A Secret Benefit of the Obama Housing Incentive Plan? Yes!
Now that the ink has dried on the Obama Housing Stability Plan, people want to know what's in it for them. So here goes: basically the Treasury Department will offer inducements and put pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses which should result in five benefits for homeowners. They include:
1. The main benefit is that it provides assistance to homeowners who wish to stay in their homes. The sour economy has made it tough for many homeowners to refinance because for most, their equity has dried up and they are unable to do so. This plan also helps those who may have lost income due to the current recession.
2. No help for flippers. Remember those TV shows where investors boasted of making massive profits by fixing up houses and then reselling them? Those days are mostly gone and in addition, the Obama plan provides no assistance for real estate speculators with homeowners receiving all the funds.
3. It Helps to Protect Neighborhoods: This plan helps to stabilize home prices for all homeowners in a neighborhood. After all, a foreclosed home often reduces the value of the entire neighborhood. The average homeowner could see his or her home value stabilized against declines because fewer homes will fall into foreclosure relative to what would happen absent the Homeowner Stability Initiative.
4. Supports Homeowners at Eminent Risk of Foreclosure. Usually a homeowner does not qualify for loan modification unless he can show that he is behind by several payments. This new plan provides support for households at risk " even though the homeowner may not yet be late on his mortgage payments.
5. It helps Bring Monthly Payments to Sustainable Levels: The goal of the Homeowner Stability Initiative is to reduce debt for a family to a sustainable (31% of debt to income) level. The Treasury Department will standardize the loan modification guidelines and implement them through Fannie Mae and Freddie Mac. The goal is to create monthly debt payments that will be able to be kept for a long time.
Although the Treasury Department hopes to keep as many homeowners in their homes as possible, at the same time it is promoting security. Step one of the plan attempts to avert the current financial bleeding by stopping lenders from foreclosing, and keeping families in their homes. Many lenders are looking to sell or auction assets at bargain prices, which not only drives home prices down further, but makes it harder for purchasers to obtain new loans. For example, if you were a lender making a loan for $200,000 today, wouldn't you be a bit concerned about the foreclosure that just closed escrow in the neighborhood for $150,000?
Obviously there is much more to the Obama Financial Stability Incentive Plan. There are many components and some involve giving incentives for people who modify loans, lenders who postpone foreclosures and as mentioned earlier, responsible homeowners interested in refinancing into a lower-interest loan.
The Treasury Department will be using the full power of Fannie Mae and Freddie Mac to standardize guidelines for loan modifications. And the benefit not talked about to consider is this one: by pumping 75 billion into the economy, the administration is giving the economy a sudden jolt that might be felt as quickly as June. The word on the street is that purchasing a home now and renting it out may prove to be a much safer bet than keeping the money in the bank!
1. The main benefit is that it provides assistance to homeowners who wish to stay in their homes. The sour economy has made it tough for many homeowners to refinance because for most, their equity has dried up and they are unable to do so. This plan also helps those who may have lost income due to the current recession.
2. No help for flippers. Remember those TV shows where investors boasted of making massive profits by fixing up houses and then reselling them? Those days are mostly gone and in addition, the Obama plan provides no assistance for real estate speculators with homeowners receiving all the funds.
3. It Helps to Protect Neighborhoods: This plan helps to stabilize home prices for all homeowners in a neighborhood. After all, a foreclosed home often reduces the value of the entire neighborhood. The average homeowner could see his or her home value stabilized against declines because fewer homes will fall into foreclosure relative to what would happen absent the Homeowner Stability Initiative.
4. Supports Homeowners at Eminent Risk of Foreclosure. Usually a homeowner does not qualify for loan modification unless he can show that he is behind by several payments. This new plan provides support for households at risk " even though the homeowner may not yet be late on his mortgage payments.
5. It helps Bring Monthly Payments to Sustainable Levels: The goal of the Homeowner Stability Initiative is to reduce debt for a family to a sustainable (31% of debt to income) level. The Treasury Department will standardize the loan modification guidelines and implement them through Fannie Mae and Freddie Mac. The goal is to create monthly debt payments that will be able to be kept for a long time.
Although the Treasury Department hopes to keep as many homeowners in their homes as possible, at the same time it is promoting security. Step one of the plan attempts to avert the current financial bleeding by stopping lenders from foreclosing, and keeping families in their homes. Many lenders are looking to sell or auction assets at bargain prices, which not only drives home prices down further, but makes it harder for purchasers to obtain new loans. For example, if you were a lender making a loan for $200,000 today, wouldn't you be a bit concerned about the foreclosure that just closed escrow in the neighborhood for $150,000?
Obviously there is much more to the Obama Financial Stability Incentive Plan. There are many components and some involve giving incentives for people who modify loans, lenders who postpone foreclosures and as mentioned earlier, responsible homeowners interested in refinancing into a lower-interest loan.
The Treasury Department will be using the full power of Fannie Mae and Freddie Mac to standardize guidelines for loan modifications. And the benefit not talked about to consider is this one: by pumping 75 billion into the economy, the administration is giving the economy a sudden jolt that might be felt as quickly as June. The word on the street is that purchasing a home now and renting it out may prove to be a much safer bet than keeping the money in the bank!
posted by Debt Consolidation Loan at
10:04 AM
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