Good news for the Marin real estate market. During the Wall Street bailout, many taxpayers grew resentful of having to float the bill for others’ errors. That feeling grew even stronger as Obama unveiled his $75 billion housing rescue plan in February. Obama insiders, however claim the legislation will be beneficial to all homeowners, not just distressed ones. New details were released on Wednesday, and many homeowners are wondering how the plan can help them.
A report by quoted there were nearly 2 1/2 million foreclosures across the country last year. That breaks down to one in every 54 housing units and represented a rise of more than eighty percent from the previous year. In a recent speech, the President said that nearly 6 million homes are either in or on the verge of foreclosure. Meanwhile, the Mortgage Bankers Association on Thursday said that over 11% of mortgages nationally were past due or already in foreclosure during 2008’s final quarter, the highest percentage ever.
The 75 billion dollars in the housing recovery plan is intended to reduce monthly payments for up to 4 million homeowners on the verge of losing their properties. Aid is only available to those whose mortgages started prior to January, 2009. To qualify, a homeowner’s monthly loan payments have to be more than 31% of gross monthly income. Also, they must have experienced some sort of financial downfall which puts them in jeopardy of default. While you mustn’t be behind on your mortgage to qualify, homeowners paying comfortably on time won’t be eligible.
To responsible homeowners growing tired of bailing out the less responsible, the Obama administration offer this retort. The plan will help all homeowners because it will avoid large numbers of foreclosures. Foreclosures can cause a rise in crime rate and lower property values. One study showed that a foreclosure will cause property values nerby to drop 9 percent. Hence, if Obama’s plan is successful in thwarting foreclosures, it should serve to boost the values of other homes as well.
A foreclosure can be very detrimental to your credit report and remains there for seven years. Credit experts say that a foreclosure can be every bit as damaging as a bankruptcy. In the current lending market where lenders are tightening standards due to growing delinquencies, now is definitely not a good time to take negative hits on your credit report. Some factors that lead to foreclosure are loss of employment, rising mortgage rates, and irresponsible spending. Though homeowners may have little control over their employment situation, careful attention to these other factors can put you in a better spot should you lose your job. Experts recommend that in these troubled times people should have fallback savings to cover mortgage payments in case the unexpected happens. A common piece of advice to concerned homeowners is to save at least three months worth of mortgage payments. Those with adjustable-rate mortgages should seek to refinance into a fixed-rate loan and fixed-rate borrowers should seek to lower their rates. Homeowners whose loans are owned or guaranteed by financial giants or may qualify for through a second part of Obama’s plan. 30-year fixed-rate mortgages averaged a low 5.15% for the week ending March 5.