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New FHFA Program Helps Struggling Home Owners

April 27, 2016

04.20.2016_01

Ever since the financial and housing crisis, many families have lost their homes and faced starting over when it comes to the American dream of home ownership. Over the last several years, new programs have been put in place to help people keep their homes. As we have watched the market improve again, we have seen more people find successful solutions toward remaining in their homes. This is great news overall, but there are still a lot of people who continue to struggle.

Advocates for distressed homeowners recently made their feelings clear to the FHFA and the current director, Mel Watt. In an announcement by Director Watt, he noted the organization was still working to complete a review of the possibility for Fannie Mae and Freddie Mac to offer principal reductions to qualified homeowners at high-risk of losing their property. It was indicated that by the end of April there should be a program in place. Housing advocates claimed that was too long to wait for those high-risk homeowners who need help right away.

The voices of the advocates were heard. Within a couple weeks after the initial announcement was made, the FHFA has released the details of a new program to reduce the principal for struggling homeowners. Principal reductions will be offered to qualified, seriously delinquent, and underwater homeowners who are still dealing with the after-effects of the housing crisis. The new Principal Reduction Modification Program is providing a one-time offer to loans guaranteed by Fannie Mae or Freddie Mac, which meet specific criteria. Homes must be owner-occupied, more than 90-days delinquent as of March 2016, and have an unpaid principal of $250,000 or less still due. These homes also must be underwater, showing as worth less than what the current owner has for a mortgage.

To get the program started, solicitation letters will be sent to qualified homeowners, providing the terms available for the modification program by October 15, 2016. If you are a qualified homeowner, and go through the program, you will need to make three timely payments before final approval is given for the modification. Once completed, the end result of the modification will be principal forgiveness in a specified amount. You will also receive a loan extension of up to 40 years.

If you think you may be qualified, but don’t want to wait to get a notice from your loan servicer, you can seek a Streamlined Modification. This option will put any foreclosure proceedings on hold, but won’t necessarily guarantee a principal reduction. Should you be qualified for the full program, you will receive principal forgiveness. If you end up not being qualified, you will still benefit from the payment relief provided while pending the qualification results.

The Principal Reduction Modification Program is expected to help close to 33,000 homeowners. This is the last chance offer being made available by the FHFA to help struggling families bounce back from the housing and financial crisis. To own a home is an American dream, to stay in it should be achievable as well. When you are ready to buy or sell a home, me and my team are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820, or by email at realestate@cecily.com.

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