Obama’s Home Stimulus Plan: A Step Toward a Brighter Future

The United States Economy is in a slump, and consequently, the real estate market is, too. People are not buying homes, but losing homes, in record numbers. Obama’s Home Stimulus Plan addresses this crisis with $75 billion dollars worth of allocation to help homeowners stay in their homes.

When a person is in default on their home mortgage, they know that foreclosure is not far away. The problem is that late fees and penalties accumulate in addition to back payments, and often there seems that there is no way out. Coming up with a large sum of money to make a home loan current again is usually impossible. If someone had that much money, they would most likely have paid their house payment, right?

That is why what is needed is a total reworking or changing of the original mortgage agreement. This is what is accomplished in this government loan program. Interest rates are lowered, terms are lengthened, or principals are reduced to make a lower mortgage payment possible. Late fees can be worked out or even forgiven to allow a fresh start for homeowners who qualify.

There are several different criteria by which the bank will determine your eligibility, but your original loan has to be serviced by Fannie Mae or Freddie Mac. It has to have been signed originally on or before January 1, 2009, and not be for more than $729,750. The home must be where you live, or a primary residence. It can be a duplex, tri-plex, or four-unit apartment building, as long as you live in one unit. It cannot be a vacation home or a rental property that you don’t live in.

You have to impress the bank with documentation that shows that your financial situation was not your fault, or the result of poor judgment. You were the victim of circumstances like job loss or divorce that caused your income to decrease or your expenses to increase. This is called Financial Hardship, and it is a necessary part of this government program. It must be put forth in a brief letter, around 1 to 1 1/2 pages, to convince the bank of the situation. This should be done factually, and you should not embellish the facts at all.

You also must be able to show the bank that you are very much able to make the modified payment in the future. Obama’s Home Stimulus Plan is an effort toward a brighter tomorrow for homeowners and the economy as a whole.