Obama’s new foreclosure Prevention plan promised a lot, and since we are already down this road, I figure it’s best to jump on the positive train and give these bad boy plans a shot. Who cares if they are trillion dollar plans, it is already happening, so let’s just make the best out of it, and help. The below post is meant to be fun for me and informational (I hope) for you – it’s late and I’m not going to use any research to get my facts straight. I’ll use my guesswork to let you know what this Foreclosure Prevention Plan means to you, don’t worry, I guess good.
Scenarios are below -
Homeowner Not Underwater and Current on Your Mortgage
If you’re a homeowner that is not underwater on your home, the mortgage prevention plan will make it easier for you to refinance your home loan. It may also help decrease the declines in home prices in your area. Even if refinancing your home is not beneficial for you, you will still greatly benefit if the economy improves and home prices stop declining.
A Renter
If you are a renter not much of this plan will directly help you. It will help you keep or get a job, help your friends and families keep their jobs, revive the economy and make it easier to buy a home when you do. A portion of the plan aims to keep interest rates low, so if you do jump in and buy a home, you may be able to secure a fixed low interest rate home loan, and if you’re lucky, that won’t decline in value! Oh, and don’t forget about your $8,000 tax credit.
Current on Your Mortgage, Underwater and Struggling to Pay Your Mortgage
If you are current on your mortgage, upside down on your home and struggling to pay your mortgage each month, the plan will change your life. Your mortgage will be modified into a lower interest rate fixed loan, a longer-term loan, or your mortgage principal will be reduced; a combination of all or some of these can also apply to your mortgage modification. As a bonus, I think you may qualify for $1,000 annually for 5 years, a total of $5,000 directly paid to reduce your principal…all just for paying your bill on time.
Homeowner Going Through Foreclosure
If you’re going through foreclosure, this plan will likely be able to keep you in the home and get you a loan modification that might do a combination of a few things to reduce your payment. Modifications could include, modifying your loan to a lower interest rate, a mortgage principal reduction, or lengthen the term of your loan. In addition, you could get up to $5,000 over 5 years paid directly to your balance, just for making payments on time.
Homeowner Going Through Bankruptcy
If you are going through a bankruptcy and in danger of losing your home, the new plan may include a provision that allows your bankruptcy judge to modify your loan so that it better fits you financially, meaning he or she will modify the loan so that you can stay in your home and afford it.
A Home Builder
If you are a home builder, this really doesn’t do much for you other than keep your inventory homes from decreasing in value (hopefully). It may increase sales if Obama can make it so a qualified home buyer can get a low interest rate loan, and if it actually does stabilize home prices. If these things happen, this could turn out good for you. I know it is about time, right!
A Real Estate Agent
You are pretty much in the same boat as home builders. The plan may include a provision that will allow all home buyers to enjoy low interest rate loans and home prices might actually “bottom out” sometime soon. If these two things happen, and you are a Rockstar real estate agent, as I know you are, you should stand to sell a few homes.
A Loan Officer at a Bank
You, my friend, are about to be “hooked up”. Unless the government somehow sets up their own company with hundreds of thousands of workers, you stand to get more business than you will know what do to with. I would imagine you will be summoned to help modify these mortgages; it will likely be rough and the pay might not be as good. I would assume you would be paid some sort of commission to do so. Anyone who knows, please correct me.
An American
If you’re an American, the plan will hopefully save our economy, save millions of your fellow Americans from foreclosure, increase investor and consumer confidence, stabilize the home market, help stimulate sales, save financial institutions and investors from bad assets, and ultimately help your country get out of a rut none of us want to be in. If you are an American, you want this plan to work so that things get better as opposed to worse. It is not as if we can scream no government intervention now, let’s just try to support them, and as a nation, give it our best.
Did I miss anyone? I’d be more than willing do to a little guesswork on your situation.
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The plan will not only add much needed demand into a languishing economy it will also (hopefully) increase consumer confidence. The plan works not only for the U.S. but Canada as well which is undertaking a similar stimulus action (relatively speaking, of course). Our 2 economies and economic fates are indeed intertwined and it’s great to see some action being taken.
