Obama refinance plan coming to fruition.

The biggest part of the Obama Administrations plan to solve the housing crisis is not the much ballyhooed loan modification program but instead the mortgage modification program for borrowers as much as 5% underwater on their first liens. With the Fed monetizing almost a trillion dollars in debt to keep mortgage rates low the plan is to get the people in the danger zone of default to commit to their homes and get a lower monthly rate. Major banks such as Wells Fargo and Bank of America have started refinancing under the plan, most just Fannie Mae loans for technical reasons but Freddie Mac loans will soon follow. For people with a Fannie Mae loan they can refinance through anyone, people with a Freddie Mac loan must refinance through their servicer to take advantage of the new program. You can find out which type of loan you have here.

Today President Obama encouraged people to refinance:

Mr. Obama urged Americans to take advantage of current low mortgage rates, so they can stay in their homes and spend more on other needs.
He estimated 7 million to 9 million people could refinance, saving $1,600 to $2,000 a year. "That is money in their pocket," he said. "We are at a time where people can really take advantage of this, and what we want to do is to send a message that if you are having problems with your mortgage -- and even if you're not, and you just want to save some money -- you can go to makinghomeaffordable.gov."

The printing presses are running to put dollars directly in the pockets of struggling homeowners following Professor Bernankes formula to stop deflation.

The "Obama Plan" refinance and loan modification details.

There is a ton of data to go over for both the loan modification program and the refinance portion of the Homeowner Affordability and Stability Plan.

The best place to start is of course the official website http://www.financialstability.gov/

For borrowers wanting the simplest guide to whether they generally qualify for a loan modification or refinance click here.

For a bit more detail oriented people here are the program fact sheet, summary of guidelines and modification program guidelines.

But the real meat and potatoes for true understanding the depth and breadth of the program is really found in reading the underwriting guidelines from Fannie Mae and Freddie Mac.

For Fannie Mae existing home loans they have the Home Affordable Refinance guidelines. For Fannie Mae serviced loans and even Non-GSE loans you can find the Fannie Mae Home Affordable Modification Program guidelines and also alternate options for the servicers for people who don't qualify for either option. Freddie Mac is a bit less detailed, they have two different places for refinance data, a summary type page here and a slightly more detailed guide here. The loan modification page which is linked to from their servicing guide points to here which is the old loan mod program from last year. Freddie has some work to do apparently.

Fannie Mae Streamline Refi coming soon?

Teaser from the National Mortgage News:

New Fannie Refi Options Coming
Fannie Mae plans to introduce refinancing options as soon as this week designed to help homeowners who have been unable to take advantage of recent low rates, a person with knowledge of the program said.

This might be the rumored program for streamlined refinance. What this means is the borrower will be able to refinance their current loan under current underwriting criteria without the need for appraisal. This would allow underwater homeowners to get the new lower rate loans even though they are upside down. You might ask why Fannie would allow this. Since they are guaranteeing the loan already this will strengthen their borrowers finances and allow them to be more likely to be able to keep paying on the loan. FHA already has a streamline refinance program for the same reason. I'm sure a very big deal will be made of it but the devil will be in the underwriting details as to how many can be helped.