Now that President Barack Obama’s $787 Billion Economic Stimulus Bill has been signed into law and will take effect on March 4, many American homeowners are anxiously wondering how this bill may affect the housing market and possible mortgage relief. Despite primarily focusing on bolstering the economy by creating jobs and reviving spending, the bill includes steps to revitalize this critically important segment of the American economy. But what impact will the stimulus package directly have on your mortgage?
President Obama’s financial resue plan, named the American Recovery and Reinvestment Act, is designed to address two groups of homeowners: those who are current on payments but have high mortgage rates and not enough equity to qualify for a mortgage refinance loan, and those who are at risk of losing their homes to foreclosure.
Watch Obama’s Radio Address 01-31-09
The mortgage rescue plan also intends to provide $200 billion in additional financial backing to Fannie Mae and Freddie Mac to increase money available for home lending.These steps will directly help homeowners and new home buyers seeking a new mortgage, says Michael Isaacs, president and CEO of Residential Finance Corporation a national mortgage lender specializing in FHA refinances. “The stimulus package aims to make money more readily available for lenders to help those who are currently in need,” says Isaacs. “The American Recovery and Reinvestment Act will directly help those seeking to refinance out of bad mortgages as well as those looking to become homeowners for the first time.”
The mortgage industry and the home financing guidelines have a long way to go before the credit markets will be out of trouble, but the road to recovery may be in sight as today we witnessed historic interest rates cut that sparked financial rallies worldwide. The Dow Jones industrials surged 360 points and broader indexes rose over 5% after the central bank said it will utilize “all available tools” to boost the financial systems of our economy. They also set its target for the interest rate at which banks lend to each other to a range of 0% to 0.25%, the lowest level on record.
Wall Street reacted positively with markets soaring Tuesday after the Federal Reserve’s historic decision to cut key interest rates again while providing considerable support to offer mortgage relief to the battered economy. According to Mortgage Rate News, the Fed cut led to mortgage lenders across the nation to reduce home mortgage rates as low as 5% for thirty-year fixed rate mortgages for conventional loan types.
The demand for long-term government bonds rose and caused yields to reach historic lows.The federal government made additional promises to promise to continue to buy bad credit mortgages in an effort to revive the struggling housing markets.Mortgage Brokers Network executive, Steve Park said, “The government commitment to protect struggling borrowers with new FHA loan program opportunities like, Hope for Homeowners should help restore consumer confidence and mortgage lending.”
According to Kelly Media Group president, Jason Cardiff, “The fact the lenders are willing to provide loan modifications to homeowners that do not qualify for traditional or FHA refinancing is simply remarkable.”Cardiff continued, “The interest rate cut by the Fed clearly signals a monumental step by the U.S. to restore trust in our financial systems that should spur more market recovery globally.”With Obama being nominated early in 2009, we can expect quick action from the President for predatory lending reform, government insured mortgage modifications and significant incentives for lenders who cooperate with short refinance loans, loan work-outs and additional foreclosure prevention measures.
