Foreclosure Aid in Sight with ‘Hope for Homeowners’ Program
HOMEOWNERS
The New Bedford Standard-Times
Courtney Hime
Boston University Washington News Service
October 2, 2008
WASHINGTON – New Bedford residents fearing foreclosure could see relief with the implementation of a new federal program aimed to reduce the number of foreclosures.
The U.S. Department of Housing and Urban Development kicked off the Hope for Homeowners program Wednesday. The three-year program will allow qualifying homeowners to refinance their mortgages. The new loan, insured by the Federal Housing Administration, would be a 30-year fixed-rate mortgage.
The program aims to prevent foreclosure on up to 400,000 homes nationally over the next three years. Kristine Foye, spokeswoman for the New England region of HUD, said via e-mail that the success of the program depends largely on communication between lenders and borrowers.
“The final participation numbers will depend on lenders, and we encourage them to work with borrowers to determine if this program is right for them,” she said.
Homeowners may be eligible for the program if their total monthly mortgage payment accounts for 31 percent or more of their gross monthly income, if the home is the borrower’s primary residence and if the existing mortgage started on or before Jan. 1, 2008 with at least six payments made.
There is lingering concern that lenders might be reluctant to take part because they would lose money on the original mortgage.
Tanisha Warner, spokeswoman for Consumer Credit Counseling Services, a division of Money Management International, for example, said this could put lender participation in question.
However, she said, the losses suffered by participating in the program might be less than the cost of foreclosing.
“Most lenders do not want to foreclose,” she said. “In the long run, they would lose money anyway. This is just a way of taking a smaller cut and keeping someone in the home and guaranteeing the home is still on the books.”
HUD’s Foye said, “Everyone benefits when a lender doesn’t have to take possession of a foreclosed house and try to sell it.”.
Nationwide, 19 lenders had signed up for the program as of Thursday, according to Lemar Wooley, spokesperson for HUD. He said the department is working to determine where the interested lenders are located and whom they serve.
Foye said she was unsure what impact the program would have on the New Bedford area specifically.
“We don’t have an indication of how the program will impact local areas because it will really depend on how many people apply,” she said.
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