The federal government will expand its mortgage assistance programme for the very first time to property investors who purchased multiple homes, assisting some speculators who drove up home prices and inflated the housing bubble.
Under the revamped Home Affordable Modification Program (HAMP), landlords can qualify for up to four federally subsidised loan plans beginning May, on condition that these houses must be occupied or rented out, said Timothy Massad, Assistant Secretary for Financial Stability at the US Treasury.
The scheme will pay mortgage lenders to decrease monthly loan payments by stretching terms, reducing interest rates and forgiving principal.
The need to protect homes from foreclosures and tenants from eviction by keeping current homeowners in place has outweighed the concern that taxpayers may end up rescuing property investors. Thus, the government has broadened HAMP’s coverage, after less than one million borrowers took up the scheme.
Property investors are important to the administration’s strategy of reviving the property market. According to Federal Reserve Chairman Ben Bernanke, the economic recovery has been “frustratingly slow”, partly because the weak housing market is affecting consumer spending.
Data from the US Census Bureau revealed that the homeownership rate, which reached 69.2 percent in June 2004, declined to 66 percent in the fourth quarter of last year.
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