Effects of the Barack Obama Foreclosure Plan
The Barack Obama foreclosure plan, which is now known as the Making Home Affordable Program, has had mixed results in its initiative to help homeowners avoid the much-feared foreclosure as housing prices drop and the unemployment level rise. As of the last week of September 2009, it is believed that the President’s plan has been slightly felt. Specifically, the Barack Obama foreclosure plan is believed to be the reason for the slow down in the slide in housing prices and the slight reduction in the foreclosure rate in some states. However, there ares still some criticisms against the government’s efforts because only a few of the borrowers who should are eligible for the loan modifications have joined the program.
The heart of the President’s program is to channel $75 billion from the funds that have been set aside by Congress for the bailout of the financial services industry into the program to fight against the rising tide of foreclosures. The Barack Obama foreclosure plan has three main components and these are refinancing, loan modification, and more home loans. The first part of the initiative has the goal of assisting borrowers whose unpaid loans are bigger than the current value of their homes to get refinancing to minimize their monthly payments. To qualify under this initiative of the Barack Obama foreclosure plan, the loan balance of the homeowner should not surpass 105 percent of the property’s present value.
The government initiative’s next component has the goal of encouraging the lenders to approve home loan modifications for homeowners to decrease their monthly payments to at most 31 percent of their monthly income. Lastly, the Barack Obama foreclosure plan wants Freddie Mac and Fannie Mae to offer more home loans and therefore has provided these two organizations with $200 billion.
Critics have lambasted the Barack Obama foreclosure plan for not being founded on sound economic principles and for being naive. However, members of the federal government continue to support the plan and have been reporting on developments regarding the program. The US Department of the Treasury and the US Department of Housing and Urban Development have revealed during the first week of October 2009 that the plan has achieved a milestone that has been projected for November 1, 2009. They pointed out that the plan’s goal of more than half a million trial loan modifications has been reached almost one month ahead of schedule. Therefore, it is still too early to judge whether the Barack Obama foreclosure plan is a failure or not in its goal of preventing foreclosures. For more information and foreclosure news click here.
