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President Obama’s Foreclosures Plan

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By : John Cutts    99 or more times read
On February 18, 2009, President Obama revealed his plan for dealing with the sinking US real estate market. The $75 billion plan targets the growing number of foreclosures in the country and will offer relief to homeowners who have been responsible with their sub prime loans but because of personal tragedy or rising interest rates are falling behind with mortgage payments. It is expected that the plan will help 9 million Americans who face foreclosure on their homes.

The plan will specifically help those who are unable to get financing because their homes are worth less than their mortgages, an increasing reality in parts of the country where housing prices have dropped significantly since last year. The plan will also help make monthly payments on mortgages more affordable for some families. President Obama’s plan focuses on families who are in danger of falling behind on their mortgage. Some families facing loss of their home will have their loans modified or will have their home loans refinanced.

The President’s plan will mean that government money will go to mortgage companies who reduce interest rates on specific loans. Mortgage companies will need to cap their mortgage payments at no more than 31% of some borrower’s incomes to qualify for the money. More government money will also be given to Fannie Mae and Freddie Mac to stabilize the mortgage economy in the near future.

President Obama has stated that his plan is for families who are playing by the rules but who need help. However, although he has stated that his plan will not bail out speculators, it is possible that when the plan comes before Congress, Republicans and some Democrats may oppose it. Some Republicans and Democrats are already raising questions, noting that the plan only helps 9 million Americans when many more million homeowners are in trouble. Some also want to know what will happen to lenders who offer bad loans. Republicans and some Democrats are also wondering whether homeowners who misrepresented their finances on home loan applications will qualify for the assistance.

Investors are likely not worried about the foreclosure market. Even if the housing package passes, there will still likely be many foreclosures on the market at discount rates. At the same time, the economic boost may mean more qualified buyers and renters who may want to buy or rent from investors.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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