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The FHA may work to refinance home owners who are upside down on their homes value 


The government is pushing hard for a new push by the FHA to guarantee loans in conjunction with lenders who make concessions on home values and loan amounts.

Representative Barney Frank is working hard to try and provide some relief to the nations home owners and specifically those who have faced foreclosure due to the housing market collapse. The new proposal would require lenders agree to write down the value of the existing mortgage to approximately 90% of the homes value to allow for the loan then to be guaranteed through the FHA. The new FHA loans would allow for home owners to refinance into fixed mortgages and create an equity position in their home, an incentive to prevent more home owners from simply walking away. The lenders would be protected as the FHA would require a 2nd mortgage on the home with no payments that protect the lender if the home owner would attempt to sell or if the home were to appreciate in value. The key to this legislation is providing some relief to the glut of foreclosures that have devastated the housing markets and resulted in a net decrease of home values in excess of 8% over the past twelve months. It is very clear that the government will need to step up their role in dealing with the housing crisis and the FHA may be an additional route along with the earlier proposed changes to Fannie Mae and Freddie Mac. Reducing the amount of foreclosures is the first step in helping to resolve the real estate crisis that has cost home owners billions in equity and forced hundreds of lenders out of business.


3-17-2008 ? LoanNetwork.com





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