| The federal government of United States of | | | | Federal Housing Administration. |
| America announced a couple of mortgage | | | | In this program, the mortgage can be refinanced |
| reduction programs in March 2010. This is yet | | | | into a loan with fixed long term rate (15 to 30 |
| another effort by the Federal Government to | | | | years). The refinancing is available even if the |
| help with monthly loan payments of home owners | | | | value of the house has reduced and now the |
| who find it difficult to meet these payments in | | | | amount owed is more than the current value of |
| time. This plan is an extension and improvement in | | | | the house. The new rate takes into consideration |
| existing government mortgage help plans, making | | | | the mortgage history and repayment history of |
| one wonder whether this program will be | | | | the borrower and is reflective of the current rate |
| effective where others have failed. Let's have a | | | | at the time of refinancing. |
| look at the program briefly and identify the target | | | | Home Affordable Modification |
| groups. | | | | The second mortgage reduction program is |
| The Aim Of The Mortgage Reduction Programs Is | | | | targeted at unemployed or low income earners |
| To Target Two Groups: | | | | providing them some relief from paying their |
| * The first group to benefit from government | | | | installments. It can reduce the home owner's |
| help with mortgages is that of home owners who | | | | monthly repayment to as low as 31% of the |
| owe more to the banks as mortgages than the | | | | owner's monthly income. The Government help |
| value of their house/property. Some estimates | | | | with mortgage involves voluntary lender |
| put the number of such households at more than | | | | participation initially but once the Government |
| 15 million. Out of the 15 million, 10 million owe | | | | starts paying the lender, participation becomes |
| more than 20% of the current value of their | | | | compulsory. There are no fees in government |
| house. | | | | mortgage reduction programs. The institutions |
| * The second target group to receive | | | | involved in this program (lending institutions) are |
| government help with mortgage payments is that | | | | expected to consider any other loan a borrower |
| of borrowers who are unemployed. They are the | | | | may be willing to discuss for this government help. |
| main focus group for government mortgage help. | | | | The cost of living is steadily on the rise and |
| The program involves giving lenders incentives to | | | | defaults on loans have become a common |
| find lower monthly mortgage payments by up to | | | | phenomenon. These mortgage reduction |
| 31% of the borrower's income. | | | | programs of the government aimed at lessening |
| The New Government Help Plans Are: | | | | the burden on the homeowners will not only |
| Home Affordable Refinance | | | | benefit borrowers but also boost the failing |
| The government will give financial aid to mortgage | | | | housing sector. The previous failure of such |
| providers or lending companies so they can give | | | | attempts of the government to help with |
| relief to mortgagees by reducing the amount | | | | mortgage payments may not bode well for these |
| they have to pay. After reducing the amount and | | | | new plans but in the present scenario they do |
| making it reflective of the current value of the | | | | seem like a boon to borrowers who are bending |
| house, if they still owe to the lending companies | | | | backwards to be able to honor their debts. |
| they can refinance their loan with aid from the | | | | |