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Lifelines for Homeowners Facing Foreclosed Homes HUD

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By : John Cutts    99 or more times read
As home values continue to slide in New York, and so in other areas across the country, many homeowners find themselves owning more than their properties are worth. Foreclosed homes HUD prevention programs are available for borrowers whose properties are worth less than their mortgages and for homeowners who are struggling to pay their Federal Housing Administration (FHA)-guaranteed mortgages.

The Federal Housing Finance Agency’s Home Affordable Refinance Program encourages lending institutions to offer new loans to borrowers who have not missed any loan payment. Borrowers whose property value exceeds by 25 percent their total mortgage amount can avail of the foreclosure prevention program.

Terms under the initial program allows lenders to refinance a loan only if the total mortgage of homeowners does not exceed 5 percent of the values of their properties. The new version of the program would give borrowers interest rates that are a little higher than the best loan rates in the market.

Meanwhile, some changes will be made to the foreclosed homes HUD prevention program designed to help homeowners who are facing payment difficulties with their FHA-guaranteed mortgages.

The original version of the loan modification program of the FHA provides financial incentives to lenders to encourage them to modify mortgages to affordable payment terms.

Data from the LPSApplied Analytics showed that about 14.2 percent of FHA loan borrowers are at risk of turning their properties into foreclosed homes HUD. FHA Commissioner David Stevens explained that changes in the loan modification program would help distressed homeowners remain in their houses, make affordable payments and defer loan payments until property values have improved.

The FHA program allows reduction of loan payments to 31 percent of the homeowners’ monthly income. However, the adjustment will focus on the principal amount of the loan and not on the interest rate. This means that lenders may lower the outstanding loan principal to allow borrowers to make payments of as much as 30 percent.

Reduced payments will be made by borrowers on their FHA-guaranteed loans but they will be required to pay off the entire loan amount if they sell their properties or if the loans will be refinanced.

And unlike in the previous program wherein distressed homeowners have to miss three mortgage payments, the revised foreclosed homes HUD prevention program allows homeowners to receive a mortgage modification after missing only one loan payment.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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