About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

As we have reported here, the Hope For Homeowners program is a flop so far. Government officials are seeing the same things we are. In an AP story we get this:

The government may let more borrowers qualify for a $300 billion program designed to let troubled homeowners swap risky loans for more affordable ones, a top Bush administration official said Wednesday.

The program, included in a housing bill passed by lawmakers over the summer, was launched Oct. 1. But there are concerns that lenders won’t participate because they have to voluntarily reduce the value of a loan and take a loss.

“We’re concerned that the program — as constructed today — is limiting people’s availability,” Department of Housing and Urban Development Secretary Steve Preston said in an interview with Associated Press writers and editors.

In the “Hope for Homeowners” plan’s current design, lenders have to take a big loss. They must absorb the difference between the current mortgage’s value and the new loan for 90 percent of the house’s current appraised value. One potential change is to make the new loan around 97 percent of the current home value, thus requiring lenders to take a smaller loss, Preston said.

Making that change and others “would open up participation in the program,” he said.

Comments (0) Posted by G.R.A. Admin on Wednesday, November 12th, 2008


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