Federal mortgage plan supported by Eastern Bank CEO

LYNN – The fine print in President Barack Obama’s plan to rescue up to nine million homeowners struggling to pay their mortgages was unveiled Wednesday.The comprehensive $75 billion Homeowner Affordability and Stability Plan – announced in concept only two weeks ago – provides relief to responsible homeowners suffering from falling home prices. The loan component of the plan could reach up to 3 to 4 million homeowners, according to the U.S. Department of the Treasury.The Making Home Affordable program allows the government to work with lenders to reduce mortgage payments and create incentives to borrowers and mortgage servicing companies.Eligibility requirements and other details contained in the plan are meant to bring relief to responsible homeowners struggling to make their mortgage payments, while protecting neighborhoods and communities from the negative spillover effects of foreclosure such as lower housing prices, increased crime and higher taxes.”Two weeks ago, the President laid out a clear path forward to helping up to nine million families restructure or refinance their mortgages to a payment that is affordable now and into the future. Today, we are providing servicers with the details they need to begin helping eligible borrowers,” Treasury Secretary Tim Geithner said Wednesday. “It’s imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets, just as we work to stabilize our financial system, create jobs and help businesses thrive. Economic recovery requires action on all three fronts.”U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan said the plan “represents a tremendous coordinated effort between major government and regulatory agencies to help bring relief to America’s housing market and homeowners.”As part of the loan modification guidelines, the program will include additional incentives that could help extinguish second liens on loans, which will then make mortgages more affordable, improve loan performance, and help prevent foreclosures, according to Treasury.”I’m in support of President Obama’s efforts, though I’m not sure every component is going to work. You really have to balance the needs of lots of different players – protecting the neighborhoods, the consumers, and the financial institutions,” said Richard Holbrook, president and chief executive officer of Eastern Bank. “President Obama made it clear from the start that he’s not helping those who want something they can’t afford. He’s doing this so that the people who need help most will benefit from it. And in the end, everybody will benefit.”Details of the program released by Treasury on Wednesday noted that homeowners must show they have made a “good faith effort” to pay their mortgages. Further, “the program does not provide money to speculators, and it will target support to the working homeowners who have made every effort possible to stay current on their mortgage payments. Just as the American Recovery and Reinvestment Act works to save or create several million new jobs and the Financial Stability Plan works to get credit flowing, the Making Homes Affordable program will support a recovery in the housing market and ensure that these workers can continue paying off their mortgages.”The plan supports low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac, providing four-to-five million homeowners with new access to refinancing and creating a comprehensive stability initiative to offer reduced monthly payments for up to three to four million at-risk homeowners.Among the many guidelines contained in the plan is the goal to reduce mortgage amounts from 38 percent to 31 percent of the homeowner’s income. Mortgage servicers will receive incentive bonuses of $1,000 to $1,500 for each eligible loan modification handled, as well as Pay for Success payments as long as the borrower stays with the program. These latter p