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Who is Obama’s Housing Plan Really Helping?

For our first entry in Wednesday’s Washington Weekly, let’s discuss an issue that has been a topic of conversation in almost every American home-the housing crisis.  Millions of Americans are feeling the effects of the subprime mortgage meltdown.  Many have lost their homes or are currently in danger of meeting that same fate, as they cannot afford mortgages that at one time appeared affordable.  No matter where you want to point the finger-at the lenders, at the borrowers, at the brokers-the next step in this discussion needs to focus on the solution.

So what is President Obama’s proposed solution?  How does our new commander-in-chief propose that we dig ourselves out of this crisis?  Obama’s “Making Home Affordable” plan aims to work with lenders to modify loan terms and to create more affordable fixed-rate loans.  Approximately 4 million Americans will benefit from the modified terms, while 5 million Americans will be granted the more affordable fixed-rate loans.  The 9 million Americans who will reap the plan’s benefits must fall in the category of borrowers who owe up to 5 percent more than their home’s current value.  If you fall into this category, you must submit your most recent tax return, two pay stubs, and an “affidavit of financial hardship.”  The conditions of the housing plan dictate that borrowers will only be allowed to have their loans modified once; furthermore, the loans needs to have been granted on or before January 1, 2009, and must either be backed by Fannie Mae or Freddy Mac.

So how is Washington responding to the fact that the “Making Home Affordable” leaves out the rest of homeowners who owe more than 5 percent of their home’s current value?

Secretary Tim Geithner commented:

“Two weeks ago, the President laid out a clear path forward to helping up to nine million families restructure or refinance their mortgages to a payment that is affordable now and into the future.  Today, we are providing servicers with the details they need to begin helping eligible borrowers.”

This is only the beginning of a plan that will, over time, trickle down to help other Americans caught in the midst of the subprime mortgage crisis.  A crisis of this size, with this much money involved, cannot be solved overnight.  For more information regarding the details of President Obama’s housing plan, visit www.financialstability.gov.

CreditLendingBlog.com’s New Weekly Themes

We have adopted a new strategy moving forward with this blog.  We want to tie in important happenings in our economy with the everyday life of all Americans.  To do this we will start with three weekly themes:

Monday’s Market Movers

This weekly theme will watch the global markets and discuss the significance they will play in our everyday lives.  Monday’s Market Movers will follow and examine how the markets will affect credit and lending on both the individual level as well as on the banking level.

Wednesday’s Washington Weekly

On Wednesdays we will examine important events from Capitol Hill and the White House to assess their direct impact on lending and credit.  We will look specifically at the enormous amounts of spending and how it will trickle down to the everyday lives of all Americans.

Friday’s Financial Fitness

On Fridays we will gear our theme towards helping readers better their financial and credit standing.  We will look at little things that can be done to better your credit score, save some additional cash, or help your borrower profile to get the loan you need.  The overall goal of Friday’s Financial Fitness is to get you into a healthier financial situation.

We will begin discussing these themes in the next week.  We will continue to grow and expand our themes based on the economic situation and the response from readers like you.

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