Bad credit plus personal loans equals crisis
Obama hopes to help homeowners avoid this fate.
A mixture of bad credit and personal loans has caused millions of Americans to face foreclosure on their homes. Now President Barack Obama has revealed his plan to help up to 9 million Americans keep their homes.
Obama will use money from the $700 billion Troubled Asset Relief Fund that the Bush administration approved last fall. He will dedicate $75 million to keeping Americans with mortgages from having to turn into their keys.
Keeping families off the streets
Many homeowners are facing the reality of having bad credit because their personal loans have gotten too expensive for them to handle. Many also now own property that is worth less than the amount they owe on their mortgage.
Obama’s new foreclosure prevention plan will help about 4 million Americans who are facing foreclosure. His plan is to offer incentives to banks so they will refinance loans to get monthly payments down to manageable levels.
Property values
The plan will also help 4 million to 5 million people who are paying mortgages that are now worth more than their property, if their loans are through Fannie Mae or Freddie Mac. Because of the steep depreciation in housing values, nearly 14 million people are currently paying mortgages that are worth more than their property.
Because the government now owns large stakes in Fannie Mae and Freddie Mac, Obama says mortgages through those companies will be easier to refinance. People who aren’t behind on their payments but are paying mortgages on low-value property can refinance their total mortgages.
Warming up cold credit market
Obama’s hope is that the plan will get credit moving, and he says relief will come to homeowners in just a couple of weeks. He plans to have the new rules in place by March 4.
Because banks are so leery of lending, people now must have immaculate credit to secure a loan. Obama’s hope is that if banks have enough incentive to lend, even people with bad credit can get personal loans.
Isn’t that what TARP was supposed to be used for? I mean, I heard that this was going to be a significant portion of the program when it first got started. Let’s just hope that it can be the cash advance that will keep people that are deserving from losing their homes.
Are you responsible for your neighbor’s bad decisions? Obama and Congress appear to think so. Is there any common sense in this program?
The mortgage crisis is clearly getting of hand. It just frustrates me that regulators under the Bush administration failed or rather refused to acknowledge this problem to being with. This is not a “new” dilemma. The mortgage situation was (and still is) in desperate need of immediate attention. Because the problem was ignored for a significant amount of time, plus this massive economic crisis, the mortgage foundation is finally giving out. It’s going to take a whole army of brains to figure this one out.
I WISH THERE WAS HELP FOR ME IN THE EARLY EIGHTY’S WHEN I LOST MY HOME AS THE MORTGAGE RATE JUMPED FROM 11.5% TO 20.5%. SO IF OBAMA CAN HELP THOSE WHO ARE RESPONDSABLE KEEP THERE HOMES THATS GREAT.
The reason we’re behind on our mortgage (5 months) is because I have been unemployed since March 2008. I have been looking for work and have had 7 job interviews. Unfortunately, I am still unemployed. I just received notification on February 14 that my unemployment application was approved. With both my husband’s salary and mu unemployment benefits, we can resume mortgage payments March 2009. IndyMac Bank is the mortgage company. If IndyMac Bank got federal bailout money last fall, aren’t they mandated to assist homewoners? I don’t want a handout. I am asking that our mortgage be modified. I would like the 5 months past due mortgage ($10,000)to be added to the current balance and with March’s payment, we’d be current. We moved in Sept 2004 and were current till August 2008.