Hopes are pinned on the foreclosure prevention plan of President Barack Obama to help reduce the number of foreclosed, cheap houses for sale which is being blamed for the abysmal performance of the housing market for the past two years now.
The $75 billion mortgage relief plan is part of the Obama Administration’s touted $275 billion housing recovery program. The program is designed to help distressed homeowners modify their loans even if the amount of mortgages they owed is more than the fair market value of their properties.
In 2008, nearly 8.3 million homeowners owed mortgages more than the market value of their distressed properties. It is expected that the plight of struggling homeowners is not going to improve anytime soon because of the anticipated drop in home values and increase in the number of foreclosed, cheap houses for sale.
Standard & Poor’s/Case-Shiller Indexes showed that home prices in the country weakened by over 26 percent since their peak in 2006.
The Obama Administration’s modification plan to abate the spread of foreclosed, cheap houses for sale has opened a window of opportunity for struggling homeowners who are behind on their mortgage payments or on the brink of missing payments to modify their loans.
Under the plan, cash incentives are offered to mortgage services to reduce monthly payments to help homeowners protect their properties from being added to the growing list of foreclosed, cheap houses for sale.
However, the plan will only alter loans on single-unit houses to a maximum of $729,750 and for mortgages taken out before the start of this year.
For those homeowners who remained current on their loans but are struggling to meet payments, their principal will be reduced by as much as $5,000 under the plan.
To further ensure that the plan will be successful in controlling the rapid spread of foreclosed, cheap houses for sale, lenders will be given additional incentives for eliminating second-mortgage home equity loans.
Meanwhile, the Treasury has given lenders the go signal to start refinancing negative equity loans guaranteed or owned by Federal National Mortgage Association and Federal Home Loan Mortgage Corp .
Previously, refinancing was not offered to homeowners who have negative equity loans. But under Obama’s plan, standard refinancing will be given to borrowers whose home market values have declined way below their mortgages.
Related Information:
- Foreclosures by State
- Tax Foreclosure Properties
- Foreclosure Homes
- Florida Foreclosures
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