New Federal Mortgage Relief
The Obama Administration’s original $75 billion dollar mortgage relief plan designed to prevent foreclosures has been revamped due to its lack of success. The plan only helped a fraction of homeowners who completed the application process and only $1 billion of the $75 billion dollar budget was spent to help homeowners in crisis.
The new relief is designed to help homeowners who owe 15-30 percent more on their home than it is worth. To qualify for the federal help you must owe less than $730,000 on your home, use the home as a primary residence, and be paying more than a third of your total monthly income toward your mortgage.
By reducing the monthly payments of homeowners, having the mortgages insured by the Federal Housing Administration and working with banks such as Citigroup, JP Morgan-Chase, Bank of America, and Wells Fargo to modify second mortgages, the federal government hopes to reduce the amount of Americans going into foreclosure around the country.
Still, there are others who feel this is hurting the economy more than it is helping it. They say that as we continue to pour more and more money into the housing market we are only prolonging the inevitable. The home values must continue to drop to market value and we as Americans must take a loss for the predicament we are in. Once housing prices are low enough they say the supply and demand will level off and the supply will drop and drive the demand up along with home prices and values.
Reports suggest that on average the value of homes located near a foreclosure are reduced by 9 percent. With increasing numbers of people owing more on their homes than they are worth, this number could go up as homes continue to go into foreclosure and home values around them continue to drop.