At last the responsible tax payers, sincere homeowners and law abiding people are finally getting their due. Having spent thepast few months watching leaders of large business flying in their private jets to ask for bailout of their companies and board members of defunct financial groups having paid themselves huge bonuses, I started wondering why common people like us always get a raw deal. But now I guess it is pay-back time for being good citizens.

I am referring to the mortgage refinancing package announced by President Obama last week. Unlike the stimulus packages for large business houses which I feel benefit the heads of corporate houses more than the employees at the bottom rung, the mortgage refinancing package is aimed at the responsible homeowners, who have been regular in their mortgage repayment.

The package, which you all must be knowing by now, has two parts. The first, called “Home Affordable Refinance,” is for homeowners whose property has dropped in value. It would not reduce the principal of the loan, but allow the borrower to refinance the principal up to 105% of the home’s current value.

The second program, called ‘Home Affordable Modification,’ is aimed at borrowers whose payments have become unaffordable, because of either a job loss, illness or increase in interest rate. Here the lender will lower the monthly payment to as much as 31% of the borrower’s gross monthly income. The government would compensate the sum accordingly with the lender in terms of cash payments and financial subsidies.

And this one is the icing on the cake. In many cases, the lender would reduce the interest rate to as low as 2% for five years. Now, mortgage repayment at 2% is quite a steal. Fellow blogger Refinancing Condo makes an interesting observation by saying that refinancing at 2% interest rate will almost instantly raise home values.

But then again to qualify you have to be regular in your mortgage repayment and also your loans should be backed by Fannie Mae and Freddie Mac. NY Times has more details on what you need to know about this housing plan.

Economists have time and again being pointing out that foreclosure of homes is one reason for the economic crisis facing the country today. This effort by the Obama administration will go a great length in reducing instances of foreclosure. Allfinancialmatters has a totally different take on foreclosures and states that it is not that bad after all.

Just hoping that this mortgage refinancing package brings in the much needed liquidity into the financial system.