Local homeowners size up Obama's plan


MOST POPULAR: Video, stories and more
SIGN-UP: Get breaking news sent to you from ABC7 News

But, some wonder if that hope is misguided.

The President announced details of his program on March 4 but applications to the program are only now being considered. ABC 7 followed two applicants through the program to find out who will be helped and who will not.

Gary Robinson came very close to losing his home in Antioch. But, just one week after being denied a loan modification, the new Obama plan came out. His lender Washington Mutual, now Chase Bank, suggested he apply.

"I think it's going to work. I think it's going to work," he told ABC 7.

Myra Garces in Hercules found herself in the same situation. Indy Mac rejected her loan modification request in March. She called for help, so 7 on Your Side called the Federal Deposit Insurance Corporation which took over Indy Mac as conservator last July.

Within weeks, she too was asked to apply for the Making Home Affordable program.

"If I am eligible, it saves me from foreclosure," said Garces.

President Obama's plan has two main parts.

Homeowners who pay their mortgage on time but do not qualify for new lower mortgage rates could do so under the Making Home Affordable refinance program.

Although, there is a big "if."

The amount owed must not be more than 105 percent of the home's value. In the Bay Area that is a problem.

"Florida and California are not going to get as big a piece of help from the plan as somebody from Wisconsin or in the middle of the country, where the housing price, the values, haven't declined quite as much as ours have," explained Maria Benjamin with the Community Housing Development Consortium.

The second part of the plan could be more helpful.

Lisa Sitkin with the Housing and Economic Rights Advocates program says, "The idea is to get someone to an affordable payment level."

The Making Home Affordable modification program assesses a homeowner's monthly gross income and then modifies the monthly payments to no more than 38 percent of that amount. As an added incentive, the government will subsidize the payments to get them down to 31 percent.

But housing advocates who saw President Bush's "Hope for Homeowners" program fail miserably are not sure President Obama's plan will work either.

"Honestly, I'm somewhat pessimistic and the reason is the investors," said Sitkin.

Banks lend homeowners money, but Wall Street investors often buy those loans from the bank. So, while the bank or servicers might approve a loan modification, investors can still veto it.

"The concern that we have about the Obama plan is that it doesn't actually require any investors to sign on," Sitkin said.

Obama's plan also does not require banks to reduce the principal, the amount owed on the mortgage.

"If your question is, 'What's really going to help folks in the Bay Area?' It's principal reduction," Benjamin explained. "But that's not really part of the President's plan."

Gary Robinson would love to get a principal reduction, but first things first. Six weeks after he applied, a clerical error has apparently delayed his application.

"I am still waiting to hear, but I have a completed, accepted application from Washington Mutual," he said.

Things are going better for Myra Garces. Her application has been accepted and the bank says everything is in.

"And, I would have to say that, with 7 on Your Side, you guys have helped me tremendously," she said.

7 on Your Side will continue tracking the terms of Myra's modification and Gary's application.

Click here to see a list of lenders who have signed on with the Making Home Affordable program and find out what it takes to qualify.

       Today's latest headlines | ABC7 News on your phone
Follow us on Twitter | Fan us on Facebook | Get our free widget

Copyright © 2024 KGO-TV. All Rights Reserved.