One of the ways President Barack Obama was assisting in stimulating the economy with the newly released stimulus package was bailing out homeowners that were either near foreclosure or already in foreclosure.  He created a sort of foreclosure prevention program that actually went into effect March 4, 2009.  There are nine million borrowers that this program was targeting.  His intentions were to resolve two basic situations.  The first one was assisting current homeowners in refinancing their current mortgages into new ones that have lower interest rates.  Secondly, the lenders are receiving incentives if they are able to restructure your current mortgage so that it becomes a more affordable amount to pay each month. 

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Another part of this foreclosure prevention program was for borrowers who have maintained their mortgages and have remained current on them.  They have been the unlucky few that could not get refinanced because the values of their homes are falling.  They owe more money on their mortgage than their homes are even worth.  The new prevention program would be capable of helping someone if their mortgage exceeds their home value by five percent.  The downside is that the only homeowners this part of the program is helping are those who have borrowed from Fannie Mae or Freddie Mac, though the government claims it is working on adding other loan sources. 

Mortgage modifications are next on the foreclosure prevention program.  This is targeting homeowners who are already in default or at risk of going into default because they suffered a hardship such as loss of incomes, expense increase, a jump in interest rates, etc.  The modification is to stay the same for at least five years, and unfortunately, it will revert back to its original amount afterwards.  There are also requirements that you as a homeowner must fall under in order to be eligible for this program.  Anyone who bought the property as an investment would not be eligible…only owner-occupied homes are.  They will verify occupancy on these homes.  Now, given the available options, are you still inclined to walk away from your mortgage, or will you be able to benefit from the new stimulus package?

Tags: Foreclosure, Real Estate