7-30-08

After mounting pressure from nearly the whole country Bush set aside his veto threat of the Housing rescue bill and signed it into law today. The bill is expected to provide a valid alternative to foreclosure for the banks and for homeowners. The measure also includes relief to Fannie Mae and Freddie Mac and also sets up regulation for the two government sponsored mortgage companies who fund most of the mortgages in the country.

This measure is expected to help hundreds of thousands of American homeowners and also includes billions in grants to revitalize areas hardest hit by the crisis. The new law will create a new FHA program which looks like it will be called FHA Help Now and it will provide the FHA with $300 billion to refinance homes that are about to or are in foreclosure. The only issue that many people have is that the bill may not go far enough since it is a voluntary program impart by your current bank trying to foreclose on you. The hope is that letting you into this new FHA program will be cheaper for them then actually foreclosing on you. It would also require the lenders to write down the loan to 90% of the current appraised value of the home, and an FHA approved lender would then refinance that 90% into a new 30 year fixed loan.

The new FHA program will become active to homeowners starting October 1st and all the detailed guidelines will be posted here as the FHA writes them. As always this is a step in the right direction but no one should wait for just one solution. In order to truly avoid foreclosure you need to be open to every option and be proactive about your situation, waiting is often the worse mistake homeowners make.

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