Programs aim to help struggling homeowners
By India Chapman
In light of the ailing economy and the downfall of Freddie Mac and Fannie Mae, President Obama has implemented programs that are slated to help the millions of Americans who are in danger of losing their homes.
In the stimulus plan laid out at the beginning of the new year, President Obama set aside $275 billion to help with the housing crisis that has affected families and businesses alike. With this new plan in place, it is estimated that 7 to 9 million families will be able to refinance and avoid foreclosure.
This bailout money will not go to everyone though. As reported in a New York Times article written by David Leonhardt in February of 2009, Obama was quoted saying It will not reward folks who bought homes they knew from the beginning they would never be able to afford. Instead of giving monetary support to people who could and could not afford their homes the, stimulus money will only go to a select group of people who need the help.
A total of $75 million has been set aside solely for the purpose of keeping people in their homes and to help floundering mortgage companies. The first set of people who are slated to be helped are those who are up to date on their current mortgage payments but are suffering from staggering interest rates and are not able to refinance to lower their payments. Next are the millions of people who are on the brink of losing their homes and have exhausted all possibilities of trying to remedy their problems. The package also has money put aside to help support the failing mortgage companies such as Freddie and Fannie.
This plan officially became effective on March 4, 2008 and it is yet to be seen if it will work out as well as it has been planned to.
Said Patrick Moy, a banker at Citizens Bank, This mortgage crisis has made it difficult for our customers to maintain their payments without defaulting because their bills are piling up around them. Ive had quite a few people that have been denied refinancing opportunities because the housing market is failing the way it is. Hopefully Obamas plan can help the banks and the customers that need it the most.
In the plan laid out 4 to 5 million homeowners who have been responsible with their home buying decisions will be able to refinance their mortgages, which will relieve some of the financial burden. This plan will also help those families that are not affected by the current housing problems but would like to maintain their property values until this crisis tides over. With help being handed out to those neighborhoods affected with multiple foreclosed homes, it will prevent all of the surrounding houses property values from dropping to such a low rate that it wont allow any houses to be sold in the neighborhood.
Around my neighborhood its difficult to move out now because of the housing market falling. The houses you used to be able to get pretty good money for now arent selling for much because other houses are selling at such a low price. It leaves you stuck until the help kicks in, said Kenneth Peebles about the housing situation in his hometown of Camden.
Another incentive outlined for people who stay up to date with their monthly payments is the monthly balance reduction plan. To qualify for this bonus you have to keep up with your current mortgage payment and it will be used to reduce the principal amount on the loan balance itself. The recipient can have a reduction up to $1,000 a year for five years.
This plan also gave bankruptcy judges the power to lower a households monthly payments as well as change the terms of the mortgages being decided upon.
There was an initiative created by former President Bush named the Housing and Economic Recovery Act that was instituted that went into effect October of 2008 and will continue until September 30, 2011. This stimulus bill was estimated to total $200 billion for all of the help slated to be given out for those families that have been affected since the beginning of the recession. So with the additional help of the Obama administration housing stimulus plan, those people affected could come out of this current housing crisis sooner than expected.
