President Obama has a housing plan for the struggling 10 million home owners. The mortgage plan and moratorium that I have heard about and read on the internet promises to bailout home owners who are going to default on their mortgage and help them stave off foreclosure.
The program for the mortgage help offers refinanced mortgages or modified loans. The modifications would have substantial lower mothly payments. However one thing to keep in mind is that this plan is intended to help those home owners who owe upto 5 percent more than their home’s current value.
What happened was that home buyers brought homes during the bubble and then the bubble burst. So in effect the homes they brought for were more expensive than they were valued at. Hence this plan helps only such home owners who were handed lemons.
Like for instance in California, cities like Stocton, Modesto etcI have heard the values of homes is still high and hence such home owners will not qualify. And it makes sense to have such a qualifying clause. Help should be given where it is due.
Click here for more on Obama Mortgage Moratorium.
Basically the ineligible households are concentrated in those who were gambling in the market. Thinking they would buy and then sell off to make money through arbitrage. So they got caught in the vortex.