Can the Government Bailout Package Help Me With My Debt or Foreclosure?

The Emergency Economic Stabilization Act of 2008, affectionately known as the government bailout, authorized the U.S. government to spend as much as $700 billion to prevent Wall Street from falling apart. Starting in July 2008, several major banks failed and the stock market experienced record-drops. The bailout was intended to inject funds into struggling banks to keep them from closing and to keep the crisis on Wall Street from spreading to consumers. Though the bailout package doesn’t directly help consumers with their debts or foreclosures, there may be some other programs that help.

How the Government Package Helps You

The bailout package was originally intended to assist banks, but latest changes will likely steer the funds to help consumers. U.S. Treasury Secretary Henry Paulson announced in mid-November 2008, the funds from the bailout package would be used to make more student loans, auto loans, and credit cards available to consumers. It hasn’t been announced how exactly this would be possible. Paulson also stated his desire to decrease foreclosures, but that Congress hasn’t figured out how to make that happen.

Save Your Home From Foreclosure

The Hope for Homeowners program is not part of the government bailout, but was created by Congress to help owners avoid foreclosure. Between October 1, 2008 and September 11, 2011, homeowners can take advantage of the program if they’ve defaulted or are at risk of defaulting on their mortgage payments. Through the Hope for Homeowners Program, consumers can have their mortgages refinanced into FHA-insured 30-year fixed-rate mortgages with payments that do not exceed 38% of their monthly income. You can find out how to take advantage of the program by visiting the U.S. Department of Housing and Urban Development’s (HUD) website, or by contacting one of the following:

• Your lender
• The Hope NOW Alliance, 1 (888) 995-HOPE
• The Federal Housing A, 1 (800) CALL-FHA

Loan Modification Availability

Homeowners with mortgages held by Freddie Mac or Freddie Mae may be able to have their loans modified to reduce payments. The mortgage financing companies both announced their plans to halt foreclosures scheduled between November 26, 2008 and January 9, 2008 while they work through the details of the loan modification program. Homeowners who have defaulted on at least three payments and still reside in their homes will qualify for the program. If you are a Freddie Mac or Freddie Mae customer with questions, you should speak with your mortgage servicer. You can contact Fannie Mae via phone by calling 1- 800-7FANNIE and Freddie Mac at 1-703-903-3933.

How to Get a Tax Rebate

You may be eligible for a 2008 tax rebate on your 2008 income tax. If you filed your income taxes by October 15, 2008, you should already have received your tax rebate. However, if you missed the October 15 deadline, you can still receive your rebate as long as you file your income taxes during the next filing season. If you filed your 2008 taxes, but didn’t receive a stimulus payment, you can check the status by visiting the IRS website. You can also call 1-800-829-0582, and when prompted, enter extension 726.

Get Rent Assistance

If you need help paying your rent, one of the HUD’s section 8 programs may provide government rent assistance. Through the programs, the government would pay a portion of your rent directly to your landlord. You may be able to receive assistance with up to 70% of your rent and utilities, depending on your income. The programs are administered through your state’s Public Housing Agency (PHA) and specific requirements can vary. You can locate your state’s PHA through the HUD’s website or by calling 1-800-995-2232.

Take Out a Debt Consolidation Loan

For help consolidating your debt, working with your lender is the best option. Many banks have tightened standards on loans, so dealing with a bank with whom you already have a relationship is a better.

While there isn’t a finalized plan for the government to help consumers with the bailout, there are several other options available to help you avoid foreclosure and pay your rent. Take advantage of these resources to help out with your mortgage payments, rent, and other debt.