Arizona, February 18: President Barack Obama will spend $75 billion to bail out around 9 million Americans from losing their homes.
This attack on the home closure crisis is seen as an earnest effort to lift the United States from its deepening economic woes.
Announcing the plan in Arizona, a state especially hard hit by the housing crunch, Obama said, "All of us are paying a price for this home mortgage crisis, and all of us will pay an even steeper price if we allow this crisis to continue to deepen."
His goal of the $75 billion Homeowner Stability Initiative is to prevent millions of American families from losing their houses because they cannot make mortgage payments. Obama declared “We must stem the spread of foreclosures and falling home values for all Americans and do everything we can to help home owners stay in their homes.”
According to Moody's Economy.com, of a total of 52 million U.S. homeowners with mortgages, around 13.8 million, a rough estimation of about 27 percent, owe more than the actual worth of their homes as a consequence of declining prices.
Obama disclosed, "This plan will not save every home". However, the endeavor is to lower homeowners' payments to less than 31 percent of their income.
As part of the plan of action, government cash will be offered to the mortgage companies in order to reduce the interest rates. This would lower the monthly payments for those home owners who are in danger of default.
Besides, the scheme would also enable homeowners to refinance the mortgages in case they owe more than the value of their property. This would benefit four to five million "responsible homeowners" to make their mortgages more affordable. Lenders would voluntarily participate in the government programs.
In addition, the 75 billion dollar initiative will help three to four million people who can't afford to pay their mortgages and have seen the price of their properties dip significantly.
As a part of the housing rescue plan, the Treasury Department will double the financial support to mortgage finance giants, Fannie Mae and Freddie Mac, to 200 billion dollars each. This would allow them to play a bigger role in supporting the housing sector.
The Obama administration said the plan could offer a buffer up to $6000 against value declines on the average home.
He stressed that the plan will not benefit those who gambled by purchasing property, with the sole purpose of making a good bargain, or those who distorted facts for naive buyers, or even those who picked up loans that were way beyond their affordability.
Obama stated that "The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans."
He cautioned that "All of us must learn to live within our means again".
.home mortgages...
Well, at least the government is trying their best to help our fellowmen. Not that bad. The Obama Administration has decided to get even further involved in the home mortgages business that will aid homeowners in securing a modification mortgage for lower interest and payments. Since the banking crash, a large amount of criticism has been leveled at the financial industry, some of it fair, but a lot of it is after the symptom instead of the disease. Fiat currency systems like ours, meaning not backed by a commodity are more susceptible to dramatic bubble and bust cycles. The Obama administration being concerned with debt relief is good, but home mortgages are ultimately a symptom, not the disease.
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