The Obama administration is pumping $ 3 billion into programs to help the unemployed with foreclosure prevention. The Hardest Hit Fund would going to be doubled with one more $ 2 billion was announced last week to be put into the fund. $ 1 billion was given to a program to help unemployed borrowers who have delinquencies on their mortgages called Housing and Urban Development. This could very well help banks instead of homeowners which concerns many experts.
Seems like a money put with preventing foreclosures
To fend off an epidemic of unemployed foreclosures, the Hardest Hit Fund was launched in February as a way to help states design their own foreclosure prevention programs. 10 states are taking advantage of this initiative right now, reports the Wall Street Journal. $ 50 billion total is in the program for housing aid under the Troubled Asset Relief Program, which is where it comes from. 17 states, including the District of Columbia, have terrible unemployment rates right now making it so $ 2 billion could possibly be split among them. Another $ 1 billion goes to HUD for providing interest-free bridge loans of up to $ 50,000 for eligible unemployed borrowers to be used to make mortgage payments for up to two years.
Hardly any money in the Hardest Hit Fund
The housing market, which has led the way out of past recessions, is dragging the current economic recovery down. the New York Times, having interest rates so low doesn’t help anything considering nobody can afford to refinance or purchase a home. . Values of homes in neighborhoods go down drastically with foreclosed homes, which doesn’t at all help. Until now, the Hardest Hit Fund had been projected to help about 140,000 borrowers. About 400,000 families can be helped through the Hardest Hit and HUD programs, which isn’t really much considering 14.6 million individuals are having foreclosure difficulties because of unemployment.
Gravy train for mortgage lenders
Many think that banks will get more from the unemployed foreclosure funding than unemployed homeowners will. Banks should be hurting along with unemployed borrowers says David Abromowitz who is the senior fellow at the Center for American Progress and had an interview with The Hill. He really feels that mortgage lenders should be making principal reductions on loans and other modifications, although they don’t have to do that. As outlined by Abromowitz, lenders should match funding and make concessions. The Hill also interviewed Dean Baker from the Center for Economic and Policy Research who said that funding wouldn’t even help individuals with underwater mortgages. Dean said for the programs to work there has to be a reasonable expectation that homeowners will have some equity in their property at the end or they’ll lose their homes anyway.
Discover more details on this subject
Wall Street Journal
online.wsj.com/article/SB10001424052748704901104575423493999575302.html
New York Times
nytimes.com/2010/08/12/business/12treasury.html
The Hill
thehill.com/blogs/on-the-money/banking-financial-institutions/114349-banks-to-benefit-most-from-white-house-program-to-stave-off-foreclosures
