President Bush Foreclosure Prevention Plan

The President's Foreclosure Prevention Plan and How It Can Help You

By Sharon Secor

Direct Lending Solutions Staff Writer

In response to the turmoil in the mortgage and lending industries and the changes is the housing market, President Bush has played a central role in the implementation of a federal foreclosure prevention plan. For beleaguered homeowners, at least those that qualify, this plan can serve to help prevent the loss of a home. Thus, if you are among those currently struggling to meet the monthly mortgage payment, it is well worth taking the time to learn what the president's plan has to offer. The sooner you assess your situation and reach out for help, if you need it, the better the odds that you will be able to successfully resolve the situation.

Foreclosure Prevention Plan Details

As President Bush recently pointed out, many of the homeowners that are currently struggling with their mortgages are having difficulties because they are having to contend with the rising interest rates associated with their ARMs, or adjustable rate mortgages. In some cases, the monthly mortgage payments have gone up dramatically, with homeowners having to come up with hundreds of dollars more per month. While meeting the initial payments at their introductory rates posed little problem, when such loans were reset to higher rates, making the payments became difficult for many and impossible for some, which has contributed to record rates of foreclosures throughout the nation.

The federal plan addresses this situation on a couple of different levels, offering both prevention and protection. However, timing is of the essence when it comes to making the most of the foreclosure prevention opportunities that the federal government has made available to homeowners. Far too often, struggling homeowners let valuable time slip away while trying to deal with the matter themselves, unaware that there are steps that they can take to improve their odds of keeping their home. The longer a homeowner takes to reach out for help, the fewer options there are likely to be.

In light of that, one of the most important parts of the federal plan is accessibility. Under the name of the Hope Now Alliance, private industry and public service organizations have come together to create programs to help homeowners in the early stages of mortgage trouble. By dialing a toll-free number, for example, consumers can access mortgage counseling resources at any time of the day or night. These services are even available in a variety of languages. Hope Now has also mailed information about the services they provide to homeowners that are struggling, hoping to help them before they fall into a foreclosure situation.

In addition to mortgage counseling, which can provide help for such things as renegotiating loan terms and other matters with lenders, through the efforts of the Hope Alliance partners, according to the White House press release, “a set of new industry-wide standards to provide systematic relief” has been agreed upon. There are three primary mortgage relief options available to qualified homeowners. These include “refinancing an existing loan into a new private mortgage,” shifting the loans into FHASecure loans, or, in some cases, a 5 year freeze on current interest rates associated with the mortgage.

FHASecure is a new program within the FHA, the Federal Housing Administration, designed to expand options, particularly for lower and middle income families, available for refinancing, particularly when used in conjunction with more individualized mortgage insurance premium rates by the FHA. That individualization will extend prime rates to some of those currently operating in the sub-prime category.

Which Homeowners Qualify For Federal Foreclosure Prevention Assistance?

All struggling homeowners are encouraged to take advantage of the mortgage counseling opportunities available by dialing 1-888-995-HOPE. It is important not to let the situation get too far out of control before reaching out for assistance, because doing so can allow serious damage to be done to credit reports and scores, which can interfere with quick mortgage prevention assistance.

Homeowners that have been able to hold fairly current with their mortgages, but are looking at upcoming resets scheduled for 2008 and 2009 are good candidates for the current federal foreclosure prevention plan, as are those that have not suffered too much damage to credit scores and histories – a prime reason for not waiting too long to seek help. This program is meant for family homes, houses that are lived in by the mortgage holder, not investment properties and the like. Because certain program elements seek to help those who took on their mortgages recently, from 2005 through July of 2007, a lack of equity in the home is not going to automatically rule out foreclosure prevention program assistance.

What If I Don't Quality?

Critics of the recent federal foreclosure prevention program point out that it does little to help those that are very close to or already in foreclosure or for those that have suffered severe damage to their finances that is readily demonstrated by sagging credit scores and deteriorated credit histories. It is true – the federal plan doesn't help everybody. What realistic plan can? However, that doesn't mean that all hope is lost.

Individual states, particularly those that have been hard hit by the foreclosure crisis, like California, as well as cities, such as Chicago and Miami, throughout the nation are devising their own foreclosure prevention plans, which can offer localized assistance. Furthermore, there is a lot that the individual can do on his own to help prevent foreclosure. The most important thing of all is to communicate with the lender. Often in the midst of a mortgage struggle, borrowers avoid speaking to lenders. That is not the right strategy, especially today. The sooner the problem is discussed, the more available options there are. With record numbers of properties being defaulted upon and hitting already flooded housing markets, most lenders want to work things out if at all possible.

If currently struggling with the monthly mortgage, the time to start researching options is right now. There are options out there, but allowing oneself to become paralyzed by panic won't find them. With the situation what it is today, many will probably find that negotiating their way out of a near foreclosure situation is much easier than it would have been in the past, which is all the more reason to take a pro-active home protection position.

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