New Program to Help Homeowners
October 25, 2011 by staff
New Program to Help Homeowners, President Obama today announced a new proposal to alleviate the pressure on homeowners who are underwater, and he traveled to Nevada, ground zero of the housing crisis.
From the porch of a home in Las Vegas – which has the highest foreclosure rate in the country – the president promoted a plan to allow homeowners who are refinancing mortgages backed by federal without obtaining a new appraisal or verification total credit. The program also removes some risk-based rates for borrowers.
The changes are being spearheaded by the Federal Housing Finance Agency, which oversees government-sponsored Fannie Mae and Freddie Mac plan is under the Home Affordable Refinance Program, which, the agency estimates, has already helped 894,000 families.
While administration officials say it will help thousands of homeowners, the program has its caveats. Only homeowners whose mortgages are backed by Fannie Mae and Freddie Mac will be eligible for refinancing. Borrowers must have good credit and have remained with their mortgage payments without late payments in the last six months and not more than one late payment in the last 12 months. In addition, the mortgage must have been sold to agencies before May 31, 2009, and has not been previously refinanced Home Affordable Refinance Program. The LTV must not exceed 80 percent.
Supporters say the program would help boost the economy by relieving the financial strain on homeowners and reducing your mortgage so that more money would dispensable.
But economists disagree on the number of people who really benefit. Some say that would not affect more than 1 million households, a relatively small, given that over 6 million homeowners facing foreclosure or have missed payments. Others say the restrictions are too strict and those automatically cut homeowners under water with bad credit.
“It’s definitely going to be a constructive step in terms of supporting the economy,” said Karen Dynan, vice president of economic studies program at the Brookings Institution. However, “the other important point is that not a free lunch. The homeowners will save on your mortgage payments, but there is another side of the transaction. Investors and lenders, who finance the mortgages, they will suffer “to get a lower yield.
The changes occurring in the housing market, which is critical for economic recovery, is still struggling despite historically low interest rates and government programs to help homeowners.
Although there is an excess supply of housing and interest rates are low, demand is low, given the high unemployment and general nervousness about the direction of the economy. Even those with purchasing power are facing difficulties to get loans because banks have tightened their restrictions after the mortgage crisis.
In its economic and housing forecast for October 2011 report, Fannie Mae predicted that home sales will remain “slow” and home sales will recover in the bottom, at least for another year. The large inventory of homes in distress continues to put downward pressure on prices, the report said.
The Obama administration’s efforts to boost the market have achieved mixed results.
The housing program to provide a credit for the first time met with sufficient success to be renewed and extended even to existing home buyers, under certain conditions. But critics of the plan say that artificially inflated the housing market and drove the buyers in the market that have been in recent months or years.
Most criticism has been directed to the 75 billion and Affordable Home Mortgage Insurance Program, launched in March 2009 which do not attract as many buyers of homes in trouble, as the administration expected. In fact, many homeowners who took advantage of the program ended again in default on their mortgages.
Some experts say the HAMP was not aggressive enough to address the issue. Others say the administration, instead of cracking down on banks, did the opposite by paying mortgages in exchange for struggling homeowners.
“The problems to be fixed have changed over time and the policy has not kept pace with what the problems are,” said Dynan. “The other problem is that things turned out to be more complicated than expected.”
Some experts say the housing programs of the administration need to level the playing field.
“It’s hard to know what would have happened if they had not been there,” said Preeti Vissa, director of community reinvestment Greenlining Institute, a public policy research and advocacy group. But the impact has been “almost negligible, especially in the most affected states or communities of color. There is still much to do.”
While few 2012 candidates have discussed the topic, the housing market play an important role in the upcoming elections. If it continues to weaken, weigh on the economy and consumer confidence in turn.
Even President recently admitted that very little has been done to address the problem and that his administration has given little support for struggling homeowners.
“The continued decline in the housing market is something that has not bottomed out as fast as expected,” Obama told a town hall event in July Twitter. Management programs “are not enough. And so we are going back to the drawing board.”
Unfortunately, there is no silver bullet, no simple fundamental restructuring to clean the damage caused by the bursting of the housing bubble. But there are steps we can take that can help homeowners
He also said that any federal program could solve the housing crisis and that “some people just buy a bigger house than they could and probably will be better to rent.”
Press Secretary Jay Carney White House echoed a similar sentiment today.
“Unfortunately, there is no silver bullet, no simple fundamental restructuring that will clean the damage caused by the bursting of the housing bubble,” Carney told reporters. “But there are steps we can take that can help homeowners.”
Please feel free to send if you have any questions regarding this post , you can contact on
Disclaimer: The views expressed on this site are that of the authors and not necessarily that of U.S.S.POST.