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U.S. President Barack Obama laid out a detailed plan on Wednesday to help homeowners refinance and support a housing market recovery.
"I am sending Congress a plan that will give every responsible homeowner in America the chance to save about 3,000 dollars a year on their mortgage by refinancing at historically low rates," said Obama.
The federal government initiated a housing plan last year, known as Home Affordable Refinance Program (HARP), which allows borrowers with loans backed by government-affiliated mortgage giants Fannie Mae and Freddie Mac to refinance at lower rates.
However, only about one million homeowners have used it, well short of the 4 million to 5 million the Obama administration had expected, because many borrowers who owe more than what their homes are worth were not eligible.
The new plan lowered the standard to all mortgages, including private-held ones. It also streamlined the refinancing process and simplified the mortgage disclosure forms.
Following up Obama's speech, the White House added that major banks and the government sponsored enterprises (GSE) are supposed to provide up to 12 months of forbearance to the unemployed.
Meanwhile, the Federal Housing Financial Agency (FHFA) announced a pilot sale of foreclosed properties to be transitioned into rental housing in order to help stabilize neighborhoods and home prices.
Obama's new housing plan is the latest administration effort to help homeowners in the face of plunging house values that have left millions of borrowers owing more than their homes are worth.
Data released Tuesday showed housing prices have reached a post- bubble low as it declined almost for the past 18 continuous months. The situation is still getting worse by a glut of supply, which has been made worse by foreclosures and tighter mortgage-lending standards.