Obama announced a rescue plan for homeowners that are in trouble with there current mortgage payments. This new mortgage policy is a multi-faucet of policies to help out struggling home owners. Some of the key components include refinancing mortgages that are upside down, restructuring delinquent loans, and delivering money to federal housing agencies to keep mortgage rates low.
With this new plan a estimated 4 to 5 million homeowners will be help in some for or fashion. Obama says this new policy will also provide a opportunity for sub-prime loans that are underwater or the amount owed is more than the house is worth to be part of the plan as well. Often the homeowners that are in loans like these are subject to a maze of rules and regulations as opposed to resolutions “says Obama.”
This type of policy will help out 12% of the crumbling real estate sector. This policy will subsidized some of the cost through the government so mortgage companies can help out homeowners in trouble.
The new rescue plan will not help out homeowners that were investors looking to flip homes for profit, nor will it help those who bought homes they cannot afford.
Refinancing for people that got in trouble with there mortgage because of ARM loans, declining value or job loss was almost impossible for them to obtain. Since all loans are based on risk this sounds like a possible solution for 4 to 5 Million Homeowners.
Being a lender this has been a mess, especially when you get a call from a past homeowner wanting help. There has not been a whole lot lenders could do since bad credit paper was not sellable on the secondary market.
Maybe with this new mortgage rescue bill lenders will in a sense allow the government to take on the high risk of bad paper loans, especially since the Federal Government is buying up Freddie and Fannie back loans.
In the end, we as tax payers will foot the bill. There also is no guarantee that this will work either.
Author: Mike Clover
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