Tax Payers Help Consumers Struggling with Home Mortgage Payments
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by: marciafreeman
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The rate of foreclosures on home mortgage loans continued to go up last month. Both home mortgage delinquencies and foreclosures are at the highest points the Mortgage Bankers Association has recorded since they began keeping track in 1972. The number of people who were unemployed went up to over 8 percent last month, as well. Decreasing or stagnant property values are still troubling many markets. Buyers in large part seem hesitant to jump into the ailing housing market, in spite of the announcement of a new $275 billion government stimulus plan. The President vows to lend a hand to responsible homeowners before they are in danger of losing their homes.
Some homeowners who took on a mortgage that was well within their means and have made all their payments on time, are angered that taxpayers have to pick up the tab for irresponsible borrowers who bought more than they could afford. But the plan the new administration has put forward maintains that it will boost all consumers who own a home. The argument for helping troubled homeowners is that home values will be driven down in neighborhoods that have many foreclosed properties. Communities will deteriorate, as more and more people lose their homes. It is, therefore, in the best interest of all homeowners that their tax dollars are put toward helping people stay in their homes and keeping the community together.
To qualify for a home mortgage modification under the housing aid package, a homeowner must meet certain criteria. A home owner must own the property and occupy it as a primary residence. If a home mortgage was obtained before 2009, it can be considered. It must be demonstrated that the homeowner has been dealing with financial difficulty (for example, a lay off or reduction in pay) that has made it challenging for him to pay his mortgage bills. Finally, to be eligible for a home mortgage modification, a homeowner must demonstrate that his mortgage payments are over 31 percent of his income each month. The housing aid plan does not mean that no homeowner will go into foreclosure. Those who will clearly not be able to make their home mortgage payments, in spite of loan modifications, may have to go into foreclosure. History will be the judge of whether this new housing aid package will give the housing sector relief from home mortgage foreclosure and delinquency rates. Those consumers who have been living within their means and have made sound financial decisions will, indeed, be giving tax dollars to help those that did not make such wise decisions. But many experts believe the consequences of not doing so would devastate an already battered staple of the economy.
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