The White House says that talks are ongoing about an effort to modify home loans and back up lenders. Bad mortgages and the millions of homeowners at risk will be assisted by the $50 billion that the government will allot to this cause. This plan is expected to aide up to three million homeowners.
Monthly mortgage payments can be made affordable by decreasing the interest rate or extending the terms of the loan. Determining an affordable monthly payment can be determined by looking at a delinquent borrower's debt to income ratio. IndyMac is modifying loans so that the new payment does not exceed 38 percent of their pre-tax income.
Jaret Seiberg, a financial services analyst at the Stanford Group states that the new government plan could offer lenders a way to reduce their losses on troubled loans. Sieberg states that effectively, this plan is a cheaper alternative to the FHA rescue program that Congress enacted.
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