The Obama Administration is putting a full court press on public relations for housing reform as it announced last week a series of new initiatives to help troubled homeowners and a new web site to assist distressed homeowners just before it convenes a summit on ideas for restructuring residential housing finance. Last week, the U.S. Treasury announced that it will provide new support to homeowners struggling with unemployment through two targeted foreclosure-prevention programs. The high profile initiatives and conference are bringing the issue of housing in America to the front burn and struggling homeowners are looking to Washington for ideas and solutions to deal with the weak housing market.
As part of the initiatives, the Treasury will make $2 billion of additional assistance available for the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund) for homeowners struggling to make their mortgage payments due to unemployment. Additionally, the U.S. Department of Housing and Urban Development (HUD) will soon launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance – for up to 24 months – to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.
Additionally, the U.S. Department of Housing and Urban Development (HUD) announced details on efforts to allow homeowners who owe more on their mortgage than the value of their property. The Federal Housing Administration (FHA) will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least ten percent of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
Fannie Mae also recently rolled out a new website entitled, www.knowyouroptions.com, that provides insight to a variety of alternatives to foreclosure that include refinancing, loan modifications, short sales or a deed-in-lieu of foreclosure. The site provides a softer approach to presenting solutions that are otherwise more difficult to stomach.