Recently the government started giving out $75 billion to banks to help people that are struggling with keeping their house. The Home Affordable Program was created to help people that are behind on payments or are facing foreclosure. The $75 billion is giving to the banks so that they could off set the cost of modifying house owners loans. So what is modifying a loan mean? Well each case is unquie but basically banks will reduce interest rates, or back end payments so that house owners will not fall into foreclosure.
From a house owners point of view when you fall behind of payments you should contact your bank immediately and work on sending in a home modification application, this is the first step in saving your house. Of course banks are severly bogged down, creating a bottle neck of applications and long delays to this process. Besides loan modifications there is also a home refinance program, even if you are over/under on your house, the program is set up for you to help save your house, of course the bank losses some money but its better then another bank foreclosure in which everyone losses.
As good as the program sounds there seems to be many problems such as communication with banks, delays in applications, and the requirements for being approved for a modified house loan. Check out this site Making Home Affordable this government web site gives detailed information if you are eligible for these benefits, it is a difficult time and anything will help. The site also recommends that you look into a housing counselor they can help guide you in the right direction. As much as I like the idea of helping people from getting foreclosed on their house, is this the right way to do it?
It seems to me the banks were a major cause of the housing crash because of sub-prime loans and very loose regulations on giving out loans, is it smart to give them billions of dollars to help get people out of trouble that they helped put them in? Could have the government have used a different system? Worst of all banks are over their head in paper work and helping house owners, it seems like this could be a very drawn out process. What do you think?
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