The Sub Prime Crisis and President Obama's Stimulus Plan - Will it Work? [mortgageinsuranceguide.blogspot.com]
The Washington Post has a great piece out today looking at how the subprime credit bust is creating lasting damage to the credit scores of black Americansâ€"something that may hamper their ability to rebound from the crisis that erased a “generation of ... A Racial Legacy of the Subprime Crisis: Damaged Credit Scores
No longer can people easily earn and spend money. Today, everyone in America is dealing with lower incomes and higher prices for consumer goods. As a result, the housing market as suffered enormously as many Americans can no longer finance their homes. Many homeowners have faced foreclosure or even bankruptcy and the banks who own these loans were unwilling to help.
President Obama's has designed the stimulus package to help struggling homeowners with their mortgages through mechanisms such as loan modification, tax credits or tax grants. However, it is still not known if the 2009 stimulus package can help with the current sub prime credit crisis.
After 911, many lenders were offering extremely low interest rates on their loans. This enticed many Americans to take advantage of the sub prime interest loans. However, with the economic downturn, the interest rate fluctuations and increases have made it extremely difficult for many Americans to keep their homes.
This is why there have been so many foreclosures and bankruptcies to date.For these people, President Obama is offering a way to help them keep their homes. He has instructed the HUD to provide free services to homeowners to aid in speaking and negotiating with lenders to make the loans more affordable.
Under the plan, your monthly loan payments cannot be more than 31% of your gross monthly income. In order to qualify, your existing debts cannot exceed 55% of your gross income. This will mean that you will take longer to pay off your loan, but will help ease your current financial situation.
With interest rates at 5.16%, loan modifications make the most sense, as you will benefit from this further down the road.
If you have sub prime credit, you may qualify for grants and loans. Even if you have a low credit score, there are still many ways to receive help. President Obama believes that with so many Americans struggling with their debt, by providing assistance and freeing up income to spend in the economy, this will help the recession turn around faster. Recommend The Sub Prime Crisis and President Obama's Stimulus Plan - Will it Work? Topics
