Significance of the Obama Foreclosure Prevention Plan

The Obama foreclosure prevention plan has the goals of increasing the number of refinanced home loans, boosting the number of available home loans for first-time home buyers, and motivating banks and lenders to agree to more loan modifications.  The Helping Families Save Their Homes Act that was approved by President Barack Obama in May 2009 is the main foundation of the program.  The above-mentioned law is an addition to the Hope for Homeowners Act that was authorized previously for the purpose of lending a hand to homeowners who have found the values of their homes declining such that the value of their unpaid loans were even bigger than the current prices of their properties.

The Obama foreclosure prevention plan helps borrowers in getting the banks and other lending institutions to agree to their loan refinancing proposals to bring down their monthly installments to more affordable amounts.  It should be noted, however, that a borrower must have a loan balance that is not more than 105 percent of the current market price of his home in order to qualify for the program.  The President’s program also gives bonuses to the lenders or banks for every loan modification that they approve and reduces the monthly payments so that they do not surpass 31 percent of the monthly salary of the homeowner.  The Obama foreclosure prevention plan also makes sure that Freddie Mac and Fannie Mae will be capable of offering more home mortgages to people who are buying their houses for the first time.

Sad to say, the Obama initiative did not have a notable impact on the housing crisis as of September 2009 and those who oppose it quickly grabbed the opportunity to use the results as proof that it is destined to fail.  But those who are in favor the Obama foreclosure prevention plan countered that it has started to have some positive effects.  For example, the plan seems to have been the major cause of the reversal of the declining trend in home market prices and the rise in the number of foreclosure filings in a number of states.  In response, critics of the President’s program countered that only a small number of the borrowers who should have been qualified to get their loans modified had benefited from the program.  Some critics also observed that the Obama foreclosure prevention plan was not founded on sound economic theories.  Nevertheless, members of the federal government remain upbeat about the program and have pointed out that it has reached a milestone in the number of loan modifications that have been approved by the banks.  The members of the federal government are sure that the President’s anti-foreclosure strategy will accomplish what it has sought out to do and they continue to report to the public about the project. For alternative funding plans stop by http://hardmoneylendersonline.com