Mortgage Aid Plan A Failure So Far

By derrick on 05 Nov 2008

The government expects only 20,000 borrowers that are in trouble to refinance by next fall under a new Mortgage aid program passed by lawmakers over the summer. The “Hope for Homeowners" program was launched on October 1st 2008. So far the results are 42 applications and no loans approved yet.

The problem is that the lawmakers expect the Lenders to take a loss down to 85% of the current appraised value. Lenders are finding it cheaper to do workouts with the borrowers then to sign up for this program.

Also with the program the government is taking a 5% stake in the property.

One benefit of the law passed is that lenders cannot be held liable by the investors for workouts with the borrowers. This should make it easier to work with the lenders of loans in the case of short sales and workouts.