The federal housing finance agency has stated President Barack Obama’s home refinance plan has been extended up to June 30, 2012, so more households can benefit from the program.
The Obama refinance program is a part of the federal government’s making the home affordable initiative to help struggling homeowners save their homes by availing affordable mortgage terms and conditions and reducing their monthly payments.
The program is available for mortgage borrowers who owe 25% or more on their mortgages than what their homes are worth in the market today. The basic issue is in recent times due to the economic recession, the market value of the real estate and the property has sharply declined in many places.
So homes are worth less today than what they were when the mortgages were taken out. The mortgage loan is secured through a collateral agreement in which the house itself acts as a guarantee, and lenders have provided loan facilities in the past keeping in mind the market value of the house at that time.
Since the market values of the homes have declined today, lenders don’t have enough financial guarantees to secure the mortgage loan. Moreover, due to tough financial times, homeowners find it difficult to make their monthly mortgage payments.
Many homeowners are currently facing foreclosures, or likely to face them in the near future. The Obama housing plan is specially designed to help these individuals avoid foreclosure, and save their homes.
Eligibility for Obama Refinance Plan
To avail the benefits of the refinance option, it’s required to become eligible for the plan. Some financial institutions provide special eligibility related services which can help you qualify. The eligibility criteria need to be carefully worked out, and their mortgage attorneys can help you by studying your current mortgage status and working out your monthly mortgage payments after analyzing your debt-to-income ratio i.e. how much you earn every month and what your monthly overheads are. The eligibility for the Obama refinance plan consists of:
- The applicant should own the home and be residing in it
- The mortgage loan should be owned or backed by either Freddie Mac or Fannie Mae
- The applicant should not be more than 30 days late on the mortgage payments within the past 12 months
- The primary mortgage should be less than 125% of the home’s market value i.e. if you owe $125,000 on your mortgage, the current value of your home should be less or equal to $100,000.
Advantages of the Obama Refinance Plan
Unlike the Obama loan modification program, the refinance option helps you get a new or fresh loan after redeeming your existing mortgage. The main advantages of the refinance plan are:
- Reduction in your mortgage rate
- Get a fixed rate mortgage if you’re currently having an adjustable rate mortgage
- A reduction in your mortgage term
Unlike Obama loan modification, the refinance option is slightly complicated. You may get the advice from refinancing experts where they will study and determine exactly what type of documentation you need, and guide you with your paperwork.
Refinance attorneys can prepare a convincing hardship letter stating your inability to make your mortgage payments and work out you are making home affordable program refinance application.
Will Obama’s Mortgage Refinancing Plan Work?
The question on the table is will President Obama’s H.A.R.P. (Home Affordable Refinance Program) strengthen the economy? The answer depends on who you are, your thoughts on President Obama, and just where you fall on the subject of the economy. Political views aside, we should take a look at the program itself and similar programs of the past.
As the bottom fell out of the real estate market a myriad of Americans paused helpless as their American Dream consisting of 2.5 kids, a home in the suburbs, and lucrative employment opportunities literally turned into a nightmare.
Many lost jobs and couldn’t afford the kid’s college tuition. Instantaneously their beautiful investment, their homes, seemed as if they weren’t worth much more than the paper the deeds were written on. They cringed as the economy tanked and foreclosures began spreading like a rabid virus.
They watched in horror as the banks were bailed out, the insurance companies were bailed out; the automobile industry was bailed out, but where was the bailout for ordinary American people?
Then came H.A.M.P.! President Obama’s Home Affordable Modification Program. This program offered the opportunity for jeopardized homeowners to relieve themselves of the huge unaffordable mortgage payments and the outrageous interest rates that had besieged them.
With this program interest rates were brought down as low as 2%. Loan terms were extended out as far as 40 years. Portions of the loan, usually the amount that was larger than the home’s current deflated value were deferred interest-free to the end of the loan or forgiven altogether.
This plan’s problem was the banks were going to take a Titanic-sized loss on the highly inflated, much-coveted booty they had designed for themselves. The banks jeered Obama’s H.A.M.P., instituted a powerful lobby, and only a quarter of the beleaguered Americans were assisted and H.A.M.P. began to fade just like the Emergency Homeowners Loan Program.
A predecessor that offered loans to unemployed Americans to aid with mortgage costs. Problem was, lose your job and you’ll default, leaving another whopper of a bill. It too like H.A.M.P. faded.
Cue the White House, plan down, plan down! What can now rally the American people and stimulate the economy? After all, if mortgages can’t be paid, surely Americans can’t help in rekindling the failing economy. Enter H.A.R.P.!
