Federal Support In The Housing Market From The President

The Bush administration has been gathering federal support through new initiatives and bills to help homeowners and mortgage companies suffering from the housing crisis. These new plans are what the administration considers a responsible plan to strengthen the economy and protect against further foreclosures in the housing market.

Support From The Federal Housing Administration

The FHA modified its refinancing program in August 2007 to help homeowners with missed payments. Since then, over 170,000 families with current and past due home loans have refinanced with the FHA. Changing over to FHA loans has saved homeowners an estimated $400 per month on their mortgages.

It also added new opportunities for struggling homeowners recently by extending assistance to borrowers who were late on up to three consecutive monthly mortgage payments in the past 12 months. The FHA will let lenders write-down outstanding mortgage balances, providing equity protection designed to help taxpayers against risk.

Loan Workouts From The FHA

New loan terms have allowed the FHA to work with homeowners on loan workouts and modifications. As subprime mortgage rates start increasing, homeowners are desperately trying to avoid foreclosure by reworking their loans. The Hope Now Alliance has provided nearly 1.4 million loan workouts to subprime mortgage borrowers since July 2007, including over 500,000 in the first quarter of this year alone.

According to U.S. Department of Housing and Urban Development Deputy Secretary Roy A. Bernardi, “Americans don’t want to pay for the risky financial behavior of others…we must not harm our economy through solutions that further erode the foundation of the nation’s housing market, hurt homeowners who are meeting their mortgage obligations, or prolong the correction.”

FHA Expansions Helps Housing Market

The expansion of FHA services allows borrowers to keep their homes and reduce their payments while avoiding the more important loss of a foreclosure for both the homeowner and the lender. Fewer foreclosures mean fewer vacancies in the neighborhood and maintain the property values of the area. Overall, the administration expects the FHASecure plan to help around 500,000 homeowners by the end of the year.

Additionally, the FHA is temporarily increasing its loan limits to ensure mortgages for higher-cost states as well as help homeowners keep their houses. On top of this, the administration is garnering federal support for legislation that would modernize the FHA and give homeowners affordable loans backed by the organization. As the housing market is still in a downturn, the FHA is finding new solutions to solve homeownership problems.