$ 3 billion can be given by the Obama administration to help any person getting foreclosed who’s unemployed. The Hardest Hit Fund would going to be doubled with another $ 2 billion was announced last week to be put to the fund. Another $ 1 billion will go toward a Housing and Urban Development program to help unemployed borrowers who are delinquent on their mortgages. However, some housing experts are concerned that the funding infusion will help banks more than homeowners.
Trying to stop foreclosure makes for a money pit
The Hardest Hit Fund was began 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. $ 50 billion total is in the program for housing aid under the Troubled Asset Relief Program, which is where it comes from. 17 states, such as the District of Columbia, have terrible unemployment rates right now making it so $ 2 billion could possibly be split among them. 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. Hardly anyone can refinance or purchase although interest rates are at record lows, reports the New York Times. Everyone who’s an unemployed homeowner has a very difficult time selling their home. Their foreclosures weaken neighborhoods and create a vicious cycle that further undermines the housing market. About 140,000 individuals could be helped with the Hardest Hit Fund. About 400,000 families may be helped through the Hardest Hit and HUD programs, which isn’t much considering 14.6 million individuals are having foreclosure issues because of unemployment.
Mortgage lenders getting the good side of the deal
Banks, not unemployed homeowners, will benefit more from Obama’s unemployed foreclosure funding, some experts believe. Banks should be hurting along with unemployed borrowers says David Abromowitz who is the senior fellow at the Center for American Progress and had an interview with The Hill. Principal reductions on loans or other major modifications don’t have to be made by mortgage lenders which is a big problem. Concessions should be make by lenders along with matching the funding, says Abromowitz. Dean Baker of the Center for Economic and Policy Research told The Hill that with so numerous individuals with underwater mortgages, the new funding is unlikely to do much good. Dean thinks the programs won’t work because homeowners without equity in their homes are bound to lose it at the end of the whole process anyway.
More on this topic accessible at these sites
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
