The United States government is aware of the increasing number of foreclosures in these worrisome economic times. Bailout plans have been put in place and it has been said that between 8 and 9 million homeowners have the possibility of qualifying for help to avoid the foreclosure of their home. However, what it boils down to is the question of whether these government bailout plans are working or not. This question will be explored here.
There have been numerous complaints in regards to lack of precise enough information for homeowners to be able to make use of the government bailout plans. They seek help from their lenders, but they have no specifics to give. Others claim a complete lack of help is available at all. Settling on the reasons for the alleged failure of the government bailout plans is difficult to accomplish as people are not willing to have their mistakes publicized or even admit they have asked for help and subsequently been declined assistance.
There are no numbers to accompany the amount of people who have applied for help versus who have been denied or whether any loans were renegotiated. This lack of records and accountability has been one of the chief complaints of homeowner advocates. Obviously, the concern here is that the legislation behind these government bailout plans needs to be improved if the number of people who can find assistance with said programs are to be successful.
One of the main sections of government mortgage bailout plans is for the assistance of people who are stuck living in a home that will sell for less than the principal balance of the mortgage they still owe on it. This is similar to owning a totaled car, except there is no way out of being under water in your home ownership without losing a huge amount of money. Borrowers in this situation have been turning more and more often to strategic default, simply walking away from their homes even if they can make the payments.
The assistance that government bailout plans offer is limited to those whose mortgages do not exceed 5% of the appraised value. This eliminates help to a large amount of people who need it the most. Investors and those not living in their homes are also disadvantaged by the plans, as they do not qualify for assistance under most of them. But without addressing the rampant speculation and homeowners who bought multiple homes during the boom, the only option for these borrowers is default.
The other important sector of government bailout plans is loan modification. These are possible for borrowers who have become delinquent in their payments for a month or more, but are not yet faced with foreclosure actions. The possible modifications are based on the lender’s discretion and can include anything from temporary suspension of payments, lowered interest rates or other creative changes. The success of this section of government bailout plans is dependent upon the individual lenders and mortgage situations.
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