The Associated Press, on Wednesday, released more information about the new FHA program to help homeowners who owe more than their home is worth. “The new program takes a different approach. It allows investors in mortgage-backed securities to evaluate their holdings and select borrowers who will be offered refinanced mortgages guaranteed by the FHA.”
Potentially this is a great program that will help everyone. Realistically I think it will mirror the government’s mortgage relief program. More people dropped out of the program than were helped. I anticipate mounds of red tape and borrowers to get gouged on the rate and fees. Why should they bother to be competitive when the client is locked in?
I had started talking to a potential client about the FHA Negative Equity program. Even though she is underwater on her mortgage, she wants to do the right thing. She does not want to walk away like some of her neighbors have done. She is trapped in a high rate arm and does not have over $50,000 to bring to the table to refinance. When I explained the new rules, she lost interest quickly. She told me she has talked to the bank for months and nothing has happened with her loan modification. She mentioned she never talks to the same person twice and the bank claims to have never received the documents.
It will be interesting to see how this plays out. Please let me know your experiences with this. Hopefully there will be success stories we can use to help people.
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