The Obama administration just announced the first six companies that will get government assistance to help struggling homeowners afford their mortgages. These companies will receive a maximum of $9.9 billion in incentive payments which can be used to lower payments for homeowners and reduce interest rates to drop the number of foreclosures. The six companies are: Chase Home Finance, Wells Fargo, GMAC Mortgage, Citigroup’s CitiMortgage unit, Select Portfolio Servicing and Saxon Mortgage Services. The administration hopes to provide money to other companies in the upcoming months.
Where is the money coming from? $50 billion is coming from the $700 billion rescue plan that went into effect earlier this year. Obama wants the money to be used to help lower bills of those struggling with mortgage payments. It’s currently limited to those who owe up to 5% more than what their home is currently worth.
This USA Today article says that borrowers claim some of these modifications aren’t helping enough people, especially those with lower incomes that can pay on time, but might be living paycheck to paycheck.
People commenting on the article had other concerns such as:
1. Bank representatives telling them they couldn’t get loan modifications because they were still employed and weren’t late on their mortgage
2. Appraisers never stepping foot inside the house to be told that their house didn’t appraise high enough
3. Being able to afford your house but having to help out a neighbor down the street who can’t afford his house with money you don’t have
4. Wondering how the government is going to monitor these bailouts
5. Why money is being spent to help those who committed fraud when they originally purchased their home
I’m curious to know what you think. Is the government doing something right by stepping in? Or are they just adding to an already increasing problem? What else can we do to prevent the number of foreclosures? Please leave me a comment or visit me online.