For those who already own their homes and are falling behind on their mortgages you have the option of taking advantage of the Home affordable Modification Program. A press release on July 28th, 2009 by HUD secretary Shaun Donovan announced the Federal Housing Administration (FHA) has recently implemented changes to its loan modification program. The press release noted that “FHA borrowers will be able to significantly reduce their monthly mortgage payments by seeking a loan modification through their current mortgage company or loan servicer under the new FHA-Home Affordable Modification Program (FHA-HAMP).” These changes were preceded by The Helping Families Save Their Homes Act which was passed on May 20, 2009, this plan was originally created to help those qualified borrowers who were upside down on their mortgage by up to 105%. This gave borrowers the opportunity to modify their loans and lower their monthly mortgage payments, apparently this percentage rate appeared to exclude too many borrowers, hence the changes announced in the press release. With the latest update the program has now increased eligibility to FHA borrowers to include those who are up to 125 % underwater. Those meeting the 125% requirement and knocking on the door of potential foreclosure are asked to contact their current lender or loan service provider. The Helping Families Save Their Homes Act of 2009 took effect on May 20th 2009 people can expect recent changes to be implemented by August 15th 2009. For more details on the FHA Programs to help homeowner’s go to www.makinghomeaffordable.gov.
As the press release explained it, “The program permanently reduces a family’s monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off.” According to the July 28th press release, “FHA has used the partial claim option in the past, which allows a lender to advance funds on behalf of a borrower, to reinstate a delinquent loan that was up to 12 months delinquent. Now, this program will allow HUD to bring the borrower’s payment down to an affordable level. This will be accomplished by bringing the mortgage current, buying down the loan by up to 30 percent of the unpaid principal balance and deferring these amounts in a partial claim.” It seems that the administration’s Making Homes Affordable plan is doing its best in trying to stabilize the housing market by attempting to make this plan work for both loan servicers and borrowers as FHA is attempting to entice loan servicers by paying them an incentive for each FHA loan that is modified under this program.
Another potential possibility for the near future is H.R. 2529, The Neighborhood Preservation Act: according to news sources this proposed bill will allow the bank to enter into a long term lease with the party who has been foreclosed upon with the option to buy back the home. The potential catch under this proposed bill will allow the lender to sell the home within 5 years if the market were to improve rather than selling at a loss in the current market. According to WashingtonWatch.com As of 7/30/2009 this consideration has been received and read in the Senate and has now been referred to the Senate Committee on Banking, Housing and Urban Affairs.
Although their appears to be varied opinions on how the bill would affect the market long term, it seems to have good intentions and appears to have the benefit of keeping homes occupied where they will be more likely to be maintained by those living in them. As many of you know numerous homes have been left unoccupied and unkempt allowing them to deteriorate at an accelerated rate.
Also in the works is the addition of a potential housing stipend for home mortgage borrowers who are currently unemployed and already collecting unemployment benefits. News sources suggest that this would aid in helping to stabilize the housing market by creating the opportunity to help families with additional funds and therefore making it more likely that borrowers will be able to make their monthly mortgage payments and avoid the additional stress of falling behind on their mortgage and facing potential foreclosure.
