Saving Homes from Foreclosure
Finally, there might be a light at the end of the tunnel to save homes from the foreclosure plague that has been hovering over thousands of families living in Florida and some other states in recent years. While the federal government’s plans to save the financial institutions were nothing short of a miracle, but the homeowners, on the other hand, were left watching their dream washing away in the sea of foreclosures. The homeowners that hung in there and kept up with their mortgage payments were rewarded with a large decline in their home equity when the home prices plummeted. For those homeowners who bought their home during the real estate boom things became even gloomier when they ended up owing more on their homes than it was actually worth. The term “underwater homes” or “upside down mortgages” refers to these unfortunate homeowners who had no way out of this mess.
Rebuilding American Home Ownership Plan
That was until finally a good man by the name of Senator Jeff Merkley from Oregon came up with a plan called: the 4% Plan or Rebuilding American Homeownership. Under this proposal, a trust that is established either in the Federal Home Bank or Federal Reserve will buy and then refinance the upside down mortgages as long as the homeowners are current in their mortgage payment. The Rebuilding American Homeownership plan is a brilliantly thought out solution for the homeowners with underwater mortgages with no cost to the taxpayers. The low-interest rates are offered at 4% for 15-year mortgages that although it might not reduce the monthly payments but it will allow the homeowners accumulate equity quicker. The next plan is a 30-year mortgage with 5% interest that offers a much lower monthly payment to make it possible for most homeowners to keep their homes. There is also a two-part plan for the first mortgages. The first part covers 95% of the current values and a second for the balance of the mortgage with no payments or accruing interest for five years. The two part plan is also designed to lower the monthly mortgage payments.