President Obama announced in the recent State of the Union address that he would make major changes to the current government programs to help homeowners who are underwater on their home but are current on payments. A recent article in the Riverside Press Enterprise reveals that President Obama has expanded the program. The article can be found at the Riverside Press Enterprise website. (continued below)
The biggest feature of the new plan is that it expands eligibility for loan modifications and encourages lenders to perform principal reductions. In exchange for the eligibility, the government will provide greater financial incentives to lenders. Furthermore, the new plan expands eligibility for homeowners to refinance their loans at current market rates without the equity limits of traditional refinancing.
While the plan could potentially benefit many homeowners in Riverside and San Bernardino county, I am doubtful the plan will have much impact. The changes to the HARP program back in November have yet to be fully implemented and many homeowners who qualify under the expanded guidelines have been stuck in limbo. The more likely explanation for this plan relates to election-year politics and the perception that President Obama has not done enough to help homeowners while banks and corporations continue to be bailed out.
However, a closer look at the plan reveals that the plan shifts risk from banks to the U.S. government. In essence, the program could potentially be another bailout for large banks who still own a large portfolio of loans that could potentially default. While these new options may expand the available options for homeowners, De Novo Law Firm will continue to advise clients on these options as well as the other options available including loan modification, bankruptcy, and foreclosure litigation. If you have any questions about these programs or would like to discuss your options, contact our office today at (877) 346-7411.