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Show Entire ArticleObama Unveils $14 Billion Plan To Help Troubled HomeownersReuters | March 26, 2010 | 10:43 AM EDT
The Obama administration on Friday announced a $14 billion effort to try to stem a rising tide of home foreclosures by giving lenders incentives to erase some mortgage debt and slash mortgage payments for the unemployed.
The new aid programs, funded from the $50 billion allocated to housing rescue under the Treasury Department's Troubled Asset Relief Program, will also allow borrowers to erase mortgage debt down to a maximum of 115 percent of their home's value by refinancing through the Federal Housing Administration.
The plan comes as President Barack Obama is under increasing political pressure to change his strategy for helping struggling homeowners and stem the tide of rising foreclosures and is the second major housing initiative announced in as many months.
Delinquencies on U.S. mortgages rose to nearly 14 percent in late 2009, led by a sharp increase in seriously overdue home loans held by the most credit-worthy borrowers, U.S. banking regulators said earlier on Thursday.
The new measures are a shift from the efforts announced last year, which focused on reducing interest rates for struggling borrowers who got risky loans.
The latest efforts are targeting unemployed workers and homeowners in places where home values have plunged across the board and it is increasingly making more financial sense for homeowners to walk away from their mortgage.
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