Help on the Way for Those Struggling with Home Mortgage
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by: marciafreeman
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Word Count: 429
Home mortgage foreclosure rates have reached historically high levels. 2008 saw an 80 percent rise in the number of foreclosures from the year before with an estimated 2.3 million consumers dealing with foreclosure. Some analysts predict that in the next few years that number could jump to 10 million. Many borrowers took on a home mortgage that was more than they could afford in the long run, as they felt certain the real estate market would maintain its upward trend and credit seemed easy to come by. During this time, the subprime home mortgage market flourished, as more and more lenders offered loans to consumers who did not qualify for regular prime loans. In some cases, borrowers were given loans that required no money down, often without having to verify their income. In other cases, a consumer took on an adjustable rate home mortgage anticipating that the home value would increase or they would get a raise before the rates changed. There was so much optimism about the housing market that banks were selling more and more home mortgage loans on the secondary mortgage market to be packaged and sold as mortgage backed securities. When the real estate market began to decline and the credit crisis set in, many consumers, banks and investors found themselves struggling.
Only a month into his new office, President Obama has made it clear that any plan to help stimulate the economy will include help to boost the ailing real estate sector. The second week of February, Secretary of Treasury Tim Geithner announced that $50 billion of the stimulus bill would be dedicated to reducing home mortgage foreclosures. As the country anxiously awaits the specifics of the stimulus package, things such as incentives for banks to lower home mortgage bills are being discussed. The new President has made it clear that he would like to assist those in trouble before they become delinquent. It will be difficult task to determine who will qualify for assistance and who will not. For those who will qualify, a rate reduction or a postponement of principal might be options offered to make a home mortgage more financially manageable. Modifying a home mortgage is usually less costly to a lender than to have that loan go into foreclosure, so banks and lending institutions are waiting to make decisions until they know the specifics of any plan to help the housing market. Many lenders have, in fact, delayed additional home mortgage foreclosure actions pending the details of the new Obama plan.
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