President Obama’s senior adviser David Axelrod has offered a glimpse of the administration’s efforts to reduce the number of foreclosed homes in the country and put a break on declining home market prices during his guest appearances in several television shows.
On the "Fox News Sunday", Axelrod explained that President Barack Obama is planning to announce measures aimed at preventing foreclosures, helping homeowners who are on the brink of losing their homes to foreclosures and helping raise home market values.
On the morning talk show,"Meet the Press", Axelrod said that Obama will unveil details of the foreclosure plan during his visit to Phoenix, Arizona, one of the stops of his road trip in western states. Obama will also visit Denver, Colorado where he is expected to sign the Congress-approved $787 billion stimulus plan.
According to Axelrod, he expects that the U.S. government will invest up to $100 million on its efforts to prevent the increase in the number of distressed properties.
It is expected that Obama’s foreclosure prevention plan would include measures to lower mortgage payments for distressed homeowners, possibly by reducing interest rate. The anticipated costs of reducing the interest rate would be subsidized by the U.S. government and mortgage providers.
The reduction scheme is expected to be made available to borrowers who are in danger of losing their properties by defaulting on their payments. The housing-related payment reduction scheme is pegged at 31 percent of the homeowner’s pretax income.
Currently, the Federal Home Loan Mortgage Corp. and Federal National Mortgage Association’s modification loan program includes a mortgage payment cap of 38 percent of the homeowner’s pretax income.
In addition, the Obama Administration will endorse a proposal to allow bankruptcy judges to modify mortgage loans in an effort to halt the rising number of homeowners who are filing for foreclosures.
The mortgage industry has opposed this proposal on the grounds that the plan could lead to the enactment of measures that would circumvent rules that prevent mortgage providers from modifying loans that are in danger of foreclosure.
Meanwhile, Axelrod pointed out that the economic stimulus bill reflected Obama’s goals of preventing the unemployment rate to reach 10 percent.
However, he sought to downplay expectations that the economic recovery bill would result to an immediate turnaround of the country’s economy.
He reiterated the administration’s message warning the public about the possibility that the economy will get worse before any improvement could be seen.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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