Impact of the Obama Foreclosure 2009 Initiative
The primary strategy of the program of the President designed to counter the increasing number of foreclosures is the transfer of some of the funds that have been established by US Congress for the bailout of the financial services industry to the Making Home Affordable Program. The Obama Foreclosure 2009 initiative has three main goals and these are: the provision of incentives to banks and lenders if they approve more loan modifications, encourage more refinancing, and increase the number of new home loans.
The President wants to help out home loan borrowers whose outstanding mortgage loans are bigger than the market value of their properties to get the approval for refinancing the loan to ensure that their monthly payments are easy on their budget. The key requirement to be entitled for this part of the plan of the Obama Foreclosure 2009 program is to have a loan balance that does not exceed 105 percent of the prevailing market value of the property.
Meanwhile, the second component wants to induce the banks and other lenders to agree to the applications for loan modifications to ensure that the monthly payments are also affordable by making sure that they do not make up more than 31 percent of the borrower’s monthly salary. Finally, the Obama Foreclosure 2009 program has allocated more funds to Fannie Mae and Freddie Mac to let them provide more new home loans.
The Obama Foreclosure 2009 strategy, which is officially called the Making Home Affordable Program, has only been able to achieve mixed results as of September. However, it is believed by some that the President’s program is finally delivering some of the sought after results. They point out that the Obama Foreclosure 2009 program has caused a reversal in the trend of decreasing property values and has slowed down the rise in the number of foreclosures at least in a number of states. Nevertheless, several critics of Obama are doubtful that the plan will work, having noticed that only a small percentage of the homeowners who should have qualified for the loan modifications have actually been given the approval to do so.
A number of these critics point out that the Obama Foreclosure 2009 initiative has not been based on accepted economic principles. However, the federal government remains optimistic about the initiative and has been continuously reporting on its progress. For example, the Obama Administration has claimed that it has reached a milestone almost one month before its estimated completion. What the Government has been touting is that there are now more than half a million approved home loan modifications. Therefore, some people remain optimistic about the Obama Foreclosure 2009 plan, thinking that it may soon achieve what the President wants for his country.
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