Mar 11, 2009
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.
- Obama’s Housing Plan – Stopping the Foreclosure rate
- How the Making Homes Affordable Program Fails Consumers
- What does Obama’s State of the Union Mean for Me and for My Financial Situation?
- Obama’s First Primetime Speech: A Stimulus Plan
- Consumers Still Hurting Despite Loan and Card Reforms
- Geithner’s Plan to Clean Bank’s Toxic Assets
- Capitol Hill and the Financial Crisis: A Busy Week
- When to Refinance Your Mortgage
- Stocks are up Again
- Fed Tasked to Oversee Systematic Risks in the Financial Industry