Unfortunately many individuals that bought their homes using adjustable rate mortgages (ARM) have experienced sticker shock when their rate resets. The amount of homeowners affected recently has further contributed to the economic crisis that is currently affecting the nation. As part of the Obama's administrations stimulus package, theFederal Housing Administration (FHA) is taking bold steps to help those with ARMs to refinance their mortgages into more affordable options.
The movement actually launched in September of 2007 under former President Bush. At that time the FHA launched theFHA Secure Initiative. This strategy allowed borrowers to refinance their mortgage in order to fend off the debts becoming delinquent. The original policy applied to homeowners who were previously paying their bills on time, but the ARMs reset caused them to struggle greatly with staying on track of their mortgage payments. That plan expired December 31, 2008.
There are two portions to Obama's bailout for homeowners and both are backed by the FHA. The two punch approach was designed toto help nine million Americans stay in their homes and stay out of financial trouble.The overall FHA program is double layered as an added safety precaution and to reach as many struggling Americans as possible.
The first program aims to help struggling homeowners refinance their existing mortgages to more realistically manageable terms. This portion of the program is called the "Home Affordable Refinance" and applies toFannie Mae or Freddie Mac mortgage holders.
Part two includesthe FHA assisted plans courtesy of the"Making Home Affordable" loan modification program. If homeowners were late on several payments or did not qualify for refinancing for other reasons they could get some additional help from the FHA. For more information regarding both programs the new mortgage plan guide can help with some insight.
