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Pilot Programs for Those Facing Foreclosure in Los Angeles?

By
Real Estate Agent with Pacific Inter Capital Solutions

In Pacioma, by creating another pilot program aimed at helping troubled homeowners in the Northeast San Fernando Valley, Rev. John Lasseigne of Mary Immaculate Church is trying to save homes. He has helped 20 homeowners. This is no small task to accomplish. However, the money comes from the Los Angeles Housing Help for Troubled Homeowners?Department and won't have to be paid back until the home is sold. Santa Monica had this program in earlier years and everyone did well when prices skyrocketed.

However, this is a very limited program. Bank of America is involved in this pilot program and these homeowners will receive a no interest loan and a silent second for $75,000, which is supposed to make the house value equal to the loan. I think that this is fabulous, but it only helps a select few.

Then I ask myself, "Will the house, even with the $75,000, be worth the market price now?" The money will have to be repaid. However, will it be better than renting? I am not so sure. I just did a short sale in that area. The house that I am referring to had a 600,000 dollar mortgage; eliminate the $75,000 and then you are still left with a 525,000 dollar mortgage. The bank accepted an offer of 300,000 dollars from the new homeowner.

Maybe, this pilot isn't the answer. Why take money from the housing department when they could short sale the house and, according to Fannie Mae, buy another house in less than two years for a lot less?

They just have to scrutinize the new loan programs for these homeowners to make sure that they are not cheated again. There should be a new program for all homeowners so more people can be helped.