The Obama administration is trying to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth, commonly referred to as "underwater." Starting Tuesday, the Federal Housing Administration (FHA)will permit lenders to give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10% of the original mortgage amount. Investors who have control over the mortgages as part of their large portfolios will select which borrowers are invited to participate.
The plan is the latest of numerous efforts by the administration to address the depressed housing market. The lending industry was ill-prepared for the crush of distressed homeowners, the economy worsened, and millions of homeowners had taken on so much debt that their financial woes have been nearly impossible to resolve. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's main mortgage-relief program -- overseen by the Treasury Department -- have already fallen out over the past year.
According to NewsGeni.us, "The new refinancing program takes a different approach. It allows investors in mortgage-backed securities to evaluate their holdings and select borrowers that will be offered refinanced mortgages guaranteed by the FHA. The theory is that there are some loans that investors simply want to unload because they have a high risk of default.
"Government officials acknowledge that getting the plan going will be complicated. FHA Commissioner David Stevens said in a statement that it 'requires significant coordination and operational execution by several parties to be successful.'"
The program will be funded with $14 billion from the administration's existing $75 billion mortgage assistance program. That money will be used to cover incentive payments to lenders and losses from borrowers who fall back into foreclosure.
To qualify, borrowers must be up-to-date on their mortgages, though many people who have already received loan modifications through other programs are still eligible. The plan is limited to loans in which homeowners owe at least 15% more than their home's current value.
If you are having trouble paying your mortgage, call or email me before you get too far behind. Let's talk about your options before your bank starts foreclosure.
Joe Giancarli, SA
Short Sale Specialist
Real Estate Advisor
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.newjerseynewhomes.blogspot.com/
www.activerain.com/blogs/josephgiancarli
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