This program, like H.A.M.P., offers modifications but takes the process a step further with the proposition of offering to refinance. It’s open to anyone whose mortgage is owned by Fannie Mae or Freddie Mac.
Even if the mortgage is underwater (the home’s current value is less than the mortgage amount owed) the homeowner is still eligible. There are several other prerequisites, but once again the American people are being delivered the proverbial paddle to transport them from up that creek.
Admirably that returns us to the original question; will President Obama’s Home Affordable Refinance Program help strengthen the economy? Well here are the answers. Yes, if the banks and those responsible for the necessity based expenditures allow relief to come to the American public so that less of their income can go to survival and a little more of it can go to indulgences.
Yes, if the powers that be in Washington consider siding with the American people and not with the lobbyist who beguiles them, and Yes if the President takes a stand and goes to war with anyone opposing what’s best for the MAJORITY of the American people.
It won’t work if the banks insist on maintaining their huge profit level if Congress and the Senate turn a deaf ear and a blind eye to the people they “represent” or if the President does it their way.
Will President Obama’s Home Affordable Refinance Program work to help strengthen the economy? Time and history will be the perfect indicators of how this current dilemma will conclude. But as long as it is carried out as planned, there is the potential of boosting the economy by freeing up funds and increasing spending.
How Senate Republicans Likely To Kill Obama Jobs Bill
President Barack Obama’s Jobs Bill was designed to reduce unemployment and improve the economy as a whole. Due to various measures, it aimed to achieve a 1.5% increase in the GDP in 2012, before any other multiplier effects. The bill mainly concentrates on providing tax cuts to firms who are intending to increase their payroll and tax relief to the individuals recently employed.
However, this bill did not seem appealing to the Senate and could not gather the necessary 60 votes needed to end the discussion and fell short 10 votes. Obama has been conducting campaign-like efforts to seek support from the general public at large for the bill.
The bill carries a $447 million measure. It combines the tax reductions on salaries for workers and the businesses as a whole. Furthermore, an amount of $175 billion has been allotted for infrastructure activities, for example, the building of roads and bridges, repair and maintenance of schools, etc. This amount is also allotted for unemployment assistance and helping the government to avoid cutting down on employees which, if they do, will obviously raise the unemployment further.
Before the jobs bill, Obama had passed the stimulus measure in 2009. The bill incorporates some of the components of the stimulus measure into it, for instance, $800 billion+ to be spent on social security and a payroll tax cut. Though the stimulus bill was deficit-financed, the jobs bill will be financed by the funds generated from a 5.6% surcharge on incomes that exceed $1 million. This will generate around $450 billion in funds over a period of ten years.
Though the jobs bill is predicted to increase the annual GDP, the Republicans are of an opinion on the contrary. They believe that just like the stimulus measure of 2009, the jobs bill will not be successful either. They have termed the stimulus package failure as an “expensive failure” and do not want the same to happen again.
The Republicans believe that the jobs bill do not offer anything different to that of the stimulus package, it is only an extension to the proposed policies of the latter. In response to their claims, Obama clarifies that this bill would help individuals in gaining employment and hence reduce unemployment. He also highlighted stories of certain people who will be adversely affected if the bill is not passed by Congress.
Obama was further willing to break down the jobs bill into pieces to try and pass the legislation for job-creation in this manner. He believed that this bill will certainly help in reducing the unemployment rate from rising further, as it has removed the incentive for organizations to terminate their employees, as a move for cost-cutting. Instead, they should focus on job sharing.
Furthermore, the bill will aim to provide tax credits to companies or businesses hiring individuals who have been unemployed for a long time. This will, to some extent, reduce the effects of the current recession over the longer term. Individuals who were unemployed previously may be able to take advantage of debt relief, as they can claim that they are not able to repay the debt as they have no jobs.
One downside of the bill is the amount the government would be able to generate from taxes. Several tax cuts will obviously lead to fewer funds being generated for the government to spend on various other economic activities. Infrastructure expenditure is only one of the areas where government funds are required to be spent.
Working individuals will experience a reduction in the tax amounts they are supposed to pay on their income, due to the reduction in payroll taxes imposed by the bill. This way they will have more income to spend on things other than taxes or bills. They will experience an increase in their standard of living and may contribute to boosting the economy overall.
With the increasing unemployment and the simultaneous increase in inflation, individuals experience ever-increasing costs and at times fail to manage their expenses on the basic necessities which may result in debts. Credit card companies will be aware of the prevailing economy and the total income of their customers. In a situation where you think you will be unable to repay your debts, you may ask for debt relief from your respective credit card companies. Read up here on debt relief.