President Bush signed a new initiative in July of this year that is expected to help many homeowners escape foreclosure and live in their homes.Do you want to learn more? Visit www.faristeam.wordpress.com/2020/10/29/knowing-you-are-ready-to-stop-renting-and-buy-a-house/
I have received several e-mails from subscribers over the last few weeks asking me about this new Support Release Program, because they have no idea how this new programme is going to help homeowners, and who may or may not apply, but mainly they want to know whether they qualify for help, whether it comes with some strings attached and there would be something in the small print that they should know or be terrible
This bill is meant to ease the troubled housing market; but the truth is that this bill sought to help Fannie Mae and Freddie Mac, the mortgage finance giants, until the government had to bail them out and not exactly to the majority of struggling homeowners.
And yes, if, and it’s a major “IF,” but if you get to apply and pass the vigorous scrutiny and actually get approved for an FHA baked home mortgage loan, there are a lot of things you need to be aware of and you better read well because, as usual, it’s very likely that all the strings that come with this arrangement will not be clarified in detail.
In several, many cases, people would be better off letting their homes go to foreclosure, renting for a year or two, and then starting fresh and purchasing a new property when home prices stop declining.
To begin with, they must first withdraw all other home debt, such as a home equity loan or line of credit, before homeowners can get FHA-backed mortgages. Borrowers are not eligible for at least five years to take out another home equity loan.
This is a voluntary scheme, so before anything can start, lenders holding the original mortgage have to agree to rework a given loan. The bill needs lenders to make substantial sacrifices, writing down the loan value to 90 percent of the existing value of the house. That will mean a huge loss for the lender in places where rates have fallen by as much as 40 percent.
Yet lenders would not sign off on a workout unless they think that by allowing a home to go through the expensive foreclosure process, they will lose less money on that than they would.
On a case-by-case basis, each loan would have to be underwritten by an FHA lender. That ensures that income statements, bank accounts, work records and credit ratings will be checked and confirmed by the banks. It’s going to be like you are looking for a new loan for a mortgage. To apply, you will have to fulfil all credit requirements.
Remembering the Lenders is a voluntary scheme, because if the original lender agrees to the write-down, the old loan is bought by a new lender and the reworked mortgage is taken over.
What would it cost?
Borrowers have a predetermined up-front risk to bear. Loan origination costs can vary according to the lender, but they will typically be charged by the borrower in the form of a marginally higher interest rate over the life of the loan.
And what’s the catch?
The cure is also worse than the disease. The refinanced loans actually come with a lot of strings, so homeowners need to know what they’re getting into. Borrowers are responsible for paying the FHA a lifetime insurance premium, which would be 1.5 percent of the principal annually, for one thing.