Pending Relieve for the Mortgage Setback

With foreclosures at an all time high, what is being done to render the situation? The government is proposing several new changes that will help release some of the pressures that many American homeowners and lenders are facing. Here are the proposed steps that are in the works, these programs may help thousands of homeowners, lenders and our nation through these tough times.

1. The President Calls on Congress to Pass Federal Housing Administration (FHA) Modernization Legislation. The President has proposed lower down payment requirements. This allows the FHA to insure bigger loans, and gives the FHA a lot more pricing flexibility. These proposed reforms would give the FHA the power to reach more families in need of help – minorities, first time homebuyers, and those with low to moderate incomes. This proposal will also offer more options to homeowners trying to refinance their existing mortgage.

• The Administration Will Also Launch A New FHA Initiative Called “FHASecure.” The President is also pursuing important administrative changes giving the FHA more flexibility to keep families in their homes through the transition in the mortgage market. The “FHASecure” program will also help people who have good credit but who have not made all of their payments on time because of rising mortgage payments. FHA is also charging mortgage insurance premiums, based on the individual risk of each loan.

2. The President Calls on Congress to Change a Key Housing Provision of the Federal Tax Code So It Does Not Punish Families Who Are Forced To Sell Their Homes for Less than Their Mortgage Is Worth. Current tax law charges the loss of money from the sale of a home as taxable income. For example, if the value of a home declines and $20,000 of the homeowner's loan is forgiven, the tax code treats that $20,000 as taxable income. The President is asking for temporary relief to ensure that cancelled mortgage debt on a primary residence will not be counted as income.

• The President Is Working With Congress In a Bipartisan Fashion to Make This Important Change. Several Senators have introduced a bipartisan bill that will deliver vital tax relief. The bill introduced would protect homeowners from paying taxes on cancelled mortgage debt.

3. The President Announced That the Administration Will Launch a New Foreclosure Avoidance Initiative to Help Struggling Homeowners Find a Way to Refinance. Alphonso Jackson the Housing and Urban Development Secretary and Treasury Secretary Henry Paulson will reach out to various groups that offer foreclosure counseling and refinancing for American homeowners. These groups include community organizations, mortgage lenders and loan servicers, FHA, Fannie Mae, and Freddie Mac. The main goal of this initiative is to expand mortgage financing options, identify homeowners before they face hardships, and help them understand their financing options. This would allow these homeowners to find a mortgage product that works for them.

The information for this article was gathered from - http://www.whitehouse.gov/news/releases/2007/08/20070831-4.html

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