Unless you live in a cave, you have probably been hearing quite a lot about a loan modification program made available through the 2009 Stimulus Bill. You may be wondering what it is and who benefits from it.When President Obama came into office in 2009, the economy was experiencing a great deal of difficulty across the spectrum. The government began to fund programs that were classified generally as “Bail-Outs,” or Stimulus Bill programs. They were hoped to stimulate the economy, rescuing certain segments such as automobile manufacturers, banks, and other financial institutions. Corporate heads flew in to Washington requesting their piece of the pie to prop up their flailing businesses.
At the same time, foreclosure was rising to record rates, as the real estate market also tanked. So, President Obama also supported a Home Stimulus Bill that provided $75 billion dollars to help homeowners in trouble on their mortgage.This program works by providing $1000 incentives to participating lenders to do loan modifications for qualified homeowners. A loan modification reworks an existing Fannie Mae or Freddie Mac loan so that the payment is lower. At the same time, the program requires the late fees and penalties to be forgiven.
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