Obama’s loan modification package
President Obama signed a bill to put 75 billion, with a b, towards the prevention of foreclosures and obviously the promotion of loan modifications so people could save their home.
Obama has made a big bet on loan modifications to save the economy. After all, nothing is worse financially and in general to lose your biggest investment, your home.
Obama’s plan wishes to extradite the use of second liens. Using a car, for exapmle, as collateral for the loan.
Also he has pushed the idea that a mortgage payment after a loan modification should be no more than 31 percent of the homeowners income.
He also wishes to use pure cash to incentivize lenders and brokers to work together to get a loan modification done. Servicers of loan modifications will be rewarded up to 1,000 dollars for getting a successful loan modification done and homeowners can qualify for 1,000 dollars off of the principal of their loan.
Whether Obama’s loan modification package will work or not remains to be seen, but it is nice to see that loan modifications are getting positive press.