The Bailout and how it will affect home owners.

HR 1424 is the much talked about "Bailout Bill". The bill is designed to help steady the economy but will it help homeowners facing foreclosure? The answer is a clear cut maybe. The bill basically covers two ways to assist homeowners. The first scenario is Homeowner Assistance by Agencies. This covers any government backed loans that have a federal property manager assigned. These managers will need to come up with a plan of action in 60 days. The immediate plan is to expand to the HOPE for Homeowners Program under Section 257 of the National Housing Act. This program allows FHA to come in and create a loan modification and if qualified, offers a reduction in interest rates or a reduction of the loan principal.

This is a great program but a home owner must qualify. Currently those standards are:

-The home is your primary residence and you have no ownership interest in any other residential property, such as second homes.

-Your existing mortgage was originated on or before January 1, 2008 and you have made at least six payments.

-You are not able to pay your existing mortgage without help.

-As of March 2008, your total monthly mortgage payments due were more than 31% of your gross monthly income.

-You certify that you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide false information to obtain existing mortgage(s).

The bottom line is that not all homeowners will qualify. Any other plans are unknown at this time but the government never moves swiftly. I feel a hybrid of already existing FHA policies will follow. However, anything more extensive will not reach the development or implementation stage for quite some time.

The second scenario affects any case in which a Federal property manager is not the owner of a residential mortgage loan, but holds an interest in mortgage loans (i.e. the bailout loan). The Federal property manager is to encourage the loan services to offer loan modifications like the one developed under The HOPE plan or assist in facilitating any similar modifications.

In conclusion, recovery is still a long way off and if homeowners are looking for a quick fix, that is a little unrealistic. Homeowners should still take a step back and discern if they truly can afford a home based on current income. Other wise, the final conclusion remains the same, and that is to try and sell or consider a short sale. If you live in the Cleveland, Ohio area and need help conducting a short sale, call Derek Walkush at 440-666-4232.