It looks like happy days are here again for the home loan borrowers. Rates of interest for 30-year mortgages have fallen to around 4.75%, indicating that rates are indeed falling. According to the Mortgage Bankers Association (MBA), home lending could reach $2.78 trillion for 2009, which would be the fourth highest on record. The MBA prediction already is an upward revision from its earlier forecast by more than $800 billion. The nice thing is there are lots of places to look for things like home loan.

The upwards adjustment reflected the recent announcement by the Federal Reserve on its purchase programs for Treasury bonds and mortgaged-backed securities, and on the Fed’s Fannie Mae and Freddie Mac refinance programs. The Federal Reserve’s move dovetails the unveiling early this year of the Homeowner Affordability and Stability Plan by President Barack Obama. There are three components to the Obama plan. First is the restructuring of troubled home loans for which $75 billion in subsidy has been authorized. Focus on loan restructuring is the second, under which a framework for clear and consistent guidelines shall be developed. Thirdly, the plan calls for overhauling the US bankruptcy laws so that judges are empowered to force mortgage rate reduction by lenders and bankrupt homeowners are allowed to write down principal on mortgages. If you’re having trouble with a home loan just search “foreclosure attorney” on google and you can find a lot of information.

Washington, no matter which administration is in power, has always been sensitive to mortgage foreclosure. The resources expended in foreclosures is an initial concern entailing representation fees for lawyers and bailiffs, surveyor fees plus the time spent in the hearings. Cost for all parties of each foreclosure has been estimated to be between $50,000 and $80,000. With foreclosures associated with stripping of home possession and evictions, there is an emotional cost involved. Subconsciously, foreclosures are also associated with the homeless. Another thing people should really look into is bankruptcy to stop foreclosure.

On a positive note, the government encourages home lending and thus homeownership because the homeowners are more likely to improve their property and their community than tenants. This is also the main rationale which prompted President Obama to craft bailout measures on mortgages that turned sour. Another government incentive for homeownership is to allow taxpayers to claim mortgage interest deductions from their taxable income.

Another stimulus for lenders to disburse home loans to borrowers are the government subsidies to the lending and guarantees of Freddie Mac, Fannie Mae, Ginnie Mae and other similar government agencies. The Fed’s recent funding increase in its purchase programs for treasury bonds and mortgage-backed securities is a reflection of such a stimulus to home lending. Homeownership is likewise fostered by the postponement of capital gains tax which is allowed on all home sale.

All these incentives notwithstanding, other factors have to fall in place for more appreciable gains in home lending and homeownership. There has to be stabilization in employment in order to realize a real increase in home sales overall, according to industry observers. What is expected is that the funding increase for home lending this year would only go to refinancing home loans estimated at $1.96 trillion this year while purchases would only be at $821 billion. Consequently, home sales are actually expected to decline by 2.5 percent to 4.8 million units, says the MBA.