As you may know, the downturn in the housing industry is weighing heavily on our economy. Millions of mortgages continue to spike from their introductory "teaser" rates to rates less appealing. With the nationwide decline in housing prices, many homeowners find themselves owing more than their home is worth leading to additional foreclosures. Unfortunately, the homeowner is not the only person affected when they lose their house to foreclosure. Because foreclosures often lead to abandoned homes, communities with high foreclosure rates have seen crime rates goes up, tax revenues generated by local governments have declined, and the neighboring property values have decreased. The lenders and investors holding the loan typically take a loss in the event of a foreclosure. For instance, investors typically lose 30% to 50% of the unpaid mortgage balance when a home has to be resold due to foreclosure.
It is in the best interest of everyone involved and the broader economy to stem the tide of foreclosures. In August of 2007, the Hope Now Alliance was established to help struggling homeowners avoid foreclosure. This program is bringing together private companies involved in the current mortgage turmoil to develop a solution that does not reward risky behavior but has the ability to slow down the number of foreclosures.
To date, over 2.3 million loans have been restructured through the Hope Now Alliance. These workouts allow the borrowers to stay in the home and help ease the burden these pending foreclosures have had on our economy.
Additionally, earlier this year six of the largest mortgage servicers in the United States announced Project Lifeline, a targeted outreach to homeowners' 90-days or more delinquent that may lead to a pause in the foreclosure process. This voluntary initiative is intended to reach not only subprime borrowers, but all 90-day delinquent homeowners nationwide with a step-by-step approach to find individual solutions to individual problems.
While these agreements are a step in the right direction, communication is essential. If you are facing a potential foreclosure, it is important to learn about all of the options that are available to you. By calling the Hope Now Alliance (888-995-HOPE), you can receive free confidential counseling about your particular housing concerns from a professional. This 24-hour hotline can provide you with information about Hope Now, Project Lifeline and other available options.
Additionally, the U.S. Department of Housing and Urban Development (HUD) has several programs designed to promote homeownership and avoid foreclosures. HUD recently unveiled the HOPE for Homeowners program that will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA). You can reach HUD to get more information on their homeowner assistance programs by visiting their website at www.hud.gov or by calling 800-569-4287.
