Mortgage Foreclosure & Refinance Resource

With record home foreclosures looming by the end of 2008, the Bush Administration is compelled to do something - anything - before the bottom falls out of the economy. Last week, the administration announced that an agreement had been reached with an alliance of the nation’s banks and mortgage lenders to temporarily freeze the low “teaser” rates that roped in so many customers now facing foreclosure. The subprime mortgage refinance plan crafted by a group of lenders dubbed the HOPE NOW Alliance. The group includes Bank of America, Citigroup, HSBC, JPMorgan Chase, GMAC, State Farm Insurance, and other major lenders. However, the participation on the HOPE NOW alliance is voluntary is the Congress has moved to help the homeowners who do fall into the guidelines outlined by the agreement.

The Senate moved against the worsening mortgage crisis Friday, voting to make it easier for thousands of homeowners with ballooning interest rates to refinance into federally insured loans. Approved by a 93-1 margin, the Federal Housing Administration will back refinanced loans for borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial “teaser” levels.

The bill also tries to make FHA loans more attractive than risky subprime loans by accepting lower down payments and expanding the eligibility for counseling for homeowners having difficult with their mortgage payments. This will allowthe federal government to insure more and bigger loans to provide some relief and ease the credit crunch.

The Senate’s plan would give homeowners “the option of refinancing to an FHA-backed loan with the peace of mind that comes with it,” said Senate Majority Leader Harry Reid, D-Nev. “And for future homebuyers, a fully backed FHA loan with honest, upfront terms, will help prevent crises like we now face.”

The FHA has been pushing Congress for years for the ability to guarantee more loans, saying the size of mortgages the government agency can back is often too small to attract borrowers in expensive areas. As a result, FHA’s share of the single-family mortgage market has dropped to about 4 percent, down from 19 percent more than 10 years ago.