Barack Obama's initiative to help homeowners stave off foreclosure begins tomorrow, March 4, 2009. Referred to formally as The Homeowner Affordability & Stability Plan, it provides hope for many across the nation who view it as possibly their last if not only chance to protect their homes.
This $75 billion foreclosure prevention program is also being criticized by some who feel it is not the right way to go. They point to reports that suggest nearly half of borrowers who had their loans adjusted in 2008, fell behind again, on their payments, 6 months later. These critics feel that if the banks are not adjusting the loans sufficiently lower, then the borrower has not received any help - it is just "a short term fix", they argue.
According to CNNMoney.com CitiMortgage announced today that unemployed homeowners whose houses are financed by CitiMortgage may be eligible to have their mortgages "temporarily" (quotation is mine), reduced to $500 a month.
The report go on to say that Sanjiv Das, CitiMortgage's President and CEO told CNN Radio that "We're planning to help recently unemployed homeowners by giving them the ability to pay as little as $500 a month on their mortgage, which in effect is less than the price of a one-bedroom rental nationally". Borrowers, the report say are covered by the program for 90 days when they submit documents proving they are recent recipients of State unemployment benefits. Extensions are possible, Das told the radio station, after the expiration of the 90 days, depending on the homeowners' situation.
Nonetheless, there are optimisms for the program, which calls for loan servicers to lower borrowers' interest rates to 31% of their gross income. The government, it is understood, will subsidize part of the reduction, as well as kick in incentives to encourage servicers, borrowers and mortgage investors to participate .
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