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Also, up to $14 billion of TARP funds will be used to provide subsidies to lenders and loan servicers who agree to write down at least 10% of a first mortgage; the combined value of first and second mortgages can be no greater than 115% of the current value of...

Author: /time Magazine | Title: Obama's New Foreclosure Plan Gets Mixed Reviews | 3/26/2010 | See Source »

The FHA part of the program has tight restrictions: homeowners must be current on their mortgage payments, live in the home, have a FICO score of at least 500 and qualify for a standard FHA-backed loan once the principal is reduced. Those who get a modified loan must make...

Author: /time Magazine | Title: Obama's New Foreclosure Plan Gets Mixed Reviews | 3/26/2010 | See Source »

The Administration also announced an initiative to help unemployed homeowners, in which their monthly mortgage payments would be reduced or eliminated for three to six months while they look for work. (See pictures of Americans in their homes.)

Author: /time Magazine | Title: Obama's New Foreclosure Plan Gets Mixed Reviews | 3/26/2010 | See Source »

Treasury Assistant Secretary Michael Barr says the principal-reduction program is voluntary, not mandatory, and that there's no guarantee homeowners will not default on the new refinanced loans. "We don't want to be overly optimistic about that," said Barr during a briefing on Friday. "Modifications are hard - they...

Author: /time Magazine | Title: Obama's New Foreclosure Plan Gets Mixed Reviews | 3/26/2010 | See Source »

Curran also worries about how this round of loan-principal reductions will play out among investors who buy mortgage securities and whether they may be reluctant to buy new mortgage loans if there's a chance the principal will wind up being reduced down the line. "The returns would have...

Author: /time Magazine | Title: Obama's New Foreclosure Plan Gets Mixed Reviews | 3/26/2010 | See Source »

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