How The Government Is Stabilizing The Housing Market?

With about nine million homes lost and an expectation of this problem to rise, the government has step in to assist the housing market. The allocated amount of about 75 million dollars has been set aside with an expectation of up to 4 million home owners to qualify.  So how does this amount reach the masses?

To qualify for the program the loans

- The mortgage must have been obtained before January 1 2009.

- The primary mortgage must be less than $729,500

- Live in the property

- Fully document their income by providing pay stubs and tax returns

-sign a statement of financial hardship ,Federal officials clarified the definition of “at risk” as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default.

- Go for counseling if the total household debt - including auto loans credit cards and alimony total more than 55% of their income.

They are two aspect of this program

One of the aspects is the refinance which lasts until June 2010. The refinancing portion, which is open to homeowners who took out loans from Fannie Mae and Freddie Mac, allows borrowers with less than 20% equity in their homes to refinance to the current prevailing rate. However, borrowers cannot owe more than 105% of the value of their home and must be current on their payments.

The other aspect is the Loan modification. The modification program will be in effect until the end of 2012, but loans can only be adjusted once.

This guideline were released on Wednesday; while borrowers are being encouraged to contact their loan servicers, companies said it would be several weeks before they can start processing applications. I believe this is a step in the right direction and the impact though long term will not only increase consumer confidence but start increasing the values of the homes.

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