In July of this year, President Bush signed a new program that is supposed to help many homeowners to avoid foreclosure and stay in their homes. In the last few weeks I have received many e-mails from subscribers asking me about this new Help Release Program, because they have not idea how this new program is suppose to help homeowners, and especially who may or may not qualify for the program.

Mostly they want to know, if they do qualify for help, would it come with any strings attached and will there be anything in the small print that they should know or be aware of?

This bill is suppose to alleviate the struggling housing market; but the reality is that this Bill aimed to bolster the Mortgage Finance Giants Fannie Mae and Freddie Mac, before they had to be bail out by the Government, and not exactly to the majority of struggling homeowners.


And yes, if, and it’s a big “IF”, but if you get to qualify and pass the vigorous scrutiny, and finally get approved for a FHA baked home Mortgage Loan, there are a lot of things that you need to be aware of, and you better read well because, as usual, it’s very likely that you won’t be explained with details all the strings that come attach along with this agreement.

In many, many cases people will be better off letting their homes go to foreclosure, rent for a year or two, and then when the home prices stop decreasing, star fresh and buy a new property.

To star; before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years.


This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home’s current value. In areas where prices have plummeted by as much as 40%, that will mean a substantial loss for the lender.

But lenders won’t sign off on a workout unless they think that they’ll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will examine and verify income statements, bank accounts, job histories and credit scores. It’s going to be as if you’re applying for a new Mortgage Loan. You will have to meet all credit criteria to qualify.

Remembers for the Lenders is a voluntary program, so if the original lender agrees to the write-down, a new lender buys the old loan and takes over the reworked mortgage.

What does it cost?

There is a predetermined up-front cost for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

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