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The Battle to Save Homes From Foreclosure Fraught With Difficulties

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By : Rob Thomson    99 or more times read
The Federal government has been struggling to help homeowners stay in their homes as well as getting more home buyers into new homes so as to support the housing market. Theyíve done this with the creation of two programs, one with the Federal Reserve to keep interest rates low, and the Making Home Affordable program to help home owners modify their mortgages.

Federal Reserve program buying mortgage-backed securities to keep the interest rates down and ensure that there is sufficient funding in place so that there are mortgages available for people buying homes. There have been very few drawbacks to this program over the length of its existence and in fact that one big downfall to it is that it will be ending on March 31st.

The Making Home Affordable program has been in place since early last year and has been less successful than hoped for. The program offers home owners the chance to either refinance or modify their loan if they qualify for the program. Home owners who are current with their payments may qualify for refinancing to a lower interest rate; qualifications include having a mortgage that is owned or guaranteed by Fannie Mae or Freddie Mac, being current on your mortgage payments, and owing no more than 125% of the market value of your home.†If you do not qualify for refinancing, you may be able to modify your mortgage instead.

Mortgage modification requires that the home that youíre looking to modify the mortgage for is your primary residence, you owe less than $729,750 on your first mortgage, you are actually encountering difficulties in paying your mortgage, your current mortgage was obtained before Jan 1st, 2009, and that your mortgage payment is more than 31% of your monthly income.

The big problem with the Making Home Affordable program is that itís very difficult for home owners to get approved for. Some lenders have been dragging their feet on helping people get approved, citing difficulties in the paperwork and staffing required; the process can take such a long time for home owners that they end of losing their homes or walking away even though theyíve started the process. Even the changes to the program that the government has made recently have been criticized because there are no penalties if the new rules arenít followed.

While it is useful that the government is trying to help home owners stay in their homes, there is still a long way to go before the program in place helps more than a small fraction of the people that it was intended to benefit.
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