President Barack Obama gave just a little bit too much in stimulus programs following the 2008 presidential election. Among the first announced was a program called Make Home Affordable, which was a mortgage refinancing plan through the Federal Housing Administration. The loan lender of the applicant and the FHA work together. In this time, they work to make sure the loan benefits all parties as best as possible. Many are worried the cash advance from the Treasury wasn’t spend on the right plan.
Loan refinancing from Uncle Sam
The way the Make Home Affordable plan works is that an individual who wants to modify the bank loans on their home has to apply for the modification. If the application is accepted, the government, working in coordination with the applicant’s lender, sets up a trial program for a few months. The trial is to see if the person is able to meet all payment obligations with the change. The trial period has to be successful. If it isn’t, then there can be no permanent loan refinancing program. It seems like an easy program. However, the question becomes whether enough modifications become permanent to justify the program.
Half within the program succeed
According to the Wall Street Journal , less than 50 percent of all such modifications are successful. In August, an audit of the Home Affordable Modification Program, or HAMP, revealed that only 434, 716 successful permanent modifications have gone through so far. 616,839 trial modifications didn’t end up going through. This is apparently like cash wasted. This is going to hurt the numbers. There is a huge risk in applying. This is why many don’t. The average ratio of debt to income for HAMP participants is 63.5 percent. Federal Housing Administration mortgages only go to those with a debt to income ratio of 41 percent or lower. This is where the bad credit comes for new homes the most.
Stimulus going
This program was intended to help keep people out of foreclosure. Modification should be left to the private market considering 40 percent of applicants cannot do anything.
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Wall Street Journal
online.wsj.com/article/SB10001424052748704075604575356663725805580.html”>Wall Street Journal
of applicants turn out to be able to do nothing and have no change. Maybe this means the private market should the take the program as it is cut}.
Wall Street Journal
online.wsj.com/article/SB10001424052748704075604575356663725805580.html
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