How Obama's Housing Plan Will Help Responsible Homeowners, Too

Carmen Wong Ulrich
"On the Money" Host

Homeowners in trouble, here’s a plan from Washington where ‘trouble’ has taken on a broader meaning.

We found out today that President Obama’s Homeowner Affordability and Stability Plan is not only a plan for those in danger of foreclosure, but for millions of homeowners who did things right—paid a down payment and are on time with their mortgages—but have no access to refinance at these historically low rates because their equity went ‘poof’ with the housing decline.

If you fall into this category (as potentially 4 to 5 million homeowners do) you are known now as a “Responsible Homeowner.” As long as your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac and your mortgage is not more than 105% of the current value of your home, you can apply to refinance and lock in a lower interest rate. So far, the underwater good guys (new band name, surely) have been waving the “What about me?” flag, and rightly so. Most of the help discussed so far has been focused on folks heading into foreclosure who cannot afford their monthly payments—whether they’ve lost income, bought a house they couldn’t afford anyway, or had an adjustable mortgage adjust—and this has set off folks like Nick from El Dorado Hills, CA, who wrote to me the other day:

>>Read Michelle Caruso-Cabrera's Opposing View

“I put 25% down on my home in 2007. Since that time, it’s lost considerable value, wiping out my entire equity position. I know many people here in California who put nothing down on their home, who now stand to have their mortgage written down by the bank to some value based on the current value of their home.”

One thing we have found out with this recession is that, when it comes to money, nothing is necessarily fair. But depending on how lenders implement this plan, it may be one move by the Obama administration that will cover more folks in trouble. The ball is now in the lenders’ court. Game on.

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