Financial News

Despite initial thoughts that the current recession could result in a depression, Federal Reserve Chairman Ben Bernanke believes were actually moving in the opposite direction. This news comes from his recent CBS 60 Minutes interview - the first of its kind from a sitting Federal Reserve chairman in 20 years. Despite much turbulence in the financial markets for the past 6 months, mortgage rates have steadily become more affordable as the government has introduced a new mortgage plan to help the ailing housing market that has dragged the entire economy down with it.

In the interview, Bernanke surprised many with his news that the recession could be ending as soon as this year. One reason he noted for this early ending is the survival of the nations largest banks, while another was the governments decision to keep money from contracting - a mistake that led to the Great Depression. By dedicating hundreds of billions in financial bailouts to a number of large banks, mortgage lenders and insurers, mass failures were avoided and financial institutions maintained solvency.

But while there is good news on the horizon for the recession, Bernanke does believe that the 8.1% unemployment rate will continue to rise for some time. Additionally, he believes the US will not make a full recovery because the financial system is still in crisis - also, interest rates will need to be raised and the supply of money will need to be reduced for the recovery to be inflation-free.

Nonetheless, there looks to be light finally shining at the end of the tunnel. At least according to Bernanke, who believes that we will likely see the first of the positive changes by the beginning of 2010.

Do you believe the Federal Reserve and government policies have been enough to steer us from a depression?

The U.S. Department of Treasury announced the Making Home Affordable Plan, as part of President Barack Obama's continuing endeavor to resurrect the U.S. economy. Companies are also helping to restructure mortgages to aid the faltering housing market and in reaction to growing unemployment. The plan is designed to aide 7-9 million homeowners in keeping their homes, and to stop the destructive tide of foreclosures. There are two separate programs, The Home Affordable Refinance and TheHome Affordable Modification - both have been created to help different groups of homeowners.

The Home Affordable Refinance (expires June of 2010) helps:

• 4 to 5 million homeowners
• Fannie Mae or Freddie Mac mortgage holders
• People with proven history of responsibly paying the mortgage
• Homeowners to be able to secure new mortgages despite the decline in their home value
• Those with either fixed rate 30 year mortgages or adjustable rate mortgages, who are being encourage to secure new mortgages to take advantage of the historically low mortgage rates and more stable mortgage options
• Only loans contracted before January 1, 2009 qualify

The Home Affordable Modification helps or requires:

• 3 to 4 million at-risk homeowners
• Reduce monthly mortgage payments
• Work in conjunction with an improved Hope for Homeowners program
• Only loans contracted before January 1, 2009
• Maximum principal limit$729,750 for first-lien loans on owner-occupied properties only
• Owner-occupied properties with 2-4 units that may qualify for higher limits
• Documentation required by all borrowers include IRS 4506-T, two most recent paystubs, most recent tax return, and signed an affidavit of financial hardship
• Ownership of property verification through credit reports, and investor-owned or condemned properties will not qualify
• Financial incentives to be paid to lenders and loan providers who modify the mortgages of at risk borrowers who are currently up to date on their mortgage payments
• Modifications that start immediately and until December 31, 2012
• Only one loan modification can occur under the program

Homeowners seeking to take advantage of these programs can contact loan providers now, as they can start to modify eligible mortgages immediately. Due to the sheer volume of qualified program applicants, please expect delays in response time.For complete program details visit the Department of Treasury.

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