Obama's Homeowner Assistance Plan-Can it Stop Foreclosures?

Last year, the Obama administration put into effect the Homeowner Affordability & Stability Plan through the HFA. (Housing Finance Agency). This legislation came about because of the enormous amount of foreclosures across the country. It provides assistance for homeowners who have been responsible with their mortgage payments. In general that would mean those who have been making regular monthly payments but might be facing some hardships that might affect their ability to continue to pay. Homeowners who knowingly entered into contracts they knew they couldn't afford would not be included. Neither would the banks who made the loans to them.
The bill also gave financial institutions monetary incentives to participate in refinancing and reduced payment programs. This would apply to Fannie Mae and Freddie Mac insured loans.The bank would lower interest rates and would be able to lower homeowner payments to no more than 31% of the homeowners income. Also, the loans cannot exceed 105% of the current value of the home. Not many sub prime loans would be included in the program.
This year the administration introduced a new assistance plan that targets the hardest hit housing markets. The first phase applied to areas or states where housing prices had declines of 20% or more.
The second phase of assistance targets areas with high concentrations of economically distressed neighborhoods. These areas would be counties that had an unemployment rate that exceeded 12% in 2009. Details of these plans can be found at makinghomeaffordable.gov.
These programs are not designed to instantly bring the housing market back and are not designed to help every homeowner in financial trouble. However, it is a step designed to slow down the speeding foreclosure train.

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