Those unemployed have a little less to worry about considering the Obama administration is trying to prevent foreclosures with an additional $ 3 billion. Last week the administration announced plans to allocate $ 2 billion toward the Hardest Hit Fund, doubling the size of the program. $ 1 billion was given to a program to help unemployed borrowers who have delinquencies on their mortgages called Housing and Urban Development. Experts are really just worried that banks rather than homeowners will benefit more from this.
Seems like a money put with preventing foreclosures
February was when the Hardest Hit Fund started to help unemployed foreclosures, helping states make their own foreclosure prevention programs. 10 states are taking advantage of this initiative right now, reports the Wall Street Journal. The money is part of $ 50 billion earmarked for housing aid under the Troubled Asset Relief Program. 17 states, including the District of Columbia, have terrible unemployment rates right now making it so $ 2 billion might be split among them. HUD will get $ 1 billion for giving bridge loans with no interest up to $ 50,000 to those eligible who need to make mortgage payments for two years.
Hardest Hit Fund receiving little money comparatively
Recessions usually are helped quite a bit by the housing market, although this time the housing market is what started the whole recession. According to the New York Times, having interest rates so low doesn’t help anything considering nobody can afford to refinance or buy a home. It is hard to sell homes for many who are unemployed homeowners. Their foreclosures weaken neighborhoods and create a vicious cycle that further undermines the housing market. Until now, the Hardest Hit Fund had been projected to help about 140,000 borrowers. 14.6 million unemployed are looking at foreclosing, meaning the 400,000 unemployed helped through the HUD and Hardest Hit programs is hardly anything.
Mortgage lenders getting it easy
Many think that banks will get more from the unemployed foreclosure funding than unemployed homeowners will. David Abromowitz, senior fellow at the Center for American Progress, told The Hill that banks should be required to share the burden being faced by unemployed borrowers. He really feels that mortgage lenders should be making principal reductions on loans and other modifications, although they don’t have to do that. According to Abromowitz, lenders should match funding and make concessions. Dean Baker of the Center for Economic and Policy Research told The Hill that with so numerous people with underwater mortgages, the new funding is unlikely to do much good. Dean thinks that the programs won’t work because homeowners without equity in their homes are bound to lose it at the end of the whole process anyway.
Additional reading at these websites
Wall Street Journal
online.wsj.com/article/SB10001424052748704901104575423493999575302.html
New York Times
nytimes.com/2010/08/12/business/12treasury.html
The Hill
thehill.com/blogs/on-the-money/banking-financial-institutions/114349-banks-to-benefit-most-from-white-house-program-to-stave-off-foreclosures
