Obama’s loan modification plan is aimed to ease the housing crisis with an estimated $ 75 Billion dollars dedicated to keep Americans in their current homes. The plan centers around the idea that it is better to keep American families in homes that they can afford through lowering their interest rates versus letting the entire neighborhood suffer through a foreclosure. His plan helps the banking industry as well. The lenders receive incentives after each year the borrower is able to make their payments. This strategy directly attacks the root of the real estate problem where many people did not prove their income and took what are called stated or “liar’s” loans.

By putting together a comprehensive plan with standards, the lenders and banks now have underwriting guidelines to approve modifications that will keep the homeowner in their current home. By placing the incentives after each successful year the borrower stays in the home the banks will now try harder to find a long term solution. The banks and lenders will also benefit with the government backing because the lowering of interest received does not effect their core capital. Being over leveraged and not having enough capital caused the credit crisis of 2008. This immediately sent the economy into the deepest recession since the great depression. Obama’s loan modification plan has the right set of goals to help keep families in their homes, long term solutions, industry standards, and capital preservation needed to be successful. Although the results probably won’t be fully known for years, the families that this will benefit will feel the results immediately.

To save your home,click here to get the help you need to qualify for a mortgage modification loan.

Article Source:http://www.articlesbase.com/real-estate-articles/obamas-loan-modification-plan-a-step-in-the-right-direction-1295804.html