June 2011

HUD and a Homeowners Assistance Program

As the nation continues to stumble through the housing crisis, the government is coming up with another program that might be of help to people who are struggling with making their mortgage payments.

It seems that HUD Secretary Shaun Donovan has announced that they are working in conjunction with NeighborWorks America to launch this program in a limited number of states.  And those who are lucky enough to live in one of them , might be eligible for a loan up to $50,000 that could be used to pay part of the homeowners mortgage payment.

Here is the article for further information:

HUD Launches $ 1 Billion Homeowner Assistance Program/ Written by Brett Varner

“As the government debates ways to reduce the size of their involvement in the housing finance market, HUD announced the launch  of a $1 billion assistance program designed to offer interest free loans to borrowers who are at risk of foreclosure.

The program, called the Emergency Homeowners’ Loan Program (EHLP) has been made available in 27 states and Puerto Rico. It offers interest free loans up to $50,000 to pay a portion of their monthly mortgage payments for up to two years.

“Through the Emergency Homeowners’ Loan Program the Obama Administration is continuing our strong commitment to help keep families in their homes during tough economic times,” said HUD Secretary Shaun Donovan. “Working with our community partners across the nation through NeighborWorks® America, we are pleased to launch this program today in 27 states and Puerto Rico to help families keep their homes while looking for work or recovering from illness.”

HUD expects the programs to help about 30,000 distressed borrowers with an average loan amount of $35,000.

Considering that the majority of homeowners who have their mortgages modified re default within a short period of time, adding additional debt to distressed homeowners, even at an interest free rate, may merely delay the inevitable and lead to significant losses of the $1 billion allocated to the program.”

Obviously this won’t make much of an impact on the overall level of foreclosures but if you are the “one’ that is lucky enough to take advantage of the program, it certainly will make a difference in your life, wouldn’t it?

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Wells Fargo & Reverse Loans

In an effort to catch up on the latest news in the Reverse mortgage industry, I just found out that Wells Fargo is exiting it.   Long considered to be the leading lender for the FHA/HUD product, I was very surprised to hear this news.   Along with Bank of America who earlier stepped away from offering the loan, we see two very big players disappearing from the Reverse loan industry, along with Financial Freedom who left in March of this year.

With the continued uncertainty due to the wobbly economy and the housing market, they apparently feel that they would rather not risk originating loans when property values continue to decline, even though there is a greater need for it them now then  in previous years.  With the economic uncertainty,  concerns about Medicare and Social Security, more senors could be utilizing the funds from a Reverse loan to pay their monthly obligations and particularly any medical expenses.

The economy future is murky and my personal feelings are that we are a long ways from any recovery.  And as the need for the Reverse loan grows ( And it will), the amount of funds that a senior could receive will shrink.  The continual slide of the housing sector is directly affecting future of the government program and the financial security of  seniors financial safety net.

The housing crisis and it’s inability to recover is  mainly due to the continual foreclosure activity and is having a direct effect on Reverse mortgages.   Currently the HUD lending limit it set at $625,500 but as of this writing, they are considering reducing it back to a previous limit of $417,000 this coming October.

The immediate effect of the reduction will mean less money will be available to the senior homeowner and if anyone is “thinking” about using the loan, it’s imperative that they do so before the change in October.

The first step is to complete the counseling that is required by HUD and then meet with a Reverse Loan Consultant for further information.   Once this has been done, those who are considering the option of a Reverse mortgage will be able to make an informed decision as to whether or not to move forward on an application.

Fear, hesitancy, inertia or not making an effort to be informed only hurts ourselves.  Life will move on and it’s up to us whether or not we do too.

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