Has the Obama Foreclosure Bailout Initiative Accomplished Its Objectives?

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By: Mike Bartonolis
Submitted February 13th 2010 & consists of 473 words.
Located in our collection of finances articles.

Critics have pointed out that the results of the Obama Foreclosure Bailout plan in its goal of helping the various owners in the face of declining home prices and the increase in the unemployment rate have been unconvincing. Some people believe that so far, the results of the Obama Foreclosure Bailout initiative have been unconvincing in its goal of providing assistance to homeowners in the face of more and more layoffs and the continuing slump in home prices. In particular, Obama Foreclosure Bailout plan is believed to be the reason for the deceleration in the slide in housing values and the slight reduction in the foreclosure rates in several states. However, many people have observed that only a small fraction of the borrowers who should have been qualified for the loan modifications have actually been allowed to benefit from the plan.

It is important to point out here that the heart of the President’s initiative is to transfer some of the funds that have been set aside by US Congress to save the distressed financial services industry to the program for reducing foreclosures. The three key objectives of the Obama Foreclosure Bailout program are the provision of more loan modifications, new home loans, and loan refinancing. The first portion of the plan is designed to help homeowners who are underwater to obtain refinancing for their home loans to make their monthly payments more affordable.

To be eligible under the Obama Foreclosure Bailout plan, the remaining unpaid loan value should not be greater than 105 percent of the current price of the home. The second portion of the government’s plan has to do with using loan modifications to place a maximum limit on the monthly payments, specifically 31 percent of the borrower’s monthly salary. Lastly, the Obama Foreclosure Bailout plan has also sent 0 billion to Freddie Mac and Fannie Mae so that they would be able to offer more new home loans.

A criticism that has been made by some people against the Obama Foreclosure Bailout plan is that it is not justified by sound economic principles. Nevertheless, members of the Obama Administration continue to support the program and are relentless in their efforts to inform the public about its progress.

To demonstrate, the Housing and Urban Development and the Treasury Departments have declared that the program has attained a milestone even before its projected date of accomplishment. They reported that more than 500,000 trial loan modifications have been issued approximately one month ahead of schedule. Therefore, it is too early to point out that the Obama Foreclosure Bailout plan is a failure in its goal of assisting homeowners who are in danger in foreclosure.

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