The Obama foreclosure bill aims to inspire banks and other lenders to permit more loan modifications, raise the number of approved refinance home mortgages, and stimulate the provision of more new loans to first-time home buyers.
The foreclosure bill has been given a boost by the approval of the Helping Families Save Their Homes Act by President Barack Obama in May 2009. This law is a follow through for the Hope for Homeowners Act that preceded the above legislation and it had the goal of assisting homeowners who were underwater in their mortgages.
One of the major aspects of the Obama foreclosure bill is to aid homeowners in getting the approval of banks and other lending institutions for the refinancing of their loans to bring down their monthly payments and make it easier for them to avoid foreclosure. It should be noted, however, that a prerequisite for refinancing is a loan balance that is not greater than the current market value of the property by more than five percent. The foreclosure prevention program also offers bonuses to the lenders or banks whenever a loan modification has been approved that pushes down the monthly payments to a level that is not more than 31 percent of the monthly pay of the borrower. A great number of home loans will also be available from Fannie Mae and Freddie Mac because the Obama foreclosure bill provides additional funds to these two organizations.
The Obama foreclosure bill, however, had failed to cause a noticeable effect on the housing crisis as of September 2009. Therefore, critics were quick to point out what they think are the deficiencies of the program and that it is destined to fail. On the one hand, supporters of the Obama foreclosure bill countered that it is beginning to have some positive effects. The program seems to have been the main cause of the turn around in the continuing slid in home market prices and the increase in foreclosure filings in some states.
In response, opponents of the President's foreclosure bill observed that only a small minority of those who should have been eligible of loan modifications were given the go signal. Some critics also noted that the Obama foreclosure bill was not founded on sound economic principles. But the members of the Obama Administration are firm in their support for the foreclosure bill and have reported that a significant achievement was made when the number of loan modifications that have been approved surpassed 500,000.
