Mortgage help could be at hand
Post-Bulletin, Rochester MN
The Obama administration’s Making Home Affordable plan should help some southeastern Minnesotans struggling with their mortgages and facing foreclosure.
"It will not help everybody, but it will help some people," said Paul Ohly, a Rochester attorney who handles foreclosure cases. "That’s good for the bank and for the people."
The Obama administration on Wednesday detailed its ambitious $275 billion plan to halt soaring foreclosures nationwide, outlining the financial incentives it’s offering investors, lenders and their bill collectors to lure them into modifying distressed mortgages to keep Americans in their homes.
It offers $200 billion to provide refinancing for some homeowners who owe more than their homes are now worth. To qualify, these homeowners — 5 million of them by administration estimates — must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September. Many of these homeowners would like to take advantage of today’s historically low interest rates and refinance but can’t, since the law prohibits refinancing if the current mortgage reflects less than 80 percent of the home’s values.
These homeowners now can seek to refinance if their mortgages are up to 5 percent higher than the present-day values of their homes.
That restriction shouldn’t limit many in the Rochester area, where home values haven’t dropped by much, if at all. But the plan won’t reach a lot of homeowners in California, Florida and other states where homes are now worth substantially less than their mortgages.
The administration provides another $75 billion in incentives for mortgage servicers to restructure loans to help prevent foreclosures.
Olmsted County has seen steady growth in its foreclosure count the past several years: 127 in 2004, 162 in 2005, 238 in 2006, and 340 in 2007 and 548 in 2008.
People should call their bankers to see if they qualify, Ohly said. But be patient — plenty of others could be calling as well.
Rochester has less of a foreclosure problem than most parts of the country, but the people affected find it "horribly disheartening," Ohly said.
"It really bothers people when they can’t make payments on their home," he said. "They face losing their home, and they think ‘I always made my payments.’"