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HOPE for Homeowners

The record number of foreclosures caused by deceptive and costly option ARMs and 2/28 and 3/27 mortgages is driving the current mortgage crisis and pushing the economy toward recession. But there’s good news for homeowners in dire financial straits from adjustable-rate mortgages.Throughout the mortgage crisis, lawmakers have been working diligently to come up with creative ways to battle the rising trend in defaults. The HOPE for homeowners program will provide aid to homeowners struggling with unaffordable mortgages get into fixed rate loans with reasonable payments.

Washington announced the HOPE for Homeowners program and anticipates that it will be more effective than previous ones like the highly publicized interest rate freeze and FHASecure. Under the program, borrowers facing difficulty with their mortgages will be eligible to refinance into affordable FHA-insured mortgage. Even the most desperate borrowers can apply -- those who are “upside-down” on their loans and owe more than their homes are worth. Here are some options under the plan:

  • 30-year, fixed rate mortgages
  • Maximum 90 percent loan-to-value ratio
  • No prepayment penalties
  • $550,440 maximum mortgage amount
  • Extinguishments of any subordinate liens
  • New home appraisals from FHA-approved appraisers.

The HOPE for Homeowners program is strictly voluntary for lenders. But government leaders such as Federal Reserve Chairman Ben Bernanke, U.S. Sen. Chris Dodd, D-CT, and U.S. Rep. Barney Frank, D-Mass., have urged them to accept some losses by forgiving some of the debt on high-cost ARMs borrowers can no longer afford. This will require lenders to write-down the outstanding mortgage principle balances to 90 percent of the new value of the property – a loss less than the cost to foreclose.

The broad consensus is that the heighten number of foreclosures is a sign that lenders are uniformly and unwilling to “write off” borrowers’ debts. But banks are in the money business, not the real estate business. They prefer to avoid the foreclosure process because it is time-consuming and cost them anywhere from $30,000 to $50,000 per house in legal, serving fees, appraisal, marketing.

Although strictly voluntary for banks to participate, the HOPE for Homeowners program offers another option to homeowners to stay in their homes. The program will last from October 1, 2008 through September 30, 2011.

Call Now to discuss Hope for your Home:
Casey Moseman

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