President Obama's Mortgage Relief Plan

Faced with the severity of the mortgage foreclosure crisis, the Obama Administration has designed a program to afford mortgage relief to approximately nine million American families.  The plan will be implemented utilizing part of the funds approved by Congress to stimulate the economy.  This effort is intended to offer mortgage debtors the option of restructuring, refinancing, or modifying their current mortgages.  Because the program is somewhat complicated, I will try to summarize and simplify the options it offers to those individuals contemplating pursuing this remedy.

The plan is comprised of four basic parts.  First, it will allow quasi public entities such as Fanny Mae and Freddy Mac to refinance mortgage loans when the balance of the mortgage exceeds the value of the property.  This practice was previously prohibited, and it is estimated that its implementation will result in the reduction of the mortgage payment of approximately five million homeowners.  The second part creates incentives for the banks that are willing to modify the problematic loans on properties in foreclosure.  If the bank agrees to reduce the interest rate to a level consistent to the debtor’s payment capacity, the government will pay the difference between the previous payment and the modified payment.

The participating institutions will have to reduce the mortgage payment to a sum that does not exceed thirty-one percent (31%) of the mortgage debtor’s income.  It is estimated that approximately four million debtors will benefit.  In addition, the government will make a concerted effort to maintain the interest rates low with the intent of benefiting millions of middle class families that intend to seek new mortgage loans.  This can be accomplished acquiring the investments from Freddy Mac and Fanny Mae backed by mortgages with the $200,000,000.00 budgeted for these purposes.  They are also contemplating amending Federal Bankruptcy Statutes by conferring authority to the judges to modify the terms of the mortgage loans with the intent of achieving the economic rehabilitation of the mortgage debtor.

I would like to emphasize that any person that intends to apply for this program must act immediately.  Even though it is estimated that the budget available will benefit approximately nine million families, it is also estimated that twenty-seven million families will need some type of mortgage relief.  Lastly, I would like to warn that the process of obtaining these benefits is complex and requires specialized knowledge.  The mortgage foreclosure process is a judicial proceeding that requires the intervention of an attorney.  Any person offering you representation or counseling on a foreclosure action without a license to practice law is incurring in criminal conduct. 

Even though the Constitution allows people to represent themselves in any judicial procedure, this is not advisable.  Remember that the banks are always represented by attorneys, and a defendant that decides to represent his or herself, will be at a great disadvantage.  In fact, even when attorneys are sued, they usually hire a colleague to represent them in the judicial process because the experience has taught them that “an attorney that represents himself has a fool for a client.”

Luis A. González
Attorney and Mediator
L. A. González Law Offices, P.A

(407) 649 - 8389
laglaw@cfl.rr.com