Obama Mortgage Relief Act: Fast Help For Homeowners

The Obama administration has made its first big decision by signing the $787 billion stimulus bill. Unfortunately, it has been difficult to determine exactly how this bill will affect you. While it is not yet final, the following provisions are those that may directly affect you in the upcoming year. Tax Credits- The first broad targeted provision is for income tax credits. A tax credit reduces your tax liability dollar for dollar. This directly reduces your tax liability rather than just reducing your taxable income. The bill proposes a tax credit in the amount of $400 for individuals and $800 to married couples filing jointly. This credit is proposed for both 2009 and 2010 resulting in an overall tax reduction of $800 per person. Of course, there is a caveat. In order to be eligible for the credit, your adjusted gross income must be less than $75,000 for individuals or $150,000 for a married couple filing jointly. According the US census bureau, this accounts for over 63% of US households.

Unemployment- Another popular topic in today’s news is that of unemployment. With unemployment rates rising, many individuals seem to be in a state of panic. In order to help ease the pain, the bill is proposing that the first $2,400 in benefits be tax free. Traditionally, you are taxed at your regular income tax rate on all unemployment benefits. So, while it may not seem like much, this benefit will result in some savings for those who are currently out of work. In addition, funds are being earmarked to assist with training and employment services through a variety of different grants geared towards expanding individuals’ opportunities. Education- Due to the recent unemployment increase, more professionals are going back to school. In order to assist these individuals, the stimulus bill has earmarked $16.14b to this cause. These funds are planned to be used to increase the limit on Pell Grants, Student Loans, Financial Aid, and College Work Study candidates.
There are also funds going to K-12 education. The programs are structured to prevent cuts to critical education programs and services including special education programs, data systems to analyze student data, education for homeless children, and programs to increase teacher quality.

You must qualify in order to apply. The following guidelines will help you determine if you might be able to obtain fast help through Obama’s Home Stimulus Package: Your home must be your primary residence, where you live more than half of the time. The original loan has to be dated on or before January 1, 2009.
The loan amount has to be no more than $729,250. Your payment, including taxes, insurance, and any homeowners association dues, must be more than 31% of your total gross monthly income.

You must be in a state of financial hardship. This means that your mortgage payment is either in arrears or will soon be due to events beyond your control. This could include: job loss, death of a spouse, medical bills, or an adjustable rate mortgage that jumped way above what you expected. You must be able to document this situation and also present how your income could reliably sustain the new, modified house payment.

There is no real incentive for the lenders to take losses on loans and work with borrowers to restructure defaulted Obama mortgage relief act. In fact, there is a much larger payoff if the banks keep the foreclosures, do nothing to respond to them, and go to the government claiming a crisis that requires enormous amounts of taxpayer money to solve. The bailout plans (especially the most recent $700 billion one) have required nothing from the banks other than that they be in serious trouble and need money. There are no restrictions and the banks can dump these bad loans directly onto the government, instead of having to work with homeowners. The government has given the banks an incentive to keep making bad loans and then never address the problems caused by shoddy lending guidelines. The more people they foreclose on, the more free money they can cash in on from the bailout plans. So nothing will continue to be done to help homeowners stay in their homes.

Learn more about Obama Mortgage Relief Plan Qualifications.