I recently read an article providing information on a program that the government and the mortgage industry has promoted for homeowners in danger of foreclosure. Here is the article from Inman News:
Hope for Homeowners, a program created by Congress to assist homeowners at risk of loan default and foreclosure that will allow some homeowners to refinance into more affordable FHA-insured mortgages, launched Wednesday.
An estimated 400,000 homeowners could avoid foreclosure through participation in this program, which is voluntary for lenders and is scheduled to run through Sept. 30, 2011.
That program is among an assortment of federal, state and industry efforts intended to stem the tide of foreclosures.
Under Hope for Homeowners, lenders will determine a homeowner's eligibility and consider loan modifications to lower the monthly mortgage cost, and can also consider whether to take a loss on the difference between an existing loan and a new loan set at 90 percent of the home's current appraised value.
I am glad to hear that there is a program like this. But I also don't agree with the government stepping in and bailing people out. My opinion, whether you like it or not, is that if you put your trust in a real estate agent who puts his or her trust in a quality mortgage professional, this whole foreclosure issue wouldn't happen in the first place. That's not to say that the only reason this whole mortgage mess happened was because of bad loans. Many of the loans offered to buyers were based on their low credit scores and many of those buyers obtained 103-105% loan approval. While most homeowners put 5-20% down on a home, they have equity in the home. But when you roll in closing costs into a loan on a house, you have no equity and are immediately upside down on this house. When someone with high-risk credit takes on a high-risk loan, it's a disater waiting to happen. Many of the foreclosures were due to the three-year ARM (adjustable rate mortgages) adjusted this year. Homeowners just can't afford going from a $2000 a month payment to $3500 or higher.
I am fortunate to know and work with several quality lenders that will take care of the financial needs and comforts of you, my important clients. Don't just rely on who is going to give you the best rate. Make sure you understand all of the terms of the loan! I'm here to help in any way I can!
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