How will the Obama Financial Stability Plan Benefit Me?

Examining the Obama Financial Housing is like watching a foreign film. You may not understand it at first, but upon second glance, it starts to make sense. Here are the five main advantages of the plan.

1. The main benefit is that it provides assistance to homeowners who wish to stay in their homes. The sour economy has made it tough for many homeowners to refinance because for most, their equity has dried up and they are unable to do so. This plan also helps those who may have lost income due to the current recession.

2. No help for flippers. Remember those TV shows where investors boasted of making massive profits by fixing up houses and then reselling them? Those days are mostly gone and in addition, the Obama plan provides no assistance for real estate speculators with homeowners receiving all the funds.

3. The Plan Helps Stabilize Neighborhoods. A foreclosure often brings an unwelcome element into a neighborhood. Most vacant homes attract vandals and vagrants as well as piles of yellowed newspapers on the stoop. Keeping a property from becoming a foreclosure in the first place, the plan helps to stabilize a neighborhood.

4. The Plan Proactively Assists Homeowners Not Yet Late on Payments. Oftentimes responsible homeowners who know that their jobs are in jeopardy due to the recession will call their mortgage lender(s) hoping to make some kind of arrangement, only to be told that there is nothing that can be done. Unless a homeowner is in arrears, banks will not listen to their plea for help. This plan offers assistance to homeowners at risk of default despite being current on their mortgage payments.

5. The Plan helps to restructure total Debt. The financial stability part of the plan is to create payment plans that can be kept by the homeowner ” not pipe dream payments. By working in conjunction with Fannie Mae and Freddie Mac to standardize loan modifications, the Treasury Department hopes to do just that.

Although the Treasury Department hopes to keep as many homeowners in their homes as possible, at the same time it is promoting security. Step one of the plan attempts to avert the current financial bleeding by stopping lenders from foreclosing, and keeping families in their homes. Many lenders are looking to sell or auction assets at bargain prices, which not only drives home prices down further, but makes it harder for purchasers to obtain new loans. For example, if you were a lender making a loan for $200,000 today, wouldn’t you be a bit concerned about the foreclosure that just closed escrow in the neighborhood for $150,000?

The Obama Housing Fix-it Plan has much more to it. Parts of it involve granting incentives to lenders who postpone foreclosures, paying down principal for owners who stay in their property for five years, and even giving incentives to people who successfully modify loans.

By assisting responsible homeowners as well as the millions affected negatively by the recession, the Administration is hoping to jump-start the economy as well. The 75 billion may have an effect that is seen as quickly as June 2009. For this reason, many savvy investors are purchasing property and renting it out. This may prove to be a smart play to help revive your 401k nest egg.

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