After several months of waiting, beleaguered homeowners with loans guaranteed by mortgage giants Fannie Mae and Freddie Mac will receive assistance from the federal government. The Federal Housing Finance Agency, recently announced this new plan to stop foreclosures, which is scheduled to start on December 15, 2008.
The new program, announced to representatives from the U.S. Treasury Department, the Department of Housing and Urban Development, Wells Fargo and Company and Hope Now, is estimated to help thousands of homeowners in danger of losing their homes to foreclosures.
The program is designed to restructure loans and reduce monthly payments down to affordable levels. Target amortizations should not exceed 38 percent of the family’s gross monthly income. To attain lower monthly payments, interest rates will be reduced, including loan term extension as well as providing deferred payments.
Customized procedures could also be implemented depending on the needs and situation of the homeowners, as long as it can help avoid foreclosures. Part of the program is for the government to pay loan servicers $800 for each modified loan.
The new program is offered to borrowers following a set of criteria. Borrowers are encouraged to start communicating with their lenders and banks to start this process and finally prevent foreclosures. The prerequisites for inclusion are:
a) the borrower is already delinquent by at least three payments
b) have loans that are at least 90 percent of the home value
c) living in these homes as their primary residence
d) have not filed for bankruptcy
The Association of Community Organizations for Reform Now (ACORN) describes the new program as heading in the right direction, although it criticized some of the program prerequisites too restrictive. In response to this, ACORN is calling for a 90-day moratorium on foreclosures to give time for homeowners while the program is still in process.
Still, organizations and lenders alike are hopeful that the new program will finally put a stop to this runaway foreclosures crisis. With affordable monthly payments, families are expected to stay in their homes and work to keep their loans current.
Author Resource:-
Leticia Carvalho has been educated in the finer points of the foreclosures market over 5 years. Read about the following article New Federal Plan Aims to Rework Fannie and Freddie Loans by Leticia Carvalho.
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