FORECLOSURE INITIATIVE TO LAUNCH IN AUGUST,
FHA TO EXTEND FORECLOSURE GRACE PERIOD
The downfall of the real estate market that swept across the country in recent years is, unfortunately, far from over. Foreclosure rates are continuing to be problematic due to the economic calamity facing the country. Within the last few years, the Obama administration has implemented several initiatives, including the Home Affordable Modification Program (HAMP) launched in 2009 that helps certain homeowners facing foreclosures stay in their homes. The latest homeowner relief will soon include extending the grace period provided to homeowners before the commencement of any foreclosure proceeding.
The bursting of the real estate bubble that hit the country in early 2006 combined with the recent demise of the U.S. economy has forced foreclosure rates to skyrocket. According to RealtyTrac, an online database that offers information and statistic on real estate trends, almost 3 million foreclosure filings were reported in the U.S. in 2010. Just last month, approximately one in every 1200 houses in Orange County, New York, received foreclosure filings with Middletown and Newburgh at the top of the list.
Luckily, some homeowners at risk of foreclosure have found support from government programs like the HAMP that helps to work with lenders to modify home loans. Others will find help through Obama’s new foreclosure prevention initiative.
Starting August 1, 2011, homeowners with a Federal Housing Administration mortgage loan (a federally insured mortgage known as FHA) who are facing foreclosures will be allowed to stay in their homes for 12 months before any foreclosure filings begin; an increase from the previous three month grace period.
Government officials acknowledge that the housing market has played a huge part in hindering any economic recovery and that approximately 3500 homeowners across the country with FHA loans fall behind on their mortgages every single month.
Since FHA backed mortgages account for 14 percent of active mortgages and 25 percent of new mortgages, the program is expected to help thousands of people.
However, Housing and Urban Development Secretary Shaun Donovan suggests that the new initiative will not help enough struggling homeowners. He is hoping that private lenders and government run Fannie Mae and Freddie Mac will soon offer similar proposals to help mitigate the foreclosure increases.
Fortunately, struggling homeowners may find other options available under the law. Those unable to keep up with mortgages payments might be able to find relief under Chapter 13 bankruptcy protection. In some cases, homeowners can erase second mortgage liens and reduce their monthly mortgage payments to a more reasonable payment.
Individuals are encouraged to speak with an experienced bankruptcy attorney to find out more.