Boosting the number of approved refinancing applications, increasing the approval rate for home loan modifications, and providing more new home loans to people who are buying a home for the first time are three of the main goals of the Obama foreclosure plan. The key element of the program is the Helping Families Save Their Homes Act that was approved by the President in May 2009. This law was designed to add to the features of the Hope for Homeowners Act that was formerly established to assist homeowners who have mortgages that are underwater.

The Obama foreclosure plan is designed, first of all, to provide assistance to borrowers in obtaining the approval of banks and other lending institutions for the refinancing of their loans for the purpose of lowering their monthly payments as a way to avoid foreclosure. However, to be eligible for this component of the plan, the loan balance of the borrower should not exceed 105 percent of the price at which the property could be sold.

Another part of the President’s initiative is to pay a certain bonus to banks and other lending institutions for each loan modification that they approve and this has the goal of ensuring that monthly mortgage payments do not go over 31 percent of the borrower’s monthly salary. The third component of the Obama foreclosure plan is to offer more new home loans by channeling more funds to the two corporations that own the majority of the mortgage loans.

But the Making Home Affordable Program has had only a slight effect on the housing crisis as of September 2009 and its adversaries were quick to focus on its negative aspects. Meanwhile, the allies of the Obama foreclosure plan point out that it has begun to produce some positive results. In particular, they claim that the program has been vital in arresting the plunge in home prices and the rising number of foreclosures in some states.

However, the people who do not believe the President’s program have pointed out that only a small number of applications for home loan modifications have been approved by banks even if the homeowners are qualified. Other opponents also observe that the Obama foreclosure plan is not supported by sound economic theories. Nevertheless, the Departments of Housing and Urban Development and the Treasury have proudly released reports that a critical milestone on load modifications had been achieved.

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