Under the latest proposal, borrowers must contact the mortgage lender 10 days prior to filing Chapter 13 to give the parties time to work out a modification. If no offer is made by the lender, the homeowner could file Chapter 13 and the judge could then treat as unsecured debt any amount of the mortgage that exceeds the newly appraised value of the home. The judge also could reduce the interest rate and extend the maturity of the loan.
This so-called \"cramdown\" provision is strenuously opposed by the lending industry, which argues that the risk that a loan will later be modified will increase the cost of borrowing."; FORECLOSURE_RELIEF_2009[i++] = new Array("","FDIC plan","","","","", "", "", "", "", "", "", "", "", "", "", "", "", "", ""); FORECLOSURE_RELIEF_2009[i-1].body = "Using Troubled Assets Relief Plan funds, the Treasury would pay mortgage servicers $1,000 for every modification they make under the program. Modifications must bring a borrower’s mortgage debt-to-income ratio to 31 percent.
Mortgage servicers start by reducing interest rates before extending the maturity to up to 40 years. If those steps do not work, the servicer defers principal. That means the borrower does not pay interest on part of the loan, though he must repay the full balance when he sells or refinances the house."; FORECLOSURE_RELIEF_2009[i++] = new Array("","Hope for Homeowners","","","","", "", "", "", "", "", "", "", "", "", "", "", "", "", ""); FORECLOSURE_RELIEF_2009[i-1].body = "Approved last summer under the Housing and Economic Recovery Act, the Hope for Homeowners program has $300 billion available to refinance troubled borrowers into FHA mortgages. Legislative restrictions on the program have made it largely ineffective.
Congress is expected to eliminate many of these restrictions as part of the TARP revision, which means lenders will absorb a smaller loss if they refinance a troubled borrower into an FHA mortgage."; FORECLOSURE_RELIEF_2009[i++] = new Array("","GSE/FHA loan limits","","","","", "", "", "", "", "", "", "", "", "", "", "", "", "", ""); FORECLOSURE_RELIEF_2009[i-1].body = "The maximum limit for Freddie Mac, Fannie Mae and FHA loans dropped to $625,500 on Jan. 1. Many Democrats, including House Financial Services Chairman Barney Frank, support restoring the maximum loan size to the prior limit of $729,750.
This would help lower interest rates on these mortgages. FHA is becoming the program of choice for first-time buyers. Higher limits also put more homes in higher cost coastal cities into play for FHA."; FORECLOSURE_RELIEF_2009[i++] = new Array("","Tax incentives","","","","", "", "", "", "", "", "", "", "", "", "", "", "", "", ""); FORECLOSURE_RELIEF_2009[i-1].body = "Spurred by the homebuilding industry, Democrats are working on tax strategies to help with the housing crisis. These include a tax credit available to all homebuyers, not just first-timers, of $7,500 -- and perhaps more.
The mortgage interest deduction may be extended to taxpayers who don't itemize. Tax incentives may also be provided to owners who rent out vacant properties."; FORECLOSURE_RELIEF_2009[i++] = new Array("","Lower mortgage rates","","","","", "", "", "", "", "", "", "", "", "", "", "", "", "", ""); FORECLOSURE_RELIEF_2009[i-1].body = "So far, the Federal Reserve has led the move to lower longer-term interest rates after targeting short-term rates as low as zero percent. Congress is looking at additional efforts to push mortgage rates as low as 2.99 percent.
These measures could include providing an explicit government guarantee on mortgages issued by Freddie Mac, Fannie Mae and federal home loan banks."; // END editorial data