The housing sales numbers might be picking up but it’s not changing the number of Americans who are still mourning the losss of their homes. To address the issue, the White House announce that it will be expanding its foreclosure prevention program to cover second mortgages.
Announced with great fanfare in mid-February, the president’s $75 billion program has gotten off to a slow start. Loan servicers only recently started taking applications and many delinquent borrowers have complained about being left in the cold because their home values have dropped or they’ve lost their jobs.
The original plan calls for the adjustment of eligible borrower’s loans so that the monthly payments amount to no more than 31% of pre-tax income. This would help borrowers in moderating their cash flow. At least their mortgage servicing will not amount to majority of spending.
Many borrowers opted for second mortgages to allow them to pay little to no down payments when buying homes. Due to the crash, most of these borrowers were exposed to high risks.
Source: CNN Money
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