After nearly a year spent trying to convince lenders to participate, the Federal Housing Authority may soon have a functioning program to help underwater homeowners refinance their mortgages. In testimony last week before Congress, David H. Stevens, the administration’s assistant secretary of housing, said that a “couple of the large [lenders] are actually building up the capacity to roll out the program.”
The program was officially launched last March. Homeowners who are still current on their mortgage payments, but whose houses are worth significantly less now than they were at the time of purchase, can use the program to get new, FHA-backed mortgages that lower the principal amount owed by at least 10%.
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The Obama administration hopes that the FHA program, plus its failed HAMP foreclosure prevention program, will help 3 to 4 million homeowners to stay in their homes by the end of 2012.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” Stevens said in a press release last August.
Since the Obama administration’ attempts to fix the housing markets are either late or total disasters, perhaps the Obama administration would be better off waiting for the markets to fix themselves. The rate of Americans delinquent on their mortgages fell 10% in the fourth quarter of 2010, according to a report by the Mortgage Bankers Association. That meant 8.22% of Americans were delinquent, the lowest rate in two years.
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