It often makes a hard choice for one to choose between secured and unsecured consolidation loans. We are aware of the secured consolidation loan where the home is considered as the collateral. Though it’s popular yet many would try and avoid putting their home as collateral to obtain further loans in the fear of losing it in the future. For these people, the idea of unsecured debt consolidation loans may seem appealing.

There are private lenders who would offer unsecured debt consolidation loans to borrowers. You may qualify for one under the following conditions.

• You may be overwhelmed with debt burden.

• You are continuously being harassed by the creditors and collection agencies.

• Or, may be you may be at the verge of filing bankruptcy.

Why is unsecured consolidation loan so popular?

• The biggest advantage of unsecured consolidation loan is that it doesn’t require collateral, i.e. you wouldn’t lose your home if you fail to comply with the loan terms.

• Getting an unsecured consolidation loan is easier since it involves less paper work. It also takes lesser time to process the loan as no collateral is involved.
• Another advantage with it is that you can include the unsecured loan under bankruptcy when you default and can still save your house since a collateral is not required here. But when you file a bankruptcy with a secured loan included in it, you may end up losing your home.

But the picture isn’t all that rosy

Yes, the unsecured debt consolidation loan has its share of negatives too.

• Since there is no requirement of collateral, the rate of interest on an unsecured loan is higher than secured debt consolidation loans.
• If you have excellent credit score, you might not face any difficulties in getting an unsecured consolidation loan. But for people with average and poor score, it might not really be an option.
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The ‘real estate bubble burst’ has been identified as the major contributory factor towards the current economic meltdown. The real estate industry tumbled as the home values dropped below the purchase prices, forcing many homeowners to foreclose. In order to stabilize the situation the Obama Government has introduced the Home Affordable Modification Program or HAMP. This program is expected to benefit around 5 million American homeowners.

The objective of the program

The principal objective of the program is to offer the much needed relief to homeowners. It’s also aimed at stabilizing the real estate market. For this purpose, the program is being offered free of cost and the borrowers are discouraged to use any third party negotiator to join the program. A fund worth $75 million has been set aside as an incentive for the participating lenders. The three main targets that the program aims to achieve are,

• Bringing the interest rate down to as much as 2%.
• Bringing the debt-to-income ratio of the participating borrowers below 31% of their earning. This has been targeted to achieve even by forbearing the principal amount.
• The amortization period can be extended to 40 years to accomplish the DTI target.

Mortgages that would qualify for HAMP

• The loan should have been taken before January 1st 2009.
• The mortgage shouldn’t have been considered before for modification under HAMP.
• Only primary residence (owner occupied) would qualify for this program. Size of the property may vary from one unit to four units.
• The value of the property mustn’t exceed the amount $729, 750 for a single unit home. However, there is a relaxation in limit on properties with more than one unit.

Qualification for the owner

There are some criteria set for the owner too in order to qualify for the Home Affordable Modification Program.

• The owner needs to be current on her mortgage payment while applying for HAMP.
• She mustn’t also file bankruptcy if she seeks to join the loan modification program.
• The debt-to-income ratio of the household must be more than 31% of its current monthly income.

Home Affordable Modification Program has been strongly opposed by investors, who have heavily invested into mortgage securities. Further, the lenders are asked to enroll in HAMP within 31st December, 2009, which will then require them to offer modification to all eligible borrowers.

Just when the economy was trying to bounce back from recession, swine flu broke out. Now, it’s almost taken the form of pandemic with the number of victims rising and more and more countries reporting positive cases everyday. The outbreak of swine flu is likely to take a toll on the ongoing economic crisis thereby slowing the recovery process further. Following are some of the effects of this disease on the economy,

• The economy is likely to experience a further drop in the production rate as many workers may stay at home in the fear of contamination.
• Travel and tourism, one of the worst affected victims of recession, is likely to face yet another slack in business since travelers may avoid visiting the infected countries. Already the industry is losing in terms of canceled trips and hotel bookings. The travel insurance industry would also get its share in terms of losses.

Diseases and their effects on economy

In recent times the economy has suffered largely during the outbreak of SARS (Severe Acute Respiratory Syndrome) and bird flu (avian flu) though the severity of those diseases was much less than that of swine flu in terms of affecting nations. The travel, tourism and services industries in the South-East Asian countries were totally ruptured during the pandemic alarms. The travel industry alone had lost around $30 billion during the SARS outbreak.

A different proposition
Some experts, however, are suggesting that the effects this time won’t be too drastic since the market is already low. Both the production and consumption rates are at their lowest rates in years. However, the fear isn’t irrational. Swine flu can still cause damages serious enough to mop-up the signs of economic recovery. Here’s what the economy is likely to experience:

• A further drop in the rate of consumption as people would tend to avoid malls and departmental stores in fear of contamination.
• Governments in certain countries have raised serious alarms and have decided to keep the schools and offices closed till further notice.
• Tourists are canceling their vacations to affected countries thereby leaving the aviation and tourism industry to absorb losses in terms of billions of dollars.
• The companies too would suffer losses as their marketing executives won’t be able to fly to affected places.
• If the situation worsens the workforce may choose to stay indoor even braving the fear of job loss; mean the unemployment rate would rise.

We mustn’t also undermine the aftereffects of the disease. In 1918 about 2.5% of the world population had succumbed to flu epidemic. With today’s world population that would mean the death of 150 million (approx) people. This may result in a shortage of workers in the global economy and probably would lead us to yet another economic recession.