Those facing a Colorado Springs foreclosure will have to wait it out a few more weeks before it is revealed whether Freddie Mac and Fannie Mae mortgages rates will be reduced for underwater homeowners.
Our Colorado Springs foreclosure attorneys know that the possibility of losing your home is nerve-wracking, not only for what it might mean in terms of your immediate future (i.e., where we will we live, will my kids have to change schools, etc.), but also your long-term credit.
We can help you sort through the details and determine your best option moving forward.
The question raised by a recent CNNMoney article was whether a principal mortgage reduction for some of the pair's combined 3 million loans will actually help homeowners.
At first, the Federal Housing Administration had resisted taking this action, saying it would be too expensive for tax-payers, who ultimately fund them. But the calls to action have been renewed, following a $26 billion settlement between five major banks and attorneys general in 49 states that would lower principal mortgage payments for some 1 million homeowners whose loans aren't backed by Freddie and Fannie.
Internal studies, however, had suggested that such a move would essentially equal a costly bailout for embattled homeowners - by already weary taxpayers.
Now, though, President Obama has offered three times the incentives if they will reduce their principal mortgage payments under the Home Affordable Mortgage Program, called HAMP. So now, the administration is taking another look to see if such a move would make financial sense.
While Fannie and Freddie-backed loans are about 3 million total, about 75 percent of those homeowners wouldn't qualify because they have kept up on their payments. So ultimately, about 750,000 might be eligible for a reduction under the criteria. That's a relatively small percentage, considering there are about 11 million underwater homeowners throughout the country.
The hope is that the move would ultimately reduce the number of foreclosures by helping to keep people in their homes. There's a concern, though, that this move might encourage individuals to strategically default, in order to take advantage of the program.
While it remains to be seen what the federal mortgage giants will decide, contacting a Colorado Springs foreclosure defense attorney will help you figure out what your best options are.