Homeowners upside down on their mortgage but not behind can now get relief.  The Obama administration announcing a plan that included: new FHA backed loans for upside down homeowners, incentives to lenders who reduce the principal balances for homeowners who owe more than their home is worth and incentives to lenders who reduce payments for unemployed homeowners.  The incentive portion of the program alone will take about 14 billion so there will be plenty of money for everyone in need.

Homeowners will be able to get new mortgage loans that exceeding the value of their homes

FHA backed mortgage loans will be offered to homeowners who need to refinance their loans to get a lower rate and payment but are upside down.  FHA will receive 14 billion dollars in incentive money.  The total cost for the entire adjustments to two specific plans are very well funded with up to a $50 billion allocation of the existing $75 billion foreclosure prevention program budget /Troubled Asset Relief Program (TARP).

FHA loans offered through the program can be up to 115% of the home’s value

Essentially these loans will exceed the value of the home but reduce the interest rate and payments substantially.  Tax payers need not worry to much as the complete program will be funded from the existing Federal budget along with some private sector funds according to the Making Home Affordable press release on March 26, 2010. (more…)