Houston, TX (PressExposure) May 27, 2011 -- Most homeowners are waiting in anticipation for the commencement of the Federal mortgage relief program this fall. The federal mortgage relief program offers hope to homeowners' country wife with the promise of bailing borrowers out by lowering the monthly mortgage repayments.
With the commencement of the Federal mortgage relief program borrowers will be able to either get their interest rates reduced or part of their principal debt written off. However, it is important to note that this program will not to salvage all homeowners.
Federal Mortgage Relief Program Plans To Target 400,000 Borrowers Facing Foreclosure
The program is however expected to stir homeowners into trying to salvage their homes by approaching their lenders with the hope of entering into negotiations. It is noteworthy that in most foreclosures the borrowers are normally passive and no attempt is made at negotiating.
For borrowers to qualify for the Federal mortgage relief plan, the must meet a set of conditions that include: the property in question must be the borrower's primary home and not a holiday home or commercial property, the monthly repayments are more than 31% of the borrowers gross income, the original mortgage contract be older than 2nd January, 2008 with at least six full repayments having been made and the client must have an impeccable credit history that includes zero fraud, no intentional defaults and the contract was made with utmost good faith.
Federal Mortgage Relief Aims To Help Foreclosure Edge-Walkers
The Federal mortgage relief plan targets up to 400,000 troubled borrowers who face imminent foreclosure since they no longer can afford their mortgage repayments obligation and neither can they be refinanced because their homes have lost value and their debts are now significantly more than their homes' worth. The Obama Relief program gives incentive to mortgage financiers to write off part of the borrowers' principal debt so that these borrowers can access refinancing through Federal Housing Administration insured mortgages.
The bankers are however very reluctant to take this route of principal reduction and would rather look at other options. The four leading mortgage financiers have set out to seek out solutions to the mortgage crisis that will not in any way require principal reduction. Their lack of enthusiasm for the program is based on the fact that the writing off will be based on the appraised value of the home.
Federal Mortgage Relief And Its Participating Lenders
The lenders participating in the Federal mortgage relief program will be expected to write off all debt that is over and above 90% of the appraised value of the home. Further there is an insurance premium to be paid to the Federal Housing Authority and this is most likely to be borne by the lenders thereby increasing their burden two fold; first with the principal written off and second with the insurance premium.
On their part borrowers who benefit from the Federal mortgage relief program have an obligation to declare and pay back to the government any gains made later on revaluation of the home or upon disposal. The percentage - which could be 50% or as much as 100% of the gain paid to the government will be dependent on the duration the mortgage has been held according to the Federal mortgage relief guidelines.