As the government reviews options on the best ways to continue to help struggling homeowners there is rumor of the Obama making home affordable program and other federal housing assistance programs that may be going "bye, bye". As Republicans argue that the federal housing program especially the Home Affordable program should be considered to come to an end because of the failure of the program. As many of us have read in the past few months how the projections of the millions of homeowners this program was suppose to help and in reality it has only helped not even half of what it was projected. As the chairman of the House Financial Services Committee, Representative Spencer Bachus – Republican of Alabama has stated "failed and ineffective housing foreclosure programs" marks the possibility of four foreclosure programs that may end.
The Home Affordable or HAMP program, HUD's Neighborhood Stabilization Program and the FHA's short refinance program, and the Emergency Homeowner Relief Fund passed under the Dodd Frank Act. A hearing is scheduled for March 2 by the Insurance, Housing and Community Opportunity subcommittee. This review will take a look at the above mentioned programs and a scheduled follow up meeting for March 3rd. Spencer Bachus also has stated that these programs, although had good intentions has just made things worse for the homeowner. Also Republican Judy Biggert of Illinois agrees that it is time to break down the barriers to our housing recovery and she feels spending more time and money on programs that obviously are not working should just come to an end.
Some lenders may require the first months new loan payment as good faith for the new loan modification. Most lenders are participating in Obama's home rescue plan, Making Home Affordable Modification-under this plan you do not have a new payment for at least 30 days, and you are on a 3 month trial for the new modified payment. You must pay this new, lower payment on time for the first 90 days, then that payment is fixed for 5 years. How can I find out if I will qualify for a loan modification with my lender? The # one requirement your lender is looking for is proof of your ability to pay the new loan payment now and in the future and evidence that you have suffered a financial hardship. When you provide your lender with properly completed financial statements, you prove to your lender that you can afford the new payment.
I am not late yet on my payments-but I am struggling and foresee a problem-can I still get a loan modification? Yes, the Federal Government is strongly encouraging lenders to reach out to all borrowers with adjustable rate and option arm loan programs now before they go into default.
I ask both parties what is the answer to fixing the housing market? Is ending the federal programs really the answer? The question really lies in the lender's hands and is it really realistic to keep people in homes they cannot really afford anyway? Are we just delaying the inevitable? The key to the market's recovery does not lie in the government's programs, but in the economy as a whole. Will jobs return, will growth continue? Will lenders start lending to new home owners to buy some of the distressed homes?
They will get that only if the person facing foreclosure has not made a payment on that loan in the last 6 months. So the mortgage company here can possibly get $900 at the most while in those instances there is only one loan, the mortgage company there would get $2,250 regardless of when the last payment on that loan was made. Is there anything wrong with that picture? It sure looks like the mortgage company handling the second loan is getting the shaft. Do you think that most mortgage companies on these second loans are going to willingly participate in this program? Current estimates are that in about 50% of the cases where people are facing foreclosure first and second loans exist. It is not clear on how many of these two different mortgage companies are involved. Chances are the percentage is high. One other big challenge exists for mortgage companies when it comes to reducing the principal balances on loans. If they start doing this for people facing foreclosure, won't the people who have made their loan payments on time and are not facing foreclosure complain? Won't they demand that the balance on their loans be reduced if the value on of their homes has dropped? When the Obama Administration announced the revisions to the Making Home Affordable Program on March 26, the news media focused on this one. Their stories just focused on mortgage companies reducing the principal balances on those loans of people facing foreclosure whose properties had dropped in value. They did not go into detail on the guidelines for the revision.People facing foreclosure who are in this situation had their hopes raised that their mortgage companies would be reducing how much they owed on their loans. Many will be disappointed if the problems I mention here occur prevent this from being done. It looks like the Obama Administration has opened itself up to much additional criticism because the guidelines for this revision to the Making Home Affordable Program were not well thought out.
