A Few Reasons Why the Government Bailout Programs Have Been Disappointing
Article by Nick Adama
The United States government is aware of the increased number of foreclosures in these hard economic times. Bailout plans have been put in place and it has been said that between 8 and 9 million homeowners have the possibility of qualifying for help to avoid the foreclosure of their home. However, what it comes down to is the question of whether these government bailout plans are working or not. This question will be explored here.
There have been numerous complaints in regards to lack of specific enough information for homeowners to be able to make use of the government bailout plans. They seek assistance from their lenders, but they have no details to give. Others claim a complete lack of help is available at all. Settling on the reasons for the supposed mistakes of the government bailout plans is hard to accomplish as people are not willing to have their mistakes published or even admit they have asked for assistance and subsequently been declined assistance.
There are no figures to accompany the numberof people who have applied for assistance versus who have been rejected or whether any loans were renegotiated. This lack of accounting and accountability has been one of the main complaints of homeowner advocates. Obviously, the concern here is that the rules behind these government bailout plans needs to be improved if the number of people who can find assistance with said programs are to be successful.
One of the main sections of government mortgage bailout plans is for the assistance of people who are stuck living in a home that will sell for less than the principal balance of the mortgage they still owe on it. This is equivalent to owning a totaled car, except there is no way out of being under water in your home ownership without losing a huge amount of money. Borrowers in this situation have been turning more and more often to strategic default, simply walking away from their homes even if they can afford the payments.
The resources that government bailout plans offer is reserved to those whose mortgages do not surpass 5% of the appraised value. This eliminates help to a vast amount of people who need it the most. Investors and those not living in their homes are also disadvantaged by the plans, as they do not qualify for assistance under the majority of them. But without addressing the rampant speculation and homeowners who bought multiple homes during the boom, the only option for these borrowers is default.
The other important section of government bailout plans is loan modification. These are possible for borrowers who have become delinquent in their payments for a month or two, but are not yet faced with foreclosure actions. These possible modifications are based on the lender’s discretion and can include anything from temporary suspension of payments, minimized interest rates or other creative changes. The success of this section of government bailout plans is dependent upon the individual lenders and mortgage situations.
About the Author
Nick publishes articles for the ForeclosureFish site. These articles provide information to homeowners facing foreclosure, describing a number of methods they can use to stop foreclosure. The site details numerous options, including loan modification, foreclosure loans, deed in lieu of foreclosure, filing bankruptcy, and more. Visit the site to read more about how the foreclosure process works: http://www.foreclosurefish.com/