Will the Government Subsidize Your Mortgage Payments?
Home Buying News - February 16, 2009 -- Mortgage modifications subsidized by the federal government may help thousands of homeowners avoid foreclosure in 2009 and beyond.
President Obama and his economic team are considering a plan to subsidize the mortgage payments of certain at-risk homeowners who may default on their loans. In plain English, they are thinking about using tax dollars to pay people's mortgages as a foreclosure prevention strategy.
This, of course, opens up a whole can of ethical worms. Is it right to reward people for being financially irresponsible? This is the question being asked by many critics of the idea. But the folks who support the subsidy idea simply have to have to cite precedence to justify it. After all, the banks were certainly rewarded for financial irresponsibility, to the tune of trillions.
But this is not a moral argument. This is a real estate news blog. So we shall limit ourselves to the facts at hand.
Last Tuesday, Treasury Secretary Tim Geithner mentioned the idea of subsidizing home mortgage payments for certain at-risk homeowners. He added that a more detailed plan would be released in a couple of weeks, explaining the nuts and bolts of how it would all work.
Borrowers must undergo a means test -- sort of like a financial health check -- to be eligible for the program, and they must also have their homes re-appraised to determine the current value. In theory, a person's mortgage lender would modify the home loan to make the payments more affordable, and the government would subsidize the difference in order to minimize the lender's losses.
According to RealtyTrac and other sources that track home foreclosure rates, the number of foreclosures in 2009 could pass the two-million mark. So regardless of where you stand on the idea of government-subsidized mortgage modifications, we can probably all agree on one thing -- something must be done.
Related articles at the Home Buying Institute:
President Obama and his economic team are considering a plan to subsidize the mortgage payments of certain at-risk homeowners who may default on their loans. In plain English, they are thinking about using tax dollars to pay people's mortgages as a foreclosure prevention strategy.
This, of course, opens up a whole can of ethical worms. Is it right to reward people for being financially irresponsible? This is the question being asked by many critics of the idea. But the folks who support the subsidy idea simply have to have to cite precedence to justify it. After all, the banks were certainly rewarded for financial irresponsibility, to the tune of trillions.
But this is not a moral argument. This is a real estate news blog. So we shall limit ourselves to the facts at hand.
Last Tuesday, Treasury Secretary Tim Geithner mentioned the idea of subsidizing home mortgage payments for certain at-risk homeowners. He added that a more detailed plan would be released in a couple of weeks, explaining the nuts and bolts of how it would all work.
Borrowers must undergo a means test -- sort of like a financial health check -- to be eligible for the program, and they must also have their homes re-appraised to determine the current value. In theory, a person's mortgage lender would modify the home loan to make the payments more affordable, and the government would subsidize the difference in order to minimize the lender's losses.
According to RealtyTrac and other sources that track home foreclosure rates, the number of foreclosures in 2009 could pass the two-million mark. So regardless of where you stand on the idea of government-subsidized mortgage modifications, we can probably all agree on one thing -- something must be done.
Related articles at the Home Buying Institute:
Labels: Economy
posted by Brandon at
7:30 AM
