[Iran Press TV Latest] Government aid is underway for homeowners in the US as President Barack Obama's administration has decided to erase mortgages and lower payments in a bid to stem foreclosures.
The Obama administration on Friday pledged USD 14 billion in aid to provide lenders with incentives to write off some mortgage debts and reduce payments for the unemployed.
| Banks and other mortgage providers would have to lower the payments to no more than 31 percent of a borrower's income, which would typically be the amount of unemployment insurance, for three to six months. According to administration officials, in some cases, a lender could completely write off the debt. |
Banks and other mortgage providers would have to lower the payments to no more than 31 percent of a borrower's income, which would typically be the amount of unemployment insurance, for three to six months. According to administration officials, in some cases, a lender could completely write off the debt.
The aid expansion comes as the administration is under growing pressure from Congress to tackle the foreclosure crisis, which is hurting the economy and exposing millions of Americans to the risk of losing their homes.
The new initiatives could well provoke protests among those who have managed to pay their debts and are not in trouble.
"Our housing initiatives must balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone," the Treasury said in a statement according to a New York Times report on Friday.
The government aid would not include investors and speculators, as well as wealthy Americans living in million dollar homes or people defaulting on vacation homes, the statement said.
Around 11 million households, or a fifth of those with mortgages, fall in this category, known as "underwater" position.
"The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is the only viable path to real housing stability," said a source who was briefed on the government's plans.
Dennis Kucinich, the Democratic Representative from Ohio, who threw his weight behind Obama on this week's landmark healthcare legislation, told the administration that he had not seen any "bold, new" initiatives for underwater borrowers.
"What are we doing to help those people who owe more on their homes than the home is worth?" Kucinich asked. |