Ask a Schaumburg Foreclosure Attorney How Mortgage Bailouts Affect You

Understanding mortgage bailout plans can be tricky. If you are facing foreclosure, you have limited time to take action and save your home. An experienced Schaumburg foreclosure attorney at U.S. Law Attorneys, Ltd. can explain all of your debt relief options, including Chapter 7 bankruptcy, Chapter 13 bankruptcy, short sale, the Home Affordable Program and the Home Affordable Foreclosure Alternatives Program.

What Is a Mortgage Bailout?

In the late 2000s, the United States experienced a mortgage crisis. As homeowners with sub-prime mortgages struggled to keep up with payments, especially those with adjustable rate mortgages (ARMs), foreclosure and bankruptcy rates increased. In an effort to prevent the country from falling into another Great Depression, the federal government enacted mortgage bailout plans on a national level.

A mortgage bailout relieves borrowers of some or all of their mortgage loan responsibility. Most bailouts do not forgive a mortgage debt. Typically, a bailout will freeze or lower a homeowner’s interest rate to keep payments affordable. Bailouts may also adjust the terms of a loan, bringing the loan current by adding missed payments to the principal or extending the length of the loan.

President Bush’s Mortgage Bailout Plan

In December 2007, President Bush unveiled a bailout plan to help homeowners with ARMs taken out between Jan. 1, 2005, and July 31, 2007, whose interest rates were set to reset between Jan. 1, 2008, and July 31, 2010. Qualifying homeowners could have their interest rates frozen for five years. Some argued the plan should have covered more homeowners or provided for a longer rate freeze.

President Obama’s Mortgage Bailout Plan

President Obama announced another mortgage bailout plan in February 2009 intended to help as many as 9 million homeowners. The plan had three components:

• It would help homeowners who were ineligible for refinancing, who were current on their mortgage payments and who had high interest rates
• It would assist people at risk of losing their homes by offering incentives to lenders for modifying loan terms to make loans affordable
• It would attempt to increase the credit available for mortgages by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac

The Home Affordable Program and Home Affordable Foreclosure Alternatives Program came out of this bailout plan. Determining whether you qualify for these programs can be tricky, and the application process can be complicated. A knowledgeable Schaumburg foreclosure lawyer can help you understand the bailout process, as well as all of your debt relief options.

If you are struggling with your mortgage payments or other debts, contact our Schaumburg foreclosure lawyers for a free consultation. Do not stress over finances any longer. Get deserved relief today and get your life back.