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New program: Keep your home lower your mortgage balance!

The Wall Street Journal and news outlets have released information on a new program to keep your home and lower your payments.

The full details have not been released but it is an overhaul of the HAMP program that will have some of the following options:

1. A new option in HAMP that allows for some balance reduction.  This will give underwater home owners more incentive to actually keep their home and do the HAMP program although in my mind it won’t stem the abysmally high rate of fall out from people who start the HAMP trial to people that actually stay current on their modifications.

2.  They are now specifically encouraging “short refinances” using the refinance loans guaranteed by FHA.  This seems like a great thing but most people that really need it will not qualify because in order to get an FHA loan typically you need to be current on your mortgage.  However there may be exceptions to that rule. Based on history the exception would be they may allow late payments if the sole hardship was due to increased payments on an adjustable rate mortgage. Also a big problem with HAMP is that banks will often make less money by following the guidelines so they will look for ways to turn down borrowers for the program.  I saw this happen many times.

3.  There could be payment relief for a specified period of time up to 6 months for those who lose their jobs.  The relief would come in the form of sharply lowered payments to no payments for a period of 3 to 6 months.

I am highly skeptical about this just because I know the implementation by lenders will likely not change.  However if I was a struggling homeowner I would want to look into these programs with my lender and follow the announcements and details.

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Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale. If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT to see if you qualify for a short sale with your lender.  Are you not in my area?  My foreclosure answer service is free to you to.  Call me!

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