The government anticipates only 20,000 troubled borrowers will apply to refinance into more affordable home loans by next fall under a new mortgage relief program passed by lawmakers over the summer. The $300 billion ‘Hope for Homeowners’ program was launched October 1st 2008.
FHA rolled out the new loan program, Hope for Homeowners loan that was designed by lawmakers eager to respond to the mortgage crisis, the Congressional Budget Office had projected it would let 400,000 troubled homeowners swap risky home mortgages for conventional 30-year fixed rate loans with lower rates.
But according to the Federal Housing Administration, the early results are discouraging: the government received only 42 applications in the program’s first two weeks. The low turnout was first reported by the industry newsletter Housing Wire. Since the FHA loan applications take about 60 days to process, no home loans have been approved yet. The FHA Loan Blog believes that the mortgage lenders are holding up the program with their guideline tweaks, like higher credit scores.
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FHA loan programs continue to support the brunt of the mortgage product that focus on refinancing homeowners facing foreclosure. The FHA Secure looked great on paper in 2007 when HUD rolled it out, but very few lenders offered the product to the borrowers who needed. HUD just rolled out the Hope for Homeowners product and hopefully these FHA loans will provide the mortgage relief to the millions of homeowners who need to refinance or get a loan modification that provides an affordable monthly payment.
In a recent Reuters article, a congressionally appointed panel that oversees the Treasury Department’s $700 billion financial rescue fund is expected to release a report on Wednesday highly critical of how it has been handled, The Wall Street Journal reported on Tuesday. The Journal, citing people familiar with the matter, also said the panel would push the Bush administration to act more aggressively to prevent foreclosures. The newspaper said the oversight report due on Wednesday is not expected to contain new findings. It said a draft of the report posed 10 questions, pressing officials for a clearer strategy and asking whether there is sufficient accountability and why more has not been done to prevent foreclosures. Elizabeth Warren, the Harvard University law professor who heads the congressional oversight panel, is scheduled to testify before the U.S. House of Representatives Financial Services Committee on Wednesday and is expected to discuss the report.
Rep. Jeb Hensarling, a Texas Republican who opposed the financial rescue bill and also serves on the oversight panel, said in a statement he could not sign the report. “In my role on the TARP (Troubled Asset Relief Program) panel, my top three goals are to ensure that the program works, to ensure that decisions made are based on merit and not political considerations, and most importantly, to ensure that taxpayers are protected,” Hensarling said. “I am hopeful that the oversight panel will eventually be an effective vehicle for these goals to be met but thus far the jury is still out on that,” Hensarling said. Caleb Weaver, a spokesman for the oversight panel declined to comment on the Wall Street Journal’s report.
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