President Obama is set to announce a $1.5-billion program that will give mortgage assistance and relief in the five states that have seen the worst of the housing crisis. The budget will come from the TARP bailout.
Assistance
Arizona, California, Florida, Michigan and Nevada will receive funding for their state offices for mortgage loan modification and foreclosure prevention. This will be targeted at homeowners who are unemployed or whose loans are underwater (where the loan is worth more than the house is worth).
There will also be actions for dealing with how second liens make it harder to modify loans, and promoting more affordable housing opportunities.
Funding will be given based on figures for home price and unemployment rates. All actions are to be approved by the Treasury department.
Housing agencies
Many people have pointed out that the proposal will make housing agencies responsible for coming up with solutions. The logic behind the thinking is that these agencies have provided mortgage assistance to more than 2.6 million first-time homeowners, and financed 2.9 million moderate- to low-income apartments. Some of these agencies also help with mortgage relief and foreclosure prevention in their local areas.
Standard actions
The program also aims to give more options to loan servicers, whose standard actions have either been to lower the interest rates or increase the term of the loans, rather than reduce the principal.
Sign up on the box at the right to get more information on options for mortgage loan modification, relief and assistance.
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