Obama Foreclosure Plan: Is It Working?

President Obama’s foreclosure plan was put in place to help first-time homebuyers make that first home purchase, get more people modified in their current loan through their current lender, and make it easier for people that can refinance their mortgage to get that done. The key element of this act which was called helping families save their homes was approved in May of 2009.

The Obama foreclosure plan was put together to help combat the slew of foreclosures that the United States is facing right now. When we do this is to make sure that homes that are currently occupied by their owners, can stay occupied by their owners. So loan modifications is a great way to do that.

Part of the plan was to give bonuses to banks they were able and willing to modify their loans with their current customers. Another part of the plan was to give additional funds to Fannie Mae and Freddie Mac to help stimulate some new loans.

The making homes affordable program has had some effect on the market at this point time but we will have to see what happens when the first-time home buyer tax credit ends in June of 2010. Much of the buying activity has been due to the fact that first-time home buyers can receive up to $8000 as a tax credit when they purchase a home for the first time. They also extended this tax credit to those that have owned a home before and put a limit on that tax credit up to $6500.

Those that criticize the Obama plan to help stimulate housing market have pointed out that only a small percentage of those that really want and need a loan modification have gotten one. Part of the problem is that many of the loans that are at risk of being delinquent are insured through FHA. I think that this makes lenders less likely to work with homeowners who need to modify their loan or do a short sale. Why would they mess with all the issues that go into modifying a loan or the paperwork that goes into doing a short sell on the home when the government is just going to foot the bill in the end anyway with mortgage insurance.

We will just have wait and see what happens as time goes on. One good part of all this is that if you are in a position to purchase a home, you are going to be in a very good position when you go to negotiate on offer and you will have the upper hand as you start your home search. It is definitely a buyers market.

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