servicemembers and FHA borrowers, the administration stated in a release today.
For the first full news conference of the year, Obama’s agenda includes details on how support will be provided for those currently in and who previously served in the military.
One provision will have servicemen who were foreclosed upon since 2006 reviewed, and if any are found to have been wrongfully foreclosed upon, they can receive compensation equal to a minimum of lost equity, plus interest and $116,785. In addition to foreclosure reviews, servicemembers will be reviewed for interest rates to see if any were charged more than 6 percent after a request to lower the rate.
For veterans, $10 million will go into the Veterans Affairs fund to guarantee loans on favorable terms.
Plans for FHA borrowers include refinancing at a lower cost. The FHA currently charges an up-front mortgage insurance premium of 1 percent of the loan balance and an additional 1.15 percent of the balance per year; the up-front premium will be reduced to .01 percent for loans originated prior to June 1, 2009. Annual fees for refinancing will be halved to .55 percent.
The administration estimates 2-3 million FHA borrowers will be eligible.
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