Obama's Foreclosure Relief Program: Can The Home Affordable Refinance Program Save Your Home?
We’ve all heard the hype and the criticism that has surrounded Obama’s Foreclosure Relief Program. Some are touting it as the solution to our nation’s mortgage woes, while others view it as a narrow program that only helps a small portion of the millions of American homeowners in over their heads with skyrocketing mortgage payments and plummeting home values.
To make an educated decision on whether Obama’s Foreclosure Relief Program can help you, you must first learn about the nuts and bolts of the program.
The Foundation of Obama’s Home Affordable Refinance Program
On February 18, the President announced a national foreclosure relief program that will attempt to stabilize prices in the housing market and ease the lightening-fast rate of foreclosures across the country over the next several years.
However, the Foreclosure Relief Program, which is expected to cost a dramatic $275 billion, must reach a large portion of American homeowners in order for it to be successful.
Strict Qualification Requirements
In order for Obama’s Foreclosure Relief Program to work, it must reach as many homeowners as possible; however, millions of Americans may not be eligible for this national relief foreclosure program because of the strict requirements. In order to qualify for a mortgage relief refinance loan from the FHA, you must meet ALL of the following requirements:
- The home loan must meet current guidelines as set forth by Freddie Mac and Fannie Mae.
- The home loan must be owned by either Freddie Mac or Fannie Mae.
- You must have a solid history of paying your mortgage payments on time, and you must not be behind on any of your mortgage payments.
- The program will not address any second mortgages.
- The first mortgage must not be over twenty five percent of the fair market value of the home.
The Problems Inherent in the Program
It is clear that many Americans simply can’t qualify for a mortgage relief refinance loan, given the impossibly difficult requirements. For example, the millions of Americans who have seen their property values decline upwards of 40 percent will not be able to qualify for this national foreclosure relief program, as their mortgage will likely be far more than twenty five percent over the fair market value of their home.
Of course, the Foreclosure Relief Program is strictly voluntary for banks and lenders – many of whom have received no federal bailout money to date. In other words, many lenders simply cannot afford to reduce the value of their loans at this time.
The second part of the Foreclosure Relief Program includes a government-guaranteed mortgage modification program, which is designed to help homeowners who are struggling to make payments because of a lack of income. The mortgage relief program involves modifying a homeowner’s existing home loan so that it falls within 38 percent of their gross income.
To be eligible for this mortgage relief program, the homeowner must be in danger of default, the loan must conform to Freddie Mac and Fannie Mae guidelines, and the home must be the homeowner’s principal residence.
If you fall within the requirements set forth by Obama’s Foreclosure Relief Program, then help can be on the way. However, if you do not meet the guidelines, you will need to look elsewhere for a solution for your housing woes.
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