The Obama administration's plan to help millions of troubled homeowners avoid foreclosure by reducing the size of their mortgage payments is just getting off the ground. So far, two months after the program went into effect,about 55,000 homeowners have been extended loan modification offers,according to a senior administration official. At the same time, foreclosures continue apace.
As per CNBC, Obama is expanding the homeowner bailout so that underwater homeowners with a 125% LTV ratio can refinance more easily through Fannie and Freddie. Earlier LTV ratio could only be 105%.It seems that Obama wants to have more sub prime loans as a solution to the current problem.
Like the original subprime loans, they're really only going to work out of home prices grow rapidly over the next few years, otherwise you're looking at the perpetuation of people living underwater in their homes.
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RealtyTrac reported Wednesday that foreclosure filings reached 342,000last month, up 32 percent from April 2008. Moody’s has estimated that more than 2.1 million homeowners will lose their homes this year.
In late April, officials fleshed out their plan to modify or forgive second mortgages — one of the big stumbling blocks in modifying primary mortgages — and provided more details on the Hope for Homeowners program, for borrowers who owe more than their homes are worth.
I think because of the size and complexity of the modification program, the administration has only recently assembled most of the pieces.
I think it is still too early to know how effective the program will ultimately be, many homeowners who have tried to gain entrance say they have been successful only through persistence — and sometimes, the help of a lawyer.
What may be a larger issue, however, is the continuing deterioration of the economy, experts say. The longer it takes to set the program in motion, they say, the fewer people will qualify for modifications. The expected rise in unemployment in coming months may keep a growing number of homeowners out of the program.
However, the administration remains confident that the program will end up offering help to as many as three million to four million homeowners, with the pace of modifications beginning to pick up in coming months.
The sales figures of real estate have gone down to its lowest rate in the last few years. Though the housing market has become more affordable now, it has not triggered buyers to jump into the attractive deals as they are unsure of their repayment prospects in the future too.
I think People who want to buy new homes are also refraining from the risk as they are unsure of their employment in the coming months. Though the housing market is becoming more affordable than before, the sales figures has reached its lowest unfortunately.
Obama is expanding the homeowner bailout so that underwater homeowners with a 125% LTV ratio can refinance more easily through Fannie and Freddie. Earlier LTV ratio could only be 105%.
This will only make the problem worse not better
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