In my first visit to Active Rain, I made no secret of my firm belief that homeowners need some special help to escape their personal mortgage crises.  Turning the tide for significant numbers of homeowners will lead to the eventual resurgence of the housing market.

A small step in this direction was taken earlier this year with the passage of the Hope for Homeowners program.  With the cooperation of lenders and backed by FHA, certain homeowners can refinance into more affordable loans.  To qualify, homeowners have to prove hardship that can include an upcoming balloon payment or an adjustable loan rate that would make payment of the current mortgage impossible.  They also must provide documentation to prove they could afford a new modified loan, along with a current appraisal of their home's value.  If the homeowner can convince the lender that they will recover more under modified terms than through foreclosure, and the lender accepts, the FHA will back the loan.  In return, the homeowner agrees to share equity with FHA if the home is sold or refinanced.

FHA requires that the new loan be less than $550,440 and not require mortgage payments of more than 31% of the household's gross monthly income.  Buyers cannot own or have ownership interest in a second home.  They cannot have provided materially false information (e.g., lied about income) to obtain the mortgage that is being refinanced into the mortgage.

This program is expected to help up to 400,000 homeowners, but a quick review of the requirements makes it obvious that many homeowners will not qualify.  For example, those who either substantially overstated their income or who were mislead into believing they could afford a home that would still require a payment larger than a third of their household income would not be helped.  Since the subprime mortgages, responsible for many of these loans, are predicted to result in excess of 2.1 million new foreclosures by the end of 2009, there are still dire days ahead for distressed homeowners and lenders alike if no help is available.

I am not suggested that marginally employed homeowners who were able to acquire million dollar homes should be rewarded by keeping homes they cannot afford.  I only point out that there is an existing and potentially worsening problem that requires some creative solutions.

In October, 2008, the $700 billion Wall Street bailout bill was passed to stabilize the economy.  Though the bill was focused on helping lenders, it does allow the Secretary of Treasury to divert some funds to programs to prevent foreclosures.  Some increased funding for Hope for Homeowners is likely, but more extensive help is needed.

For information on the Hope for Homeowners Program, see http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL

For information on beautiful homes in Clark County, including bank owned properties available at great prices, contact your Prudential Americana Group Realtor® Yonas Woldu at (702) 236-8997 or visit www.VegasRealProperty.com.