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Support Under the Homeowner Affordability and Stability Plan: Three Cases Contact Us | Press Center | Blog | Accessibility | Google Privacy | Español | Languages Advanced Search Home Treasury For... About Resource Center Services Initiatives Careers Connect with Us Press Releases Daily Guidance Media Schedule and Advisories News Press Center Home » Press Center » Press Releases » Support Under the Homeowner Affordability and Stability Plan: Three Cases Photos Video, Audio, and Webcasts Support Under the Homeowner Affordability and Stability Plan: Three Cases 2/18/2009 Press Contacts 2009-2-18-9-43-27-6747 Family A: Access to Refinancing In 2006: Family A took a 30-year fixed rate mortgage of $207,000 on a house worth $260,000 at the time. (The family put just over 20% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%. Today: Family A has about $200,000 remaining on their mortgage but their home value has fallen 15 percent to $221,000. Their "loan-to-value" ratio is now 90%, making them ineligible for a Fannie Mae refinancing. Under the Refinancing Plan: Family A can refinance to a rate of 5.16%. This would reduce their annual payments by nearly $2,350. Existing Mortgage Refinancing Balance $199,584 $203,575 Remaining Years 27 30 Interest Rate 6.50% 5.16% Monthly Payment $1,308 $1,113 Savings $196 per month, $2,347 per year Family B: Access to Refinancing In 2006: Family B took a 30-year fixed rate mortgage of $350,000 on a house worth $475,000 at the time. (The family put just over 26% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%. http://www.treasury.gov/press-center/press-releases/Pages/2009218943276747.aspx[8/5/2015 1:33:46 PM] Support Under the Homeowner Affordability and Stability Plan: Three Cases Today: Family B has about $337,460 remaining on their mortgage but their home value has fallen to $400,000. Their "loan-to-value" ratio is now 84%, making them ineligible for a Fannie Mae refinancing. Under the Refinancing Plan: Family B can refinance to a rate of 5.16%. This would reduce their annual payments by nearly $4,000. Existing Mortgage Refinancing Balance $337,460 $344,210 Remaining Years 27 30 Interest Rate 6.50% 5.16% Monthly Payment $2,212 $1,882 Savings $331 per month, $3,968 per year Family C: Eligible for Homeowner Stability Initiative In 2006: Family C took out a 30-year subprime mortgage of $220,000, on a house worth $230,000 at the time (they put less than 5% down). Their mortgage broker – Mom & Pop Mortgage – sold their loan to Investment Bank. The interest rate on their mortgage is 7.5%. Today: Family C has $214,016 remaining on their mortgage but their home value has fallen -18% to $189,000. Also, in November, one parent in Family C was moved from full-time to part-time work, causing a significant negative shock to their income. Their loan is now 113% the value of their home, making them "underwater" and unable to sell their house. Meanwhile, their monthly mortgage payment is $1,538 and their monthly income has fallen to $3,650, meaning the ratio of their monthly mortgage debt to income is 42%. Under the Homeowner Stability Initiative: Family C can get a government sponsored modification that – for five years – will reduce their mortgage payment by $406 a month. After those five years, Family C's mortgage payment will adjust upward at a moderate, phased-in level. Existing Mortgage Loan Modification Balance $213,431 $213,431 Remaining Years 27 27 Interest Rate 7.50% 4.42% Monthly Payment $1,538 $1,132 Savings: $406 per month, $4,870 per year Homeowner Stability Initiative: How the Program Works for the Lender, Government and Borrower First, Investment Bank (working through a mortgage servicer) reduces the interest rate so that the Family C's monthly debt-to-income ratio drops from 42% to 38%. This means that Investment Bank must reduce the interest rate from 7.50% to 6.38%, bringing down Family C's monthly payment from $1,538 to $1,387. Second, the government and Investment Bank share the cost of further reducing the interest rate so that the Family C's monthly debt-to-income level is lowered to 31%. Any dollar the bank spends is matched by the government. At this stage, Family C's interest rate is reduced from 6.41% to 4.43%. In total, Family C's monthly payment has fallen from $ 1,538 to $1,132. If Family C remains current on their payments, they will receive incentive payments up to $1,000 a year, or $5,000 over five years, that would go towards reducing the principal they owe. Additionally, the mortgage servicer can earn an up-front incentive fee of $1,000, plus up to $1,000 per year in "Pay for Success" fees for three years, so long as Family C remains current. http://www.treasury.gov/press-center/press-releases/Pages/2009218943276747.aspx[8/5/2015 1:33:46 PM] Support Under the Homeowner Affordability and Stability Plan: Three Cases Initiatives Bureaus Inspector General Sites U.S. Government Shared Services Financial Stability Office of Inspector General (OIG) HR Connect Program Office Housing Finance Reform The Alcohol and Tobacco Tax and Trade Bureau Making Home Affordable Bureau of Engraving & Printing Treasury Inspector General for Tax Administration (TIGTA) Administrative Resource Center (ARC) Bureau of the Fiscal Service Recovery Bureau of the Fiscal Service U.S. China Strategic and Economic Dialogue Community Development Financial Institutions Fund Special Inspector General, Troubled Asset Relief Program (SIGTARP) TreasuryDirect Services for Governments Wall Street Reform Financial Crimes Enforcement Network (FinCEN) Report, Fraud Waste & Abuse Other Government Sites Additional Resources USA.gov Office of The Comptroller of The Currency Privacy Act USAJOBS.gov Plain Writing USASpending.gov U.S. Mint Small Business Contacts OPM.gov Español Budget and Performance MyMoney.gov 한국어 TreasuryDirect.gov Securities/Bonds Data.gov Tagalog Freedom of Information Act (FOIA) Forms.gov TiếngViệt No FEAR Act Data Regulations.gov Whistleblower Protection PaymentAccuracy.gov Internal Revenue Service Languages S中文 Business.USA.gov Required Plug-ins Privacy Policy | Google Privacy | Site Map | Site Policies and Notices | FAQs | Feedback | Careers | Contact Us http://www.treasury.gov/press-center/press-releases/Pages/2009218943276747.aspx[8/5/2015 1:33:46 PM]
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