Mortgage Loans and the Stimulus Bill
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by: marciafreeman
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The President is out promoting the new economic stimulus plan, as he gets ready to sign it into action the end of February. The country is in the midst of the biggest economic decline it has seen other than the Depression. A large part of the stimulus bill will be aimed specifically at the ailing housing market, which is blamed for much of the financial crisis that began last year. The specifics of how the bill will aid the sector are not yet public, but consumers having trouble meeting the obligations of their mortgage loans are hopeful the bill will offer them some aid.
President Obama is expected to make the details of the new housing plan public in Arizona in a week. There is, however, one thing that is expected to be included in the plan. Those who are first time buyers, regardless of whether through mortgage loans or cash, are expected to get a credit on their taxes. Many economic analysts believe the tax credit alone will not encourage a large influx of buyers to jump into the market. A big hurdle for potential buyers currently is the more stringent standards lenders adopted for mortgage loans. Banks are requiring higher credit scores and cleaner credit histories to qualify for loans. And requisite down payments are much higher than they were prior to the credit crisis. Buyers must have enough money for the required down payment on mortgage loans, regardless of a tax credit. Still, other economic experts think any incentive will give a boost to the real estate market. There will be some buyers who are eligible for mortgage loans who will decide that the combination of low interest rates, a tax credit and lower prices makes this a good time to buy. That is a step up from the current stagnation the housing sector has been in.
A major factor dragging down the housing sector has been mortgage foreclosures. The stimulus plan is expected to contain some relief for consumers who are in trouble with their mortgages. Banks and lenders will likely be offered incentives to modify mortgage loans for their customers who may be at risk of foreclosing. Many banks are suspending foreclosures until next month. They want to know the specifics of the stimulus bill to understand what it may mean for consumers and them.
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