Foreclosed Home Prevention Program Helped 60,000 Homeowners- By: John Cutts
A recently released government data showed that the Obama Administration's home refinancing program has helped more than 60,000 troubled homeowners avoid foreclosed home since it was launched in April.
The refinancing program is geared towards borrowers who have little or no home equity. It is part of the Making Home Affordable housing program and aims to help about 5 million troubled homeowners within three years.
The program is intended for homeowners who will find it difficult to qualify for a traditional refinancing initiative because their home equity is less than 20 percent. Home equities are dropping precipitously as a result of plummeting home prices across the country.
According to a market report, nearly one-third of homeowners are at risk of foreclosure because their properties are valued less than the total outstanding mortgage they owed. Since April, 60,484 homeowners were able to refinance and save their properties from foreclosures. About 30,192 or 50 percent of the refinancing deals were completed last month.
In a statement, Federal Housing Finance Agency director James B Lockhart III said that there were significant results from the federal programs, but admitted that more work are still required.
The refinancing program is intended for borrowers with loans guaranteed by government-sponsored mortgage companies, Federal National Mortgage Association and Federal Home Loan Mortgage Corp.
The initial program covers only homeowners whose outstanding loans were not more than 105 percent of the fair market value of their properties. In July, the federal government decided to expand the refinancing program to homeowners whose loans were not over 125 percent their current property values.
Meanwhile, the refinancing program is different from the other federal initiative, the loan modification which is aimed at troubled homeowners who are at risk of foreclosure and want to reduce their mortgage payments to affordable rates.
The refinancing program is for homeowners who are still current on their loans but are struggling to make payments and would greatly benefit from cheaper mortgages.
According to industry and government officials, the refinancing initiative was facing challenges such as difficulty in determining eligible borrowers and the lengthy process of appraising the right value of a property. Furthermore, many borrowers were concerned over the gradual rise in historically low interest rates.
According to data, the 5.29 interest rate of the 30-year fixed-rate loan represented a 5.22 percent rise from previous weeks but still lower compared with last year's average rate of 6.52.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.