Can A Housing Assistance Program Prevent Foreclosure?

There are many ways to prevent foreclosure. One way is to sign up with a housing assistance program. That is, if it delivers as advertised.

A while back, I wrote a post about ways to survive the credit and mortgage crisis. This time, I’d like to follow up with some information for those who find themselves facing foreclosure. Lots of people are in the midst of losing their homes unless they do something. Maybe our information here will help!

Let’s take the case of a delinquent homeowner who’s falling behind on their mortgage payments, a scene not too uncommonly replayed these days. Unfortunately, it’s often the case that their mortgagor hasn’t been too helpful, refusing them reasonable options to help ease their debt burden.

Now because of the magnitude of the nation’s debt and credit situation, the government has taken notice and is now offering several federal programs to help people keep their homes. Let’s check out these programs and see how well they work.

Can A Housing Assistance Program Lighten Your Mortgage Debt Load?

1. Check out what the FHA offers.

The Federal Housing Administration (FHA) is part of the United States Department of Housing and Urban Development (HUD). These government agencies insure mortgage loans and help provide housing solutions. For instance, the FHA offers FHA Secure, a refinancing option that allows people who are current or delinquent on their mortgage payments to get out of non-FHA adjustable rate mortgages. These homeowners are given the ability to refinance into a FHA-insured mortgage, which should be a much more affordable option. Check out the FHA site for further assistance. You can also call HUD-approved housing counselors for more information.

2. Evaluate the Hope For Homeowners program.

Hope for Homeowners is an FHA program designed to help homeowners get out of mortgage loans they cannot afford to pay. Find out more about this program here and here.

In recent news, however, it seems that this program has met with some criticism, with media outlets reporting that this program has been a flop and has hardly helped anyone. Because this program relies on the cooperation of lenders to find resolutions for delinquent borrowers, the program has been less successful, as lenders aren’t too willing to compromise, in most cases.

Here’s my own personal story with regards to trying out this program:

I recently called the number for this program to see if the counselors could review my case and to find out whether we could qualify for assistance; they patched a call through to my mortgage company. The counselor discussed several possibilities including a deed in lieu of foreclosure and a short sale. After talking to a friend who is a mortgage broker, we discovered that we faced two major problems. Both avenues will leave a negative impact on our credit rating. Furthermore, Hope for Homeowners only works if you are two or three mortgage payments behind; if you’re behind many more payments than that, you may not be eligible for assistance. We don’t want to go into foreclosure, but it seems that no programs exist at this time to help those on the brink of disaster.

After three weeks, my mortgage company never called back despite follow up calls and emails. We’ve been paying our mortgage on time, but things are tight. We continually feel anxious that we’ll be in grave financial trouble if we ever fall behind in payments, given the lack of responses and support we’ve received from our lender, despite intervention from Hope for Homeowners.

We’ve been dealing with Countrywide. Their website has indicated that they will have new programs for homeowners by December 1st, 2008, courtesy of Bank of America. I’ll keep you posted on our progress.

A recent article by attorney Dana Wilkinson summed up the problems with this new program. This program hinges on your lender being willing to work with you. There are also some eligibility requirements (if you’re a homeowner who’s either way far behind with payments, or hasn’t missed a single payment yet, then you’ll probably not qualify). It’s a program that best works for those who aren’t too far behind with their payments, with a mortgage company that’s willing to negotiate.

3. There’s disaster relief, and debt assistance for those in the military.

If you ever end up facing down a disaster (as officially declared by the government), then there are additional resources for you. Ditto for those on active military duty. For more information about homeowner’s assistance for those seeking disaster relief, you can contact the HUD’s National Servicing Center. Also, here’s where you can find out about the possibility of reducing your mortgage interest rates when you are on active military duty.