Obama Has New Housing Plan to Combat High Foreclosure Rates
Feb 24th, 2010 @ 2:01 PM by Amber Nelson
The national foreclosure rate actually declined in the last quarter of 2009 to 9.47 percent, down from 9.64 percent in the third quarter, according to the latest data from the Mortgage Bankers Association. If you’re feeling optimistic, this may be a sign that things in the housing market are slowly starting to turn around. Yet a foreclosure rate close to 10 percent is hardly something to celebrate. Also, if you combine loans in foreclosure and those that are delinquent by at least one payment, that percentage shoots up to roughly 15 percent. And let’s not forget that another wave of foreclosures is predicted to hit sometime this year as many more option ARM loan interest rates begin to reset.
Considering all that, it is no surprise that the Obama administration has come up with another program to help ease the foreclosure crisis. This new initiative will fork over $1.5 billion to the five states hit hardest by foreclosures. Currently those include California, Florida, Nevada, Arizona, and Michigan. All of these have experienced median home price declines of 20 percent or more since the housing boom peak.
“This fund’s going to help out-of-work homeowners avoid preventable foreclosures,” Obama said in announcing his plan in Las Vegas. “It will help homeowners who owe more than their homes are worth find a way to pay their mortgages that works for both the borrowers and the lenders alike.”
The state housing authorities in these states will be able to use the funds to create programs to reduce the number of foreclosures as they see fit. Hopefully this new plan will be able to reach out to more willing homeowners than the original Obama mortgage plan. That program, a $50 billion initiative to get banks to modify mortgages, was supposed to help four million borrowers but has only served 116,000 homeowners to date.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.