Struggling Homeowners Can Receive Help!!

Here is an article from Washington Post:

LAS VEGAS, Feb. 9 — The Obama administration has developed the broad outlines of a plan to stem the soaring rate of foreclosures by adding incentives for borrowers and lenders to agree to modify home loans that have fallen behind, perhaps by as little as a single month.

The plan is a “more aggressive” version of an initiative launched by mortgage financiers Fannie Mae and Freddie Mac late last year, James Lockhart, director of the Federal Housing Finance Agency, said in an interview here. The administration has said it will spend between $50 billion and $100 billion from the financial bailout package to help struggling homeowners.

Senior officials are still hammering out the initiative and are not expected to provide the details tomorrow when they unveil their rescue plan for the financial system, two sources familiar with the matter said. The foreclosure strategy could be announced at the end of this week or next week, they said.

Lockhart said both lenders and borrowers have been frozen by the perception that the government may continue to unveil new and better modification programs.ad_icon
“The early returns show that we may need to be more aggressive” than plans already announced, he said. But the government also needs to send a message to lenders that its new approach would represent the “best and final” offer.

The Fannie and Freddie program allowed borrowers who were 90 days delinquent on a loan to have their payments lowered to 38 percent of their income. The loan could also be extended from 30 years to 40 years, and if that was not enough, the interest rate could be reduced to as low as 3 percent to make the payments more affordable.

Consumer advocates say the program was a good start in tackling the foreclosure problem but did not go far enough to help homeowners. For example, the effort did not include measures to cut the principal owed by borrowers who have seen the value of their home fall below their mortgage loan. Another requirement — that borrowers miss three payments before qualifying for help — has been a troublesome issue identified by some consumer groups.

The government’s new approach would make the terms more generous for both the borrowers and lenders. For instance, borrowers who missed only one payment might be able to qualify, Lockhart said. Lenders may be able to lower payments to a lower percentage of a homeowner’s income.

Officials are also planning to set national standards for when banks opt to participate in the government plan — an important concern for loan servicers who can now only perform modifications that improve the value of the mortgage under the terms of their contracts with investors.

Lockhart said he hoped the new program would be attractive to loan holders, but he added that they had an obligation to increase their modification efforts.

“It is taking too long,” he told an industry group during a speech in Las Vegas. “It is time to act.”

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