$ 3 billion will be given by the Obama administration to help any person getting foreclosed who’s unemployed. Last week the administration announced plans to allocate $ 2 billion toward the Hardest Hit Fund, doubling the size of the program. A Housing and Urban Development program that is supposed to help unemployed borrowers who’s mortgages are delinquent got one more $ 1 billion. Experts are really just worried that banks rather than homeowners will benefit more from this.
Seems like a money put with preventing foreclosures
The Hardest Hit Fund was started to help states make their own foreclosure prevention programs in February, helping those with unemployed foreclosures. As outlined by the Wall Street Journal, the program works with 10 states at present. The money is part of $ 50 billion earmarked for housing aid under the Troubled Asset Relief Program. The $ 2 billion infusion will be distributed to housing agencies in 17 states, plus the District of Columbia, that have the highest unemployment rates. Another $ 1 billion goes to HUD for providing interest-free bridge loans of up to $ 50,000 for eligible unemployed borrowers to be used to make mortgage payments for up to two years.
Hardest Hit Fund receiving little money comparatively
The economic recovery is going down because of the housing market, which historically has helped all the recessions. According to the New York Times, having interest rates so low doesn’t help anything considering nobody can afford to refinance or purchase a home. Anybody who is an unemployed homeowner has a very difficult time selling their home. Values of homes in neighborhoods go down drastically with foreclosed homes, which doesn’t at all help. The Hardest Hit Fund will help 140,000 borrowers if it actually works right. About 400,000 families might be helped through the Hardest Hit and HUD programs, which isn’t much considering 14.6 million people are having foreclosure issues because of unemployment.
Mortgage lenders getting it easy
It is likely that Obama has just helped a variety of banks out more than unemployed homeowners with these new programs. David Abromowitz, senior fellow at the Center for American Progress, told The Hill that banks should be required to share the burden being faced by unemployed borrowers. He said the primary problem with the funding is that mortgage lenders don’t have to make principle reductions on loans or any major modifications. As outlined by Abromowitz, lenders should match funding and make concessions. Dean Baker of the Center for Economic and Policy Research told The Hill that with so numerous people with underwater mortgages, the new funding is unlikely to do much good. Dean said for the programs to work there has to be a reasonable expectation that homeowners can have some equity in their property at the end or they’ll lose their homes anyway.
Additional reading at these websites
Wall Street Journal
online.wsj.com/article/SB10001424052748704901104575423493999575302.html
New York Times
nytimes.com/2010/08/12/business/12treasury.html
The Hill
thehill.com/blogs/on-the-money/banking-financial-institutions/114349-banks-to-benefit-most-from-white-house-program-to-stave-off-foreclosures
