Come On And Rescue Me
Sound the horns. The House passed a bill yesterday that will give $300 billion in housing aid. The funds will help out folks having trouble making their mortgage payments. There just needs to be one more approval – by the Senate – to make this bill a reality.
Assuming the Senate does pass the bill, up to two million homeowners may be able to stay afloat with new, more affordable fixed-rate loans. Here’s a rundown on who qualifies.
1. Applicants must live in their homes.
2. Applicants must be spending at least 40% of their gross monthly income on total household debt.
3. Applicants must have gotten loans between January 2005 and June 2007.
4. Applicant debt must not be more than 95% the appraised value of the home.
(Note: You can’t apply just to get a more affordable loan. Only those who are either in default or up-to-date, but in need qualify.)
Here’s a little snippet from CNNMoney.com.
This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home’s current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.
But lenders