How To Avoid Foreclosure & The New Housing Rescue Bill

Posted by Alfred Sant

October 2, 2008

by Alfred Sant

In July, a program to help many homeowners to avoid Foreclosure and stay in their homes was passed by Congress and signed by President George W. Bush. In the last couple of weeks I have received tons of e-mails from my e-newsletter subscribers concerning this new program. They want to know how all this is going to help them.

Homeowners want to know how this program is going to work for them to avoid foreclosure and if the financial crisis that Wall Street is facing now is going to affect this program. They want to know who will qualify, how to get help, and if the help will come with restrictions or any kind of strings?

The New Housing Rescue Law is expected to ease the struggling housing market and help homeowners to avoid foreclosure; but the reality is that this Bill is intended to bolster the Mortgage Finance giants Fannie Mae and Freddie Mac (this was developed before they had to be bail out by the Government) and not exactly to the majority of struggling homeowners in a direct way.

And yes, if, and it is a big IF, but if you get to qualify and pass the vigorous scrutiny, and finally get approved for a FHA backed home Mortgage Loan in order to avoid foerclosure, there are a lot of things that you need to be aware of, and you better read well because, as usual, it is very likely that you will not be explained with details all the strings that come attach along with this agreement.

Homeowners, in many cases will be better off if they hold on to their homes for as long as they could, then letting it go to foreclosure, rent a house or apartment, and then when the home prices begin to go back up, start fresh and buy a new home with a better mortgage. To start; before homeowners can get a FHA backed mortgages, they have first to pay back any other debt, such a home equity loan or line of credit they may have in their property, and they will not be able to take another home equity loan for at least five years.

This program is voluntary for the Lenders that actually own your loan, so they first have to agree to rework the actual loan before anything could get started. The Bill requires Banks to make mayor concessions, reducing the value of the loan to 90% of its actual value. In areas with high foreclosure rates where home prices have dropped by as much as 45%, it will mean a significant loss for the Banks.

In the kind of financial environment that this economy is facing at this moment, the hight rate of foreclosure and the urgent need of cash that most Lenders have, I do not think it would be a big problem for the Lenders to accept 90% of the actual apprised home value, but there are other things involve in this matter.

The fact is that the lenders will not sign off on a exercise unless they are sure that they will lose less money on that than they would by allowing a house to go through the costly foreclosure procedure. In this case there are many factor that need to be taken into consideration like; Will Fanny maid or Freddy Mac have the financing cash available at the moment, or if a probable new buyer will find credit, if they decide to finally foreclose your property and then sell the property in the market or in an home auction.

If you wonder; will this have any cost to me? The answer is yes, there is a prearranged up front cash cost for homeowners to bear. And what is the catch? In fact the refinanced loans do come with many strings attached, so the borrowers who are facing foreclosure must understand what they are getting into, since it is not as simple as the Government wants us to believe. In my website I explain everything you need to know in details as well as what you should do, and if you will or will not qualify for this help.

About the Author:

If You Want To Learn More About This Topic And For Tips And Proven Techniques And Strategies On How To Avoid Foreclosure And Stay In Your House For Over A Year And A Half Without Making Any Monthly Mortgage Payments Visit My Website: www.YouStayHome.com

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