Good damn question! So far they do not seem to be helping anyone that is truly in harm’s way other than Wall Street. The new plan to save people from foreclosure is not really all that much help either……the people that need the help the most are the ones that will be screwed in the long run……not much change there, huh?
The Obama administration’s housing plan is intended to help 9 million struggling homeowners avoid foreclosure, but it leaves out tens of thousands of borrowers in the most battered housing markets who won’t qualify because their homes have lost too much value.
The program detailed Wednesday offers refinanced mortgages or modified loans with lower monthly payments. Yet its refinancing plan is limited to borrowers who owe up to 5 percent more than their home’s current value. Loan modifications, supported by $75 billion in federal funding, are unlikely for severely “underwater” borrowers.
The plan doesn’t help homeowners in states “that are at the epicenter of the housing debacle,” said Greg McBride, a senior financial analyst at Bankrate.com.
The ineligible households are concentrated in California, Florida, Nevada and Arizona, but can also be found in struggling cities such as Detroit and Grand Rapids, Mich. Even houses in the outlying suburbs of the nation’s capital, where the economy is relatively healthy, have dropped substantially in value.
Government officials acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades.
Of the nearly 52 million U.S. homeowners with a mortgage, almost 14 million, or nearly 27 percent, owe more on their mortgage than their house is now worth, according to Moody’s Economy.com.
The program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowners, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.
For the modification program, which runs through 2012, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will then take steps to verify the information.
Borrowers are only allowed to have their loans modified once, and the program applies for loans made on Jan. 1, 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.
Lenders could reduce a borrower’s interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.
In case you are interested……this plan will help about 11% of those with mortgage problems…now there is a plan that we should get behind (sarcasm intended).
While the government is here to help…more and more home owners who were crapped on by the unscrupulous lenders will continue to lose their homes…how is this helping those of us on Main Street?