HOW WILL THIS LAW HELP STRUGGLING HOMEOWNERS KEEP THEIR HOMES: Through FHA, an estimated 400,000 borrowers in danger of losing their dream homes will be able to refinance into more affordable government insured mortgage. The program offers government insurance to lenders who voluntarily reduce the mortgage balance for at-risk homeowners to at least 90% of the property’s current value.

 WHEN WILL THIS PROGRAM TAKE INTO EFFECT: Starting Oct. 1, 2008 and ending on Sept. 30, 2011.

WHO IS ELIGIBLE TO PARTICIPATE IN THIS PROGRAM: To be eligible to participate, a borrower must:1)    Have a loan on an owner occupied principal residence2)    Have a monthly mortgage payment that is greater than 31% of the borrower’s total monthly income as of Mar. 1, 2008.3)    Certify that he or she has not intentionally defaulted on the existing mortgage & did not obtain the mortgage fraudulently.4)    Has not been convicted of fraud. 

HOW CAN A HOMEOWNER ACCESS THIS NEW PROGRAM: Homeowners or a servicer of an existing eligible loan need to contact an FHA approved lender. The FHA approved lender will determine the size of a loan that a borrower can reasonably repay & that meets the requirements of the program. If the current lender or mortgage holder agrees to write down the amount of the existing mortgage & make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30 year fixed rate notes. 

ARE LENDERS REQUIRED TO PARTICIPATE IN THIS PROGRAM: No – the program is completely voluntary. 

HOW DOES THIS LAW HELP NEIGHBORHOODS THAT HAVE BEEN HIT HARD BY THE FORECLOSURE CRISIS: The impact of the current crisis has not been isolated to individual borrowers or investors but has been felt broadly by neighbors, communities and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties and stabilize the housing market. If you have any questions or need to inquire on how to participate in this program, please call Chito Vilar of Home Funds at 602-488-2679.