The US housing stimulus plan, allocated with $275 billion dollars of government money, a.k.a. taxpayer's money, is to be known as the "Making Homes Affordable" program.
An article in the Christian Science Monitor likens the plan to a "Goldilocks" endeavor. As children's books go, the plan might be more appropriately connected with the three little pigs, who were up to their necks in real estate. Remember, a house of straw and a house of wood, were readily disposed off, before the wicked wolf was stopped in his tracks by the brick built variety!
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Whether what is being offered by the Obama administration can keep the wolves at bay, and dramatically reduce foreclosures remains to be seen, but there is no doubting their good intentions. Around one in five US homeowners are in negative equity, which means that they owe their lenders more than their houses are worth. It sure is a pretty miserable situation, but then again who would like to see house price inflation take off to anything likes the dizzy heights it previously reached?
Dissenters of the plan may be pleased to know that you don't have to be behind with your mortgage payments to qualify for help. However, borrowers will have to prove that they have suffered financial hardship by way of losing a job etc. The outstanding loan balance must be greater than the value of the home, so we're back to negative equity!
Some of those who don't qualify as above may take advantage of another tier. This part of the mortgage package could affect up to a further 5 million homebuyers, who are finding it tough going, without being seriously behind with mortgage repayments. It is aimed at Fannie and Freddie connected mortgages, and allows successful participants to take advantage of more affordable mortgages, such as fixed rate deals.
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There are also to be tax credits for some first time buyers who purchase a home in 2009. So, there are millions of Americans who could benefit from the "Making Homes Affordable" program. There are many who may find it difficult to determine whether they qualify for help or not, and the program is certainly more complicated than mentioned here. However, there are vast sums of public money involved, and a seemingly genuine desire to help. There will be plenty of advisers who will be familiar with all details of the plan. So the best advice to anyone who is affected is "IF IN DOUBT ASK".
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Obama's Fairy Tale Ending to Mortgage Problem
Obama's Fairy Tale Ending to Mortgage Problem
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