Three weeks later, Secretary of Housing and Urban Development Alphonso Jackson acknowledged that the program, FHASecure, would help only 80,000 people avoid the trauma and humiliation of having their homes seized. The people who will benefit from FHASecure are in addition to the 160,000 nondelinquent borrowers HUD's Federal Housing Administration expected to help this fiscal year even without the new program, Jackson told a House committee.
The modest reach of the program is evident when Jackson's estimate is placed in context. Through September, there were 1.56 million foreclosure filings this year. And experts expect the number of foreclosures to rise in 2008 as the interest rates on more subprime mortgages jump, or "reset."
Housing advocates in the Lower Hudson Valley say the program will do little to stop the torrent of foreclosures hitting the region.
In Westchester County, the number of foreclosure filings was up nearly 38.8 percent to 1,975 through November, compared with the first 11 months of 2006. In Rockland County, filings were up 16.2 percent to 1,045 through October. Putnam County filings were up 44.3 percent to 368 through October.
FHASecure is for subprime borrowers who are in default on their mortgages but who were making timely payments before the interest rates on their loans rose.
The FHA will insure refinanced mortgages on adjustable-rate loans even if the borrower has not been keeping up with payments. But the homeowner must have been making on-time payments for at least six months before the interest rate rose.
The loan limits vary from region to region. In metropolitan New York, the loan must be $362,790 or less.
To qualify, a homeowner must have a rate jump between June 2005 and December 2008. He or she must also have 3 percent cash or equity in the home, a record of steady employment and enough income to make the mortgage payments.
Brian Sullivan, a spokesman for HUD in Washington, said the agency has not touted the program as a cure-all for the foreclosure crisis.
"It's not supposed to help everybody," he said. "As the president said when he announced the initiative, it's not designed to bail out people who were speculative investors or people who bought second homes (with subprime loans). It's designed to help people who were in the subprime market and had excellent payment histories but are in trouble for no other reason than their loans are resetting."
But, he said, "lender and borrower interest has been off the charts." The FHA got 127,686 applications to refinance mortgages from the time of the FHASecure announcement through Dec. 9, he said. Of those applicants, 2,950 were already delinquent on their payments, Sullivan said.
A total of 40,405 of the applicants were able to close on loans, he said.
But local advocates said the program has had little impact in the region.
"The reality of it is that this program will not help a lot of people," Elizabeth Chavez, grants administrator for Community Housing Innovations, a White Plains nonprofit that provides housing advice and other services.
She said she gets calls daily from people who are struggling with their mortgages. She said 90 percent of the calls are from people with subprime loans, but nobody has qualified for FHASecure yet.
Most of the callers have been in default on their loans for too long, usually six months to a year, Chavez said.
Veronica Raphael, a program administrator for Westchester Residential Opportunities in White Plains, said she has not referred a single person to FHASecure. Her agency gets dozens of calls a week from people looking for mortgage advice, she said.
"They just don't qualify," she said. "If their (the government's) goal is to lift consumers or bail people out, this is not the program to do it."
She said she believes the underwriting guidelines are among the reasons more people do not qualify.
Raphael said a more recent Bush administration announcement offers some hope. Bush announced Dec. 6 a plan that calls for a five-year freeze on interest rates on adjustable-rate subprime mortgages starting Jan. 1 for some homeowners.
"Anything that moves toward getting a rate reduction for these individuals is positive," she said. "But nobody has told us what happens after five years."
Stephanie Rojas, a foreclosure-prevention counselor with the Rockland Housing Action Coalition in Nanuet, said her office has been getting calls from about 15 people a week looking for advice on avoiding foreclosure. She has referred only a handful to FHASecure, a program she called "very limited" in its ability to help people.
"It'll be a little bit of help, but not much," she said.
Rojas agreed with Chavez that many of the people who seek help were in a jam before their interest rates reset. Two other factors also disqualify most people from using FHASecure, she said.
One is the loan limit. In the pricey suburbs north of New York City, $362,000 doesn't buy - or refinance - much house, she said.
Another factor is the program's credit standards, she said. Many of the homeowners who call her office have fallen behind on credit card, auto and other payments, drastically lowering their credit ratings, she said.
Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.
source: lohud.com
No comments:
Post a Comment