Obama Targeting Homeowners with $1.5 Billion in Assistance
Facing millions of foreclosures and high unemployment, President Barack Obama recently announced a $1.5 billion fund to help unemployed homeowners and other struggling borrowers in a handful of states.
The program, known as the Home Affordable Modification Program (HAMP), seeks to aid borrowers by allowing them to modify their mortgages and lower monthly interest rates through any participating lender. Under this plan, the lender voluntarily lowers the interest rate, and the government provides subsidies to the lender and borrower. The Obama program has so far only helped 116,000 troubled borrowers modify their mortgages from three-month temporary plans into more affordable permanent loans. The HAMP program, which is set to run through 2012, was announced on Feb, 18, 2009. As part of the program, five states—Arizona, California, Florida, Michigan and Nevada—have home prices that have fallen enough to qualify for the additional assistance. Obama said that price declines in homes and high unemployment in these regions have created major challenges for families.
He argued that too many lenders were too focused on “making a quick buck than acting responsible,” that “too many borrowers acted irresponsibly by taking on mortgages they couldn’t afford” and government regulators turned a blind eye to the problem.”
According to Obama, three sorts of problems may be addressed with funding: unemployed borrowers, underwater borrowers and those with second mortgages on properties. “This fund is going to help out-of-work homeowners avoid preventable foreclosures. It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both borrowers and lenders alike.”
The program could be expanded to other regions in the future, stay tuned.
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