Foreclosure Aid Program Failed to Bring Hope to Homeowners
The Hope for Homeowners initiative of the U.S. government was once hailed as the potential solution to combat the burgeoning foreclosure problem in the country.
However, federal housing officials received only about 115 applications for the program since it was implemented on October 1, 2008. Data from RealtyTrac, a real estate research company, showed that over 3 million households are in foreclosure proceedings.
Furthermore, people and entities involved in the program doubt that Hope for Homeowners will meet expectations. Bankers do not like the program. Consumers do not understand it while government regulators do not believe that it can solve the foreclosure problem.
Nevertheless, some experts still hope that the program will prove worthy of its name. They suggest that the fast track initiative of Freddie Mac and Fannie Mae could revive the Hope for Homeowners initiative.
On the other hand, several alternatives for the Hope for Homeowners are being considered. These alternative programs aim to help homeowners who are facing the threat of foreclosure find fixed-rate mortgages that they can afford.
One initiative is the Federal Deposit Insurance Corp. – guaranteed home loan program that aims to provide refinancing to about 2.2 million homeowners facing foreclosure property. Another initiative is Freddie Mac and Fannie Mae’s loan modification program that aims to fast track homeowners applications for loan relief.
Neither of these initiatives require loan servicers to accept write-downs on a mortgage’s principal, a major rule in the Hope for Homeowners program objected by bankers. Also, if homeowners decide later to sell their properties, they will be required to give to the U.S. government half of the proceeds from the sale.
Meanwhile, as the banking industry is trying to review which initiatives they are going to focus on to help abate foreclosures, the government has distributed a quarter of the almost $700 billion bailout fund for the financial industry.