Five Benefits of the Obama Plan

Examining the Obama Financial Housing is like watching a foreign film. You may not understand it at first, but upon second glance, it starts to make sense. Here are the five main advantages of the plan.

1. The Fix-it Program helps Hard-Working Homeowners Stay in their homes: Those who commit to make reasonable monthly mortgage payments can stay in their homes ” providing families with security and neighborhoods with stability. Thus owners who may have lost equity due to the faltering economy can lower their payments without having to move.

2. The Initiative Offers No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home ” it will not aid speculators or house flippers.

3. It Helps to Protect Neighborhoods: This plan helps to stabilize home prices for all homeowners in a neighborhood. After all, a foreclosed home often reduces the value of the entire neighborhood. The average homeowner could see his or her home value stabilized against declines because fewer homes will fall into foreclosure relative to what would happen absent the Homeowner Stability Initiative.

4. Supports Homeowners at Eminent Risk of Foreclosure. Usually a homeowner does not qualify for loan modification unless he can show that he is behind by several payments. This new plan provides support for households at risk ” even though the homeowner may not yet be late on his mortgage payments.

5. The Obama Housing Fix-it Plan hopes to make total monthly payments affordable. The approach is to attack the homeowners total debt, and create a payment plan that the homeowner can keep. Using the power of Fannie Mae and Freddie Mac in conjunction with the Treasury Department, the plan offers to make a homeowner’s debt more sustainable.

The goal of the Obama program, in a nutshell, is to lend security to the current volatile financial markets. The Treasury must placate nervous lenders who wish to pull the trigger on non-performing assets out of fear that home prices might fall even further if they wait, but stop the market from plunging further so that new purchasers may buy. In other words, lately a purchaser with good credit is finding it difficult to purchase a home because of lender concerns about the depreciating values in the marketplace. The Obama plan addresses both issues in one fell swoop.

Is there more to the Financial Stability Plan? Um, do most foreign films have sub-titles? Yes!. The Plan includes incentives for people who help to successfully modify home loans for owners, principal reduction payments for owners who stay in their homes for five years and even incentives for lenders who postpone foreclosures.

The Treasury Department will be using the full power of Fannie Mae and Freddie Mac to standardize guidelines for loan modifications. And the benefit not talked about to consider is this one: by pumping 75 billion into the economy, the administration is giving the economy a sudden jolt that might be felt as quickly as June. The word on the street is that purchasing a home now and renting it out may prove to be a much safer bet than keeping the money in the bank!