Let’s hope that it works like they hope it will. It certainly beats doing nothing, that has been advocated by others…and the states that are severely effected like Nevada and Arizona need all the help they can get.
Charless last blog post..First Time Home Buyer Tax Credit
OK, let me get this straight: If you worked hard, played it straight, paid your bills and lived within your means you now earn the opportunity to bail out irresponsible dipchits who maxed out their credit cards, bought lots of neat stuff with plastic, and now can’t afford to keep a roof over their heads.
Sounds like a good deal for those who require the government up their back porch from womb to tomb and cannot function in the real world.
Why must I be punished for doing everything right?
Regards,
Michael McLaughlin, Cary real estate
Michael,
It sounds like you did everything wrong
It’s a shame that thousands of irresponsible individuals are going to get “bailed out” just like the irresponsible institutions that created them did, but it’s what our leaders think the best course of action is.
The plan is meant to help the people that weren’t irresponsible, the ones that worked hard and are still financially screwed because of everything that’s going on …we’re all just under the same umbrella, so we have to take it as a team.
I fit into one of the categories above, but am in another not mentioned, where I am screwed. I am an investor, along with 2 other partners in an LLC formed after we bought a condo in Scottsdale, AZ. We have a renter, who pays less than 50% of our monthly bills and our home value has decreased by more than 50%. We have a 7.25% interest only loan for 10 years and we are in year 3. Does anyone know how we can create a scenerio to get some help from the govt? Do we need to kick the renter out and move in ourselves? We have paid on time now for 3 years and unless we stop payments to go into foreclosure which we don’t want, we are stuck. Yes? No? Help???
Scott,
Thanks for stopping by. It’s sounds like you’re in a pretty tough situation. If you move into the home, and make it your primary residence (not sure if you can), I think you’ll have a better shot at a loan modification.
You should contact Jay Thompson, he’s a real estate agent in Phoenix that can give you some solid advice. I’m sure he’s ran into a few investors with similar situations. A phone call may make it easier for him to get all the necessary details.
http://www.phoenixrealestateguy.com/contact-us
Best of luck
The Foreclosure Prevention Plan is a very helpful step by the government encase. Homeowner can keep their house. But is should not be a give away, homeowners should pay it back. Some of the home owners really deserve to be bail out, but some of them are not, because some of them acquire a house loan that they cannot sustain. So it is unfair for homeowners who can really afford to pay when they bought it, only it is really a tough time to sustain the mortgage. Cheers, Michael McLaughlin, Cary real estate
Now we can see what the plan has turned into. People have made too many bad decisions in the past and they need to be fixed now.
It seems like recession is the only reason of people’s wrong decisions. People take wrong decisions spending money and make their lifestyle more than their budget. Same they did when buying homes, but then they realize that its not possible for them to afford the life style they have accepted. Looking back in that mistakes is also one of the solution.
Cheers,Samuel (The guy into Real estate business in panama)
If i’ve filed bankruptcy (more than 7 years ago) and have no further credit problems, do I qualify for the tax credit? I’ve not owned a home in 15 years.
Mary,
If you’re asking about the $8,000 tax credit for new home buyers, you qualify as long as you’re a first time home buyer.
I like the way you laid this out so simply – I’ve not seen a talking head put this in such easy to understand terms yet.
As one of those “Rock Stars” you mention – I can’t wait for the bottom but don’t mind the current market either – the bottom feeders are heading to different waters on a daily basis – and the age of the part-time Realtor is hopefully coming to an end (and our clients cannot be happier).
Another factor to consider in all this is many states are adopting tax credits of their own. Georgia signed in to law its own tax credit for homebuyers on 11 May, and you do not have to meet any of the First-Time Homebuyer requirements of the Federal version.
Joes last blog post..Tax Credit for Georgia Homebuyers
Variable mortgage rates are quite low right now and a great way to save on interest and lower monthly mortgage payments.
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