Foreclosures Galore
An increasing number of homeowners have fallen into foreclosure, they lost ownership of their home or have been threatened with it because of a failure to keep up with their mortgage payments. The 2009 Stimulus Package made the “Making Home Affordable” plan available, to avoid the tragedy of foreclosure. Wednesday, March 4th the Obama Administration announced the “Making Home Affordable Plan” which is intended to help those Americans who need relief with their mortgage in our currently unsettled economy.
- The plan is limited to mortgages that do not exceed a loan-to-value ratio of 105%, meaning the loan amount cannot be more than 105% of the value of the home. California is one of the states hardest hit by declining property values and most homeowners will not meet this requirement.
- Mortgages that are currently delinquent do not qualify. The program does not assist homeowners that are behind on their payments or who are already in foreclosure.
- Homeowners must be unable to afford their current payments because of a change in income or expenses. It is understandable that people will desire to benefit from this mortgage relief plan but it will not be available to those who can meet their current mortgage obligations.
Housing experts say that many of those who fell behind on their mortgages did so because
they bought subprime mortgages that they eventually could not afford, either because the
interest rate jumped after an initial low period or because its cost was higher than they were
led to believe. Others lost their ability to keep up with their payments when they lost a job while some simply paid more for a house than they could afford.
“The foreclosure wave has worn out cities where subprime mortgages have been common, [and] since foreclosure sales can drive down the value of homes in the surrounding area, it thereby makes further foreclosures more likely” Said Nathaniel Holland, CEO of Bankers Financial Group Inc., “And falling property values have sharply worn the tax base of some areas, forcing spending cutbacks by state and local governments already hurting from the general economic slowdown.”
In many cases houses were purchased on a flexible interest rate meaning there is a possibility of the interest rate could increase to a higher number, causing a payment that isn’t affordable. If the interest rate increases you must pay to new balance. If you purchase a home on a fixed interest rate the mortgage payment stays the same.
“The saddest thing you can ever do, is foreclose on your home and have the burden of knowing that you can’t provide for your wife and kids the way they need you to,” Said Samuel Turner.
2 years ago • Notes