On Wednesday, the Obama Administration gave more details on their plan to help consumers to modify their loan with their financial institution. With the national number being close to 10% of all houses are either in foreclosure or late on their payment, President Obama and his staff have been busy trying to find the best solution to help lower this number and find a fair way to help home owners.
The plan is broken up to help to major groups of people. First, are those who have fallen behind on their mortgage payment and risk foreclosure, where the government plans to give banks incentives to work with troubled assets with the help of loan modification.
The second group of people are those who have remained current on their payments, but are unable to refinance their loan, because the value of the home has fallen below the value of the mortgage.
For those seeking to Modify Their Loans, here are the following rough requirements:
- Have secured your mortgage before Jan. 1, 2009
- Have a primary mortgage of less than $729,500
- You must live on the property
- Must fully document income with tax returns and pay stubs
- Sign a financial hardship statement
- Go for counseling if your total household debt totals more than 55 percent of income.
If qualifications are met, the lender will determine how much to lower your payment so that it is right around 31% of your gross monthly income. In doing so, banks could be willing to lower your interest rate as low as 2%!
For Those Seeking To Refinance Your Mortgage, here are the rough requirements:
- Your home must be the primary residence
- Your loan must be owned by Fannie Mae or Freddie Mac
- You must have sufficient income to support the new mortgage debt
- You can’t take cash out of the new loan to pay other debt
For those that qualify, they can be eligible for new loans up to 15-30 years fixed on market interest rates. There is also a good possibility of getting a significantly lower reduction in interest rate, just not principal.
So as you can see, the government continues to work hard to help save your house and make it easier for you to pay your mortgage. Even if you do not meet the requirements listed above, you may still qualify for help with your mortgage. The best thing to do is to get in contact with a representative. So start today, by filling out your application to get the process of your loan modified started today!
On Wednesday, President Obama unveiled the mortgage relief program the government will be issuing, to help slow the massive trend of home foreclosures and help consumers in modifying their loan. On Wednesday, the Obama administration launched the $75 billion plan, which now includes the ability to help those who are behind on their payments and close to foreclosure to participate in loan modification. The new plan aims to reduce principal payments as well as interest rates for those who qualify for the mortgage help.
The government is requiring major US banks who are eligible for TARP funds to participate in frequent “stress tests” to show how stale the financial institution is in case of severe economic turmoil The tests will entail many scenarios of which is foreseeable in the near future if the economy continues on the trail it’s on, and show how well the bank will be able to perform in such an environment. Some aspects of the test include a scenario if:
Bank stocks experienced a strong rebound in Tuesday’s trading as the The Fed Chairman Bernanke addressed the nation and assured investors that though the recession would linger longer, banks were going to survive. In response to the remarks, Bank of America and Citi Bank’s stock shot up over 20%. This rise in stocks puts an end to the 6 day selling streak the Dow experienced as well as the slaughtering of financials we have seen the past week.
The past week, a lot of changes have been made in Washington and it looks like many more are to come in helping consumers to modify their loans. Last week, President Obama announced his initiative to get all commercial banks to work with customers and their mortgages to find a result that is fair to both the lending institution and the consumer. Considering many of the banks are receiving government aid (or will be shortly), a lot of the banks are already required by the government to work with customers in loan modification. Also, it is rumored that the recent decision for Citi bank to allow bankruptcy judges to modify loans may spread over to other lending institutions in the near future.
During another downward trading day for Wall Street on Friday due to more speculation of the commercialization of banks, President Obama’s press secretary held a media conference in which he said that the best option for commercial banks was to remain under private ownership and that bank commercialization was not being considered. Such an announcement caused a big turn around for several of the commercal bank’s stock price as some nerves were put to rest.
On Wednesday, President Obama announced his new plan to spend up to $275 billion on a plan to help fight the disease of foreclosures, which has been spreading in every market of the US. It is estimated that by 2012, over 8.1 million homes, or 16% of all houses with mortgages, could be in foreclosure. You can see why this has been on Obama’s agenda from the very beginning. A failure to come to the rescue could be catastrophic for the US markets for years to come.
On Wednesday, February 18th, President Obama plans to outline his plan to help subsidize mortgages in his attempts to try and slow the massive foreclosure hitting the US. With the huge increase in housing foreclosures this past year and the expected amount for it to continue to increase, President Obama has been working with banks to try and find a resolve to the decaying real estate problem.
Big news from Washington hit media today as it seems the Obama administration is working to put together a plan to help subsidize mortgages to help reduce the foreclosure count for homes. Their theory is that by helping to insure certain mortgage back debt, they will instill more confidence in banks and help allow them to start lending more. Just as news hit the public, the stock market shot up in its remaining 45 minutes to almost eliminate an earlier 3% deficit in the Dow.
On Tuesday, February 10th, Secretary Geithner is set to unveil the new plan to help buy toxic assets from banks in order to build up the strength of their balance sheet. After a few weeks of consideration of different strategies, it seems like the treasury is going to introduce a program where they will encourage private equity to invest in troubled assets to help get them off bank’s books. To help encourage this, the government is offering protection of additional losses in the assets so that if they did continue to fall in price, the investor would be protected. Also, they are planning on allocating anywhere from $50-$100 billion of the remaining $350 billion in TARP funds to assets in foreclosure.