Foreclosure bailout: Where to go for help


Photo courtesy of James Jordan on Flickr

The economic stimulus package could help you keep your house ... or maybe the money will go to the guy down the street.

Today President Barack Obama is unveiling details of the $787 billion stimulus package in Arizona, a state that has been plagued with foreclosures. So far the bailout money has gone primarily to Wall Street, but now some of it looks headed for Main Street.

Confused? Local resources can help. If you're facing foreclosure, you might contact Twin Cities Habitat for Humanity. They have a Mortgage Foreclosure Prevention program -- and it's free.

According to The New York Times, there are two groups of people who could use help, but the bailout will focus on one group:

The first group is made up of people who cannot afford their mortgages and have fallen behind on their monthly payments. Many took out loans they were never going to be able to afford, while others have since lost their jobs. About three million households -- and rising -- fall into this category. Without help, they will lose their homes.

The bailout won't help homeowners who can make the payments, but now owe more on their mortgages than their homes are worth, according to the Times.

There are advantages to this approach, according to the story.

Bailing out all underwater homeowners would be tremendously expensive. All told, about $500 billion in mortgage debt is already underwater, and it's impossible to know in advance who is likely to walk away. So the government would have to spend hundreds of billions of dollars to help millions of people who don't need help staying in their homes.

For more, check out the Times article.