Preventing Foreclosures

FORECLOSURE. Every which way we turn we seem to be hearing that horrible word lately. Indeed, foreclosures have spiked dramatically due to a variety of reasons. But, there may be hope for many people in this dire situation.

"Separate from the stimulus package, President Obama has made up to $200 billion available to shore up investor confidence in the mortgage secondary market and up to $75 billion in incentives to encourage lenders and borrowers to refinance troubled loans. The effort is critical because of the destabilizing impact of high foreclosures and distressed sales.

"When people lose homes to foreclosure, our communities, the housing market, and our economy all suffer," Charles McMillan (President of NAR) says. The plan details include:

• Help for home owners making their payments but at risk of default. Home owners with a conforming loan could be eligible to refinance as long as their mortgage doesn't exceed 105% of the home's current market value.
• Help for home owners already in default and in need of loan modification. For lenders that voluntarily agree to lower a borrower's payment so that it makes up no more than 38% of the borrower's income, the government would share the cost of lowering the mortgage burden further.
• Doubled resources to Fannie Mae and Freddie Mac. To encourage investors to buy the secondary market companies' mortgage-backed securities, the government promises to back them up to $400 billion, twice the current amount.

If you know of any borrowers who are having trouble keeping up on their mortgage, tell them to call their mortgage servicer or a HUD approved nonprofit housing counseling agency.
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Source: Robert Freedman, REALTOR Magazine