The recent release of the HOPE NOW program by President George W. Bush asserts that up to 1.2 million homeowners could be assisted by the program Treasury Secretary Henry Paulson and Housing and Urban Development (HUD) Secretary Alphonso Jackson to work with lenders, loan servicers, mortgage counselors, and investors on an initiative to help struggling homeowners. 

Will it really assist that many homeowners?  Is this program enough?

The program has three prongs to assist homeowners:

1)      Refinancing into a new private mortgage;

2)      Move into an FHASecure loan;

3)      Freezing of current rates for five years.

The requirements to participate in the program is fairly stringent, and most with Adjustable Rate Mortgage's ("ARM") are already in trouble --- in that they most likely have been late on their mortgage or are in an area with actual depreciation of property values, and an appraisal with recent comp properties supporting value might be tough to obtain - so obtaining a private mortgage - perhaps even another subprime mortgage, will result in a minimum reduction in the interest rate.

     First, a private (conventional) mortgage is going to require assets and a good credit score.  This is possible, but, it will also require on time payments,

     Second, the FHASecure product has strict guidelines:

1)      History of one time payments BEFORE during fixed rate period and a reset of the loan (between June 2005 and December 2008);

2)      Sustained employment and sufficient income to make the mortgage payment;

3)      3% cash or equity in the home.

     Third, a freezing of the rates for five years --- while this will provide a temporary relief, not sure this will avoid individuals and families from being able to afford to continue to pay their mortgage on time and avoid foreclosure.

     The remainder of the plan is that of prompting Congress to make changes and reforms.  Although this is an important issue, are we that sure that Congress will follow through (with speed) with the changes suggested to assist additional homeowners?

      While I applaud the program, I simply don't believe it is enough, nor does it provide the relief that is needed to assist homeowners that entered into adjustable rate mortgages and face mortgages that cannot be paid and eventually foreclosure.  Do you?  If not, what are the solutions??

      Going forward, we all should be responsible in making sure our clients understand what a mortgage is, the products that we are offering them, and educate the customer.  As professionals, we can all make this a more responsible lending landscape, and continue to make property ownership the American dream.

Michael Sally

Victory Lending Group

http://www.mortgagesbymike.com/ or http://www.michaelsally.com/ - two great domains, same great destination!