U.S. Considers Plan to Subsidize Mortgages

[Feb 15, 2009.]

 

President Barack Obama's administration is considering a plan to help homeowners before they get behind on their mortgage loans. Under the plan the government would subsidize mortgages in an attempt to help boost the housing market.

This plan differs from current efforts to help homeowners with their mortgages because it would target people who haven't yet become delinquent on home loans. Some current programs only assist homeowners who are paying more than 38% of their gross income on a mortgage. The Obama plan would require a reappraisal and homeowners would have a uniform eligibility test to determine if they qualify for help.

Homeowners would have to prove that they are experiencing a financial hardship to qualify for help with their mortgage loans. The plan aims to keep people from becoming delinquent on their mortgage in the first place. Among those who could be helped are people who spend a large percentage of their income on their mortgage loan. Other Americans who've lost their jobs could also find assistance through the program.

The mortgage rescue plan is being embraced by some people while angering others.  "This is fantastic. It is very forward-thinking," Rick Williams, president of the nonprofit Home Ownership Center of Greater Cincinnati told Reuters. "Until now lenders are saying, 'We can't help you until you're three months delinquent.' And it's crazy. It's encouraging people to just get delinquent."

Opponents of the plan include homeowners who have continued to pay their mortgages on time and feel that many of the people being helped knowingly obtained mortgages they couldn't afford. Others argue that people may intentionally change their financial situation so they will qualify for help.

"There is no good message that you are sending for the future other than 'If you get into trouble we will bail you out,' " David John, a senior fellow at the Heritage Foundation, a think tank, told Reuters.

 

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.