Government Mortgage Help Plan: Can The U.s Government Liberate The Subprime Borrowers?

The United States Government has come up with a government mortgage help plan to

help several borrowers reorganize their loans and also to help lift the real estate industry. With more than 200 million Americans residing in the U.S and more than 50% paying taxes, the obvious question that comes to their mind is - how much will they have to spend as tax payers to bail a very small segment of people out and will this really help?

The Government Mortgage Plan has two main components which are intimately connected - the home affordable modification and the home affordable refinance. Both these programs have eligibility requirements.

The Government Mortgage Help Plan - Eligibility

The borrowers have to meet specific criteria to be eligible for an interest rate freeze:

* Only loans made in the beginning of 2005 through 30th July, 2007

* ONLY those customers who are able to prove that they cannot meet the expense of the resetting payments

* ONLY those customers who have never delayed or skipped a payment

* Only primary residence borrowers

* Only those borrowers who can manage to make 'teaser' payments and cannot afford resetting the payments

The Cost Of The New Government Mortgage Help Plan

The plan has been laid out in such a manner that the taxpayers will not have to fund the added costs of the program. In theory, the expenses will have to be stood by the banks and the people who acquire a rate freeze. However, there are certain hidden overheads to this program. Just adding the number of hours the government has spent in creating this program offers a bird's eye view at the hidden price of its implementation.

Moreover, as a huge variety of candidates think about increasing the plan's scope and scale, the general public may be staring at an even larger cost. This is definitely a typical example of the government meddling with the free capital market. Although very unfortunate, a foreclosure is important to keep the price of housing in line with the income. When people go beyond what they can afford, there is absolutely nothing wrong with making a new beginning as a tenant and working one's way up to owning a house. This plan basically kills the process which assists in keeping the already puffed up housing prices high.

An Improved Way Forward

It's never easy to lose a house, but at times it is for the best. All the years before they witnessed the mortgage crisis, the same people were not willingly giving the profits back though they benefitted from the estate boom. When people take chances on the issue of increase in the housing cost financing their mortgage payments, they must be okay with losing or winning that bet. As far as the present market goes, most customers will be losing the bet. Definitely, learning an important lesson and beginning again is the most effective way to go forward for the American taxpayers and the customers. It's not a good feeling to lose a house, but it teaches a great deal about better money management.

by: Mable William

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