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Why Home Foreclosure Rescue Plans Aren't Enough
By
Lois Center-Shabazz
As most
Americans know, America is experiencing its
worse foreclosure crises in history caused,
in part, by adjustable rate subprime loans
and job losses. Now, the government is
offering a couple of alternatives to the
constant flow of foreclosure homes onto the
market. The problem is, I don't think either
plan will produce significant help for those
in trouble. I have outlined both plans
below, the purpose of this article is to
explain the pitfalls in both. I call the
first plan which was unveiled in September
2007 -- plan one, also known as FHA Secure,
and the second plan, unveiled in February
2008--plan two, also known as Project
Lifeline. I am not sure when either plan
will be activated, although in plan one a
letter was sent to hundreds of thousands of
potential foreclosure victims. The letter is
listed below.
Foreclosure rescue plan number one is for
homes with FHA loans. These loans have a
maximum of $202,000, this may be increased
in areas with high cost homes.
To qualify for the new program, FHA Secure,
a borrower would have to prove the original
loan was being repaid until it reset to a
higher rate, and he or she must have 3
percent equity in the home. The housing
administration does not supply the mortgage
loan but guarantees loans extended by banks
and other lenders.
Foreclosure plan number two, dubbed Project
Lifeline is for low cost and high cost
homes. It will give homeowners who are in
foreclosure a stop on the foreclosure
process, then they will get 30 days to
refinance. Six of the largest banks in the
United States will participate in the
program.
The following is a copy of the actual letter
sent to troubled homeowners for rescue plan
number one, FHA Secure.
Dear Homeowner,
Do you need help with your mortgage?
Your area is experiencing a disturbing home
foreclosure rate that has accelerated in
recent months. News reports cite the
damaging effects of "subprime loans" as a
major factor in the unsettled market. By
focusing on education and safe mortgage
alternatives, though, the Federal Housing
Administration (FHA) of the United States
Department of Housing and Urban Development
(HUD) is working diligently to address this
unacceptable foreclosure trend.
Over the past few months, FHA has worked
with mortgage loan servicers to identify
solutions for the crisis facing current
homeowners. Your current mortgage does not
have to be FHA insured for you to benefit
from our help. If you are facing financial
difficulties due to a recent or imminent
mortgage reset, or other housing-related
difficulty, I urge you to contact us at
1-800-CALL-FHA or to visit
www.fha.gov
. There you will have the opportunity to
learn about foreclosure prevention, legal
rights, and credit counseling, among other
topics.
Many homeowners may also be able to take
advantage of our recently announced FHA
Secure program. This new program allows
eligible homeowners to refinance into a
secure, fixed-rate FHA loan even if they are
in default.
Additionally, a new partnership between
mortgage companies and non-profit housing
counselors called HOPE NOW is available to
you. Their mission is simple: reach out to
homeowners who may be having difficulty
paying their mortgages. For more information
or to see if your mortgage company is a
member of this caring coalition please go to
www.hopenow.com .
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At these seminars an attorney will personally go over your
mortgage looking for a defense