Frustrated by the housing market’s inability to rebound post-Great Recession, the Obama administration plans to roll out two new programs this autumn that may help Americans keep their homes. One is all about refinancing, while the other will provide “emergency” help for unemployed homeowners.
Beyond a doubt, homeowners need help if they want to avoid going into foreclosure. According to Lending Processing Services, home mortgage delinquencies were up 2.3% in May, up to 9.2%. And even worse, the firm says about 7.3 million home loans are in some form of delinquency.
The federal government wants to knock those numbers down, and its plan is a two-pronged approach:
- Offer an emergency home loan program for the unemployed.
- Provide government mortgage refinancing for struggling homeowners who can’t obtain a new mortgage loan.
The announcement came from U.S. Housing and Urban Development (HUD) Director Shaun Donovan, during an appearance on CNN on Sunday, Aug. 29.
“We’re going to continue to make sure folks have access to home ownership,” Donovan said.
One move the government likely won’t make is to resurrect the homebuyer’s tax credit, which economists say was instrumental in propping up the U.S. housing market in early 2010, but has since hurt the market after expiring last April. Since then, American homebuyers have shied away from the market, no longer tempted by the $8,000 tax credit for new homeowners and a $6,500 tax credit for existing homebuyers.
Consequently, the two programs represent a new direction for Uncle Sam.