In response to the nation-wide mortgage crisis, the U.S. government’s
Federal Housing Administration (FHA) has created a new program to help consumers at risk of defaulting on their mortgages. The
HopeNow program is an alliance between investors and counselors to aid consumers by creating a “workout” plan, which aims to reduce interest rates or create a payment plan for past-due payments. Included in the alliance are eleven of the nations top mortgage companies, who hold nearly sixty percent of all domestic mortgages.
The HopeNow program aims to help the nearly two million homeowners who will need help as the interest rates on their
adjustable rate mortgages begin to rise significantly. Homeowners who may not be able to handle the rising interest rates need to seek help as soon as possible, and the HopeNow program aims to speed up communications for relief options by mass mailings and offering toll-free hotlines to inform consumers of their options.
The U.S. government has also stated that it will be working with the Federal Home Loan Administration to make FHA mortgages accessible to more consumers. This news, along with lowered interest rates, has sparked a slight increase in mortgage applications for new purchases and refinances.
The government’s Federal Housing Administration has been helping homeowners since 1934, when it was created to improve housing conditions for Americans. The FHA is not a mortgage lender, but rather a government institution that offers insurance to lenders against default. With insured FHA mortgages, many consumers are able to get lower, more affordable
FHA mortgage rates, and have smaller down payments. This makes it much easier for first time homebuyers, or those who don’t have a large amount of money saved up to get an affordable FHA loan that works for them. The insured FHA mortgages also help those with less than perfect credit qualify for a loan.
The FHA also offers programs for consumers who are looking to refinance or even remodel their existing homes. FHA mortgages are often more popular with lenders, due to the decreased risk of default. This is why FHA lenders often offer much lower interest rates, and require smaller down payments, usually only around three percent. Also with FHA loans, the down payment is allowed to be paid by a family member, employer, or as a gift from a charitable organization, which is usually not accepted.
Homeowners facing foreclosure or struggling to make
mortgage payments can get help. It is critical to contact their lenders immediately to discuss their options, or begin to look for better terms offered by other lenders. The HopeNow program, set up by the federal government in response to mortgage crisis, is now available for this exact purpose. Since the program coordinates communication between lenders and debt counselors, it can speed up negotiations for debt relief efforts. Consumers may call the toll-free hotline, and are encouraged to do so as soon as possible if they fear they may not be able to make future mortgage payments. The sooner they seek help, the easier it will be to avoid foreclosure.