US Government Expands Foreclosed Home Relief Program to Stem Wave of Foreclosures

The current Obama administration in office has been battling the number of foreclosures homeowners are facing. His recent efforts include giving grants to people who owe more money than their current home is actually worth. The funding comes from the Troubled Asset Relief Program budget, which was set at $700 billion. Many critics who have been scrutinizing the government say it is not doing enough in its efforts to help homeowners facing foreclosure. They should be doing more, many people say.

Economic experts say the country is currently in a recession that hasn’t been this bad since World War II. The Obama administration is working to try to help its citizens and the economy as a whole recover from this economic downturn. Government efforts are working to try to maintain public confidence in the Freddie Mac and Fannie Mae entities. Numerical estimates say that foreclosures were 2.8 million in 2009 and are expected to rise to 4.5 million by the end of 2010 if current trends continue.

The government needs the banks to cooperate with them to reduce foreclosures. The goal of the plan is to reward banks that allow second liens to occur on a mortgage. However, many are currently unwilling to negotiate. To combat this, the government is willing to allow some refinancing to take place as FHA-insured, meaning they guarantee the loan amount to the lender if the borrower defaults. However, for this to happen, lenders must negotiate and the loan amount must be at least 10% less than the value of the home. The borrower must also be current on their loan in order to be refinanced. This could help people who may be headed down a foreclosure path in the future to avoid it.

The goal of government intervention is not to put any homeowner in foreclosure because it is not feasible and too costly to wait. However, the number of people that can be helped is staggering. The government says that banks should not expect a reduction in their profits after these programs are implemented. The program’s primary intent is to help homebuyers who find themselves short-term unemployed. These people would see their mortgages reduced for three to six months. If work cannot be found within this time frame, the government may be willing to help further depending on an individual assessment later.

Many people feel that people should expect more assistance from the government, especially people who are laid off or unemployed. It is not always realistic for people to find work in such a short time. Many feel that greater efforts should be made to help people with their loans so they don’t face foreclosure as well. Many of the mortgage lenders say they are more than willing to cooperate with the government to reduce foreclosures.