It’s About Time…
It looks like the growing army of foreclosed homes up and down Main Street U.S.A. may have finally caught the eye of Uncle Sam. This week, the government announced it’s working on a way for some of that $700 billion rescue plan to actually help homeowners, not just bankers.
It’s about time. With home prices spiraling downward, no bottom clearly in sight, many property owners are finding out their home is worth less than the mortgage they still owe. They’re caught in the middle: can’t afford to sell the house, can’t afford to keep the house. Their only chance is to negotiate a new, more affordable mortgage.
But people have still been losing homes left and right simply because lenders don’t want to wait for their money. Amid a sea of defaulted loans, banks are desperate. They want their money now, and if that means kicking you out of your house so they can slap a “for sale” sign up in front of it? Then tough luck. Until now, anyway. It seems the Feds are finally seeing the light: it’s the lenders that got us into this so-called financial crisis when they handed out “no money down” mortgages like candy. So the lenders have an obligation to help us out.
Here’s how the plan will work. If the FDIC and Treasury have it their way, some of that bailout money will serve as the carrot to encourage lenders to work with homeowners. They’ll (hopefully) be inspired to modify current loans into more affordable versions with more realistic deadlines. If a buyer defaults on the new mortgage, the lender will still get paid. If all goes well, the deal could cut the average homeowner’s mortgage payments by nearly $400, according to CNN.com. Of course, so far lenders won’t be required to negotiate with buyers, so there’s still a chance they could balk. But at least there will be a financial incentive.
So what can you do to take advantage of this potential government lifeboat? Start by getting your finances in order today. With the free one-on-one debt analysis DebtStoppers is offering, you can learn how to reorganize your debt so you can start saving. That way, even if Uncle Sam ends up changing his mind, you’ll still have a shot at the American dream—whether that’s keeping the home you already own, or making the dream of buying one a reality.