Government Foreclosure Assistance Programs or Foreclosure Relief

Loan modification services provided by Feldman Law Center are focused on helping homeowners. Even if it means recommending government services and services outside the scoop of our programs. When it comes down to government foreclosure relief you can get mixed messages. There have been talks about programs to help homeowners directly, but the bailout just went directly to banks. Not to homeowners in need of immediate foreclosure assistance.

The FDIC just announced a loan modification program expected to help over 1.2 million homeowners. The issue with the proposed program is that it is not for everyone facing foreclosure due to late mortgage payments. It is a cookie cutter program focused on helping homeowners only with certain criteria, they do not explain all this upfront so there is a feeling that the government is doing their part to stop this crisis. When in reality they are putting out blanket statements about helping homeowners and leaving the details out of the media and beyond.

Here are some direct quotes from the FDIC Chairman, Sheila Bair, on the program details. We have highlighted some areas that mention the type of homeowner they are trying to help.

"My loan modification proposal targets a specific set of borrowers: those that are in sub prime hybrid adjustable rate mortgages (2/28s and 3/27s) who have been current on their payments at the starter rate but are unable to make their resets. If it is determined that they can make the reset payment, then they will be bound to the terms of their contract. Because of weak underwriting, however, we believe that the overwhelming majority will not be able to make the reset, which typically results in a payment shock increase of 30 – 40%. The FDIC currently estimates that 1.2 million borrowers who are facing resets in the next five quarters may be eligible for this proposal.

These are individuals who have been in their homes for years and will eventually default if their loans are not modified. These are not speculators, but disproportionately working class and minority borrowers. There is always an issue of equity in any loan modification, but many of these borrowers were led to believe that they would be able to refinance before the payment shock occurred. While modifying these loans will keep the borrowers in their homes, it will also protect home values of surrounding properties. Foreclosed homes typically sell at steep discounts, having a significant negative impact on neighboring properties.

One last important point I would make is that this category of borrowers is typically already paying between 7 – 9% at their starter rate. This is well above prime rates for a typical 30 year fixed mortgage. The vast majority of borrowers who took the conservative route will still be paying a lower interest rate than the targeted borrowers receiving this modification."

The government can not be your safety net and waiting on a loan modification or bailout from these programs could end in you losing your home. You simply do not have the time to wait. At the pace the government is reacting to this crisis you will of been out of your house for months before they figure out what will actually work.

The Feldman Law Center knows what works and we are standing by for your free consultation. Click here now to see recent loan modifications we have provided for our clients. We can save your home, lower your rate, and get you the fresh start your deserve.