With only about 170,000 of the 1.1 million eligible homeowners who began the process of restructuring their loans over a year ago succeeding, the Obama administration announced plans to back up new loans to the tune of $14 billion. Loans involving over 100 lenders would be backed by the Federal Housing Administration. If the lender agrees to rewrite a new loan at better terms the government would then bear the risk as well as offer incentives to the lenders to simply reduce existing mortgage balances.
There are many details to the new program which homeowners need to qualify under such as not being late on any payments, being underwater on their loan (balance of loan is more than homes current value),the ability to still pay a smaller mortgage amount, not be an investor owned property, not be a vacation home, etc.
With the housing industry still trying to gain some footing, this latest plan is part of the original goal to help three to four million struggling homeowners stay in their homes. In the recent past, lenders have not been too receptive to working with homeowners on restructuring loans that they felt would eventually fall into default. Now, with the Government stepping in and backing up these new loans, hopefully we will begin to see some stabilization in the housing economy and prices start returning to normal in our area. Contact your neighborhood lenders for the latest details and to see if you qualify for a reduced mortgage.