Hollywood, FL Mortgage Principal Reduction: FHA Announces Principal Reduction Program
On behalf of Bankruptcy Law Firm of Clare Casas on Monday, August 9, 2010.
FHA has announced that it will begin offering FHA-insured mortgages to qualified non-FHA borrowers that are underwater on their mortgages. This new refinance program will begin on September 7, 2010 and is targeted to help homeowners who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.
As we all know, lenders have been very reluctant to write off principal on existing loans. The logic behind that has always eluded me since most homeowners that I speak to would be more than willing to continue making payments even if the final balance is still reasonably more than the house is worth. The key word there is "reasonably." It would make sense for lenders to secure a new income producing mortgage for more than what they could get at a subsequent foreclosure sale and the homeowner would be happy staying in their home and making a payment they can afford! But logic rarely rules the day anymore when it comes to banks.
FHA has just sent lenders a mortgage letter explaining the details of the new "negative equity" program.