Some experts opine that the latest housing solution initiated by the government is a good bandage for foreclosure bruises. But whether it will heal or leave indelible scars only time alone can tell.
It is an opportune time for first time buyers to realize their great American dream of owning a house. Borrowers in trouble can evade eviction with the help of certain new options – all thanks to the new bill President Bush has inked into law. But there are buts in this legislation running through 694 pages!
The government claims that from the bill 400,000 householders facing foreclosures will be benefited across the country. How many residents of Illinois will qualify to avail of the help line remains a query. During the first half of this year Illinois was responsible for 4% of all the foreclosures in the country as per data collected by RealtyTrac.
The programme is expected to take off many of the houses from the choking real estate market and help to stabilize the falling price line. But Mark Zandi of Moody’s Economy is not all that optimistic as he feels that with more reo houses pouring in there are slim chances of immediate recovery. So the latest government move is “not a miracle cure. It’s one modest positive step.”
The programme will allow those borrowers who qualify to seek cancellation of their current mortgages and replace it with a traditional long-term fixed rate loan running for 30 years. These new loans will be backed by FHA insurance covering 90% of the value of the property. The pivotal issue is that the lenders will have to agree voluntarily to this plan. For this they will have to write off a sizeable part of the original loan contracted.
Options will be left open from 1st October 2008 till end of September 2011. It will be of help to those householders who spend over 31% of their monthly earnings on mortgages. These loans must have been contracted during a certain specific period. As such the bill will not be of timely help for many. Jacqueline Rodriguez of Logan Square is one of them. She had taken a sub-prime ARM loan three years ago and is now five months behind payment schedule. Even after having attended several foreclosure related workshops she remains in a state of limbo about the fate of the house that is her home.