Foreclosure Rescue Loans from States
Individual states are stepping up to provide distressed home mortgage holders some options other than foreclosure.
According to a Scripps News article on a recent Pew study, “Defaulting on the Dream: States Respond to America’s Foreclosure Crisis,” nine states have already begun offering home loan refinancing programs including Connecticut, Delaware, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania.
With over $450 million committed thus far, states hope that they can help homeowners who can’t afford their home or need temporary help until their normal funding situation is restored (such as a new job).
Factors involved in determining if assistance is necessary for mortgage holders include:
- Is the homeowner’s mortgage going to cause financial problems for the holder?
- Allow ARM (adjustable rate mortgage) and fixed-rate mortgage holders to have a 30-year loan at a fixed rate.
- Counseling for homeowners who are part of the program.
- Any future gain from the sale of the home would be shared with the government entity who helps the homeowner obtain a beneficial mortgage.
- The program is not for the rich but middle and lower income classes.
- The program is for lower-priced housing.
- Finally, the new refinanced loans will be made available to those who show an ability to pay back the loan.
Garth Rieman, director of housing advocacy and strategic initiatives at the National Council of State Housing Agencies in Washington, D.C., told Scripps that [state] Housing agencies are “very reliable lending partners and will probably give homeowners very good advice,” Rieman says.
October 2, 2008 – 6:03 pm