Foreclosure Crisis Watch: Hope for Homeowners Hopeless?

One can argue that homeowners and lenders have yet to be aware of their options under the said program. However, Hope for Homeowners itself is insufficient to help those with troubled mortgages. The program is limited since eligibility is confined only to those with mortgages taken out before January 1 of this year and to homeowners who are paying a home loan equivalent to 30 percent or more of their income.

Aside from this, it does not cover those who deliberately miss payments, those who provide false information to be eligible for the first mortgage, and those with second homes.

The so-called federal assistance is also not beneficial for bankers or lenders. 30-year mortgages insured by the Federal Housing Administration must be renegotiated into by bankers; while lenders, who should set new loans at 90 percent of the present property value appraisal, are taking losses. Also, prepayment penalties and subordinate liens are not allowed.

Added to these discouraging limitations, the program doesn’t allow for easy modification. Speculative investors who own already vacant properties, economic problems and repackaged mortgages bought by other parties are also not helping to make viable deals.

In this present state where brokers and bankers refrain from taking credit risks and interest rates have not been exactly appealing, the only solution for homeowners facing housing foreclosure or troubled mortgages is a revitalized market. It seems that current conditions are clamoring for an alternative plan.

By Cassiano Travareli