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Government Expands Mortgage Relief Program to Slow Foreclosures

The Obama administration announced expanded mortgage relief yesterday as borrowers with mortgages worth up to 125 percent of their property’s value will be able to refinance under the administration’s program to assist foreclosure victims. The one hitch is that the homeowner cannot be behind on their mortgage loan payments.  The other concern for millions of struggling homeowners is that second mortgages are not eligible for this program.  The second mortgage exclusion really takes a lot of potential borrowers out of the mortgage refinancing equation.

Housing secretary Shaun Donovan says borrowers who owe up 25 % more than their home’s market value will qualify for government help refinancing their mortgages. The refinance program currently is limited to borrowers who owe 5% more than their homes are worth.

The goal of this change is to help homeowners who have not been able to take advantage of the low mortgage rates that have been available in recent weeks due to the fact that the value of their property has dropped significantly. The program currently caps eligibility for the program to homeowners that have a loan-to-home value ratio of 105 %. Many homeowners in the country are unfortunately well above that ratio.  The change will certainly draw the ire of people who believe that policies like this are the reason that we got into the housing mess in the first place. However, rising interest rates could be the real issue. The days of 4.8 % interest rates are in the past, and refinancing has noticeably decreased in recent weeks. Thirty-year fixed rate mortgage loans are now back at 5.4%.

Posted in 125 percent, 2nd Mortgage Tips, Mortgage News, Mortgage Refinancing News, Published Loan Articles. Tagged with , , , , , .

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