The House of Representatives passed a bill containing the long awaited rehabilitation to the FHA Hope for Homeowners loan program late last week and the Senate will likely deliberate early shortly. The mortgage relief measure are attached to H.R. 1106, a controversial home financing bill that would grant bankruptcy judges the authority to cram down borrowers’ mortgage loan balances when they file for a Chapter 13 bankruptcy.
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FHA Hope for Homeowners loan, Mortgage Relief
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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