Thursday, January 15, 2009

Little know foreclosure help

The Hope for Homeowners and Foreclosure Prevention Acts of 2008 were passed in 2008 to help distressed homeowners who have an FHA-insured mortgage. The goal was to assist 400,000 homeowners in retaining their homes and avoiding foreclosure. In response to many of your questions about foreclosure issues, I will attempt to give you a brief description here of services you may be able to avail yourself of if you are facing foreclosure on your home. I will also give you links to access more information on these programs. I am not a lawyer or a mortgage broker, so what I am giving you is the basics and the information you need to get more information and to approach your mortgage holder. Since foreclosure seems to be the area of most concern, I am going to focus on the areas specifically addressing that issue. For more information contact your lender directly.
A new mortgage program is being offered by FHA-approved lenders to refinance distressed loans at significant discounts for owner occupants at risk of losing their home to foreclosure.


Eligibility Requirements:


You must be in living in the home the mortgage is on, and unable to afford the current mortgage payment

You must certify, under penalty of law, that you have not intentionally defaulted in order to qualify

Your mortgage debt to income ratio must be greater than 31% as of March 1, 2008.
You must be able to verify your income with the IRS

You must be willing to take on the new loan as a 30-year, fixed rate loan.

All subordinate liens must be resolved. You do this through negotiations with the primary lien holder

Benefits:

The new loan amount will be the current affordability requirement you meet under FHA requirements based on your income and expenses, or 90% of the current value of our home, whichever is the lesser amount. This is the current fair market value, not the current balance on your mortgage.

Appraisers who determine the fair market value must be certified by the state where the property is located, or by a nationally recognized appraisal organization, and have a demonstrated education in FHA appraisal requirements.


You will be sharing any newly-created equity and future appreciation equally with your mortgage holder. Basically, you will split the profit if you sell the house for more than this new loan is for, but not for the original amount of the mortgage. There is a small penalty if you sell your home in the first five years.

For this program, the FHA loan limit has been increased from 95% to 110% of the area median home price with a cap (which currently is around $625,000)

This program requires a new disclosure that informs you of the maximum monthly payment possible for the life of the loan.

Allows you to retain home ownership, at an amount equal to the current market value of our home, and still enables you to keep the equity you will be building.

Additional benefits for veterans:

Lenders must wait from 3 – 9 months after a soldier returns from service before they can begin foreclosure proceedings.

Soldiers returning from active duty are given a one year period of no increase in mortgage payments due to interest increases or adjustable rates on existing mortgages.

The Boston Globe on January 16th ran an article about the funding for these programs, and what the banks have done with that funding. To read this article, paste the following link directly into your browser.

http://www.boston.com/business/articles/2009/01/16/financial_institutions_set_to_unlock_funds/


For more information on the foreclosure prevention programs themselves, paste this link into your browser.

http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf