Mortgage Relief Program: Will it be too late for many homeowners?

by Peter Vernon on Mortgage

In order to address the enduring foreclosure crisis, the Senate has passed a mortgage rescue proposal that aims to help distressed homeowners switch to government-backed mortgages under the supervision of the Federal Housing Administration. Based on initial estimates, about 500,000 homeowners will be qualified for such program, which will be worth $300 billion.

But the Congressional Budget Office has yet to release the official estimate for the FHA proposal. Although it is likely that the project will be able to help the targeted 500,000, 35 percent of these homeowners might still default. In other words, an approximate 325,000 home owners will be able to keep their homes and avoid foreclosure.

The reason for such difference is that there are about 1.5 million homeowners whose adjustable rate mortgages are scheduled to re-set this year. To be exact, those with mortgage interest rates re-setting from the months of January to May will most likely have their homes repossessed or entered some stage of the foreclosure process.

In most cases, homeowners who have defaulted in their mortgage payments for 90 days and were unsuccessful in working out a new repayment deal with their lenders will probably lose their homes to foreclosure in about three to four months proceeding the delinquency period. You can therefore expect troubled homeowners whose mortgage rates reset last January will have their homes repossessed by July, at the latest.

If you are lucky to be living in a state where the entire foreclosure process takes about a year, then you might be able to enjoy the opportunity of availing the foreclosure rescue program of the Senate once it has been approved.

Of course, homeowners should understand that the government can only do as much and they should probably work out their mortgage problems as soon as possible. For more foreclosure information, you can always go to Bank Foreclosures Sale for the latest news and information.