Government Takes Steps to Help Foreclosure Victims
The new foreclosure prevention initiative program, called FHA Secure, is administered by the Federal Housing Administration (FHA) and is a mortgage insurance program for borrowers who have good credit but have still fallen behind in their monthly payments due to resetting interest rates that increased those payments significantly.
Under the terms of this initiative, the FHA can offer homeowners and affordable option that permits them to refinance their existing mortgages and make payments. This program, along with other FHA programs, will provide important help to more than 240,000 families. The target for the initiative is families who could have a foreclosed home due to the unavailability of refinancing options.
In addition, the FHA has 2,300 approved housing counselors nationwide and has increased funding for housing counseling by 200% since 2001. The Department of Housing & Urban Development (HUD) announced more than $44 million in grants for new housing counseling grants to more than 400 state and local programs.
It is the government’s contention that many US consumers must be educated because many don’t read or understand their loan contracts and some don’t even try. The key here is to teach people how to read the ‘fine print’ in contracts before they commit to terms and conditions beyond their financial means and also when they should ask for assistance. President Bush has also asked Congress for an additional $50 million for housing counseling as part of his new budget.
It appears that federal and state authorities have finally taken some firm steps to halt the growing mortgage foreclosures and housing industry slump that might be the beginning of a recession. Officials have also reached out to groups that offer foreclosure prevention counseling and refinancing assistance through a program called HOPE NOW, a private sector alliance to help more people keep their homes.
This is a ‘partnership’ that includes many large mortgage services, housing counselors, investors and trade organizations committed to expanding mortgage refinancing options and helping homeowners to understand loan agreements before bad things take place.
Given these steps, it appears that the US government has finally taken some firm actions to help. For many homeowners, however, it comes too late.
Some state governments are taking similar steps to aid their homeowners caught-up in the mortgage foreclosure crisis. In Michigan, for example, there is a proposal to make loans available through the Michigan State Housing Development Authority to permit qualified borrowers to refinance their mortgages at lower rates, thus avoiding the huge increases of foreclosures for sale and from the resetting of adjustable rate mortgages.