Today the Obama administration announced a broader mortgage relief program aimed at helping homeowners who are both current on their mortgage payments yet are at risk of default because they are "underwater" in their home values. The program, initially dubbed the "short refinance" program, lenders will write-down mortgage balances to 115% of the current market value of the home, then transfer the loans to the Federal Housing Authority. Official preliminary estimates are that 500,000 to 1.5 million homeowners could be benefited by the new program
According to the latest numbers from housing analysis firm CoreLogic, 23% of American homes, approximately 11 million, are "underwater" and at risk of default. One of the most persistent problems that has mired others modification programs is what do lenders do with second mortgages. The new program mandates that second liens be reduced so that the total mortgage debt is less than 115% of the home's current value. The government will make partial payments for banks to reduce those loans, but lenders have been unwilling to write down second mortgages that remain current.
Another potential stumbling block for the "short refinance" program is that lenders and mortgage servicers are still the ones in charge of the process and must be willing to write-down the values. Many mortgage servicers are already overwhelmed and an influx of new request for mortgage help, this time from homeowners who are current on their loans, may only exacerbate that problem.
If you are a Florida homeowner facing default or are considering a strategic default due to your home being underwater, contact a Jacksonville Foreclosure Defense Lawyer today to discuss your options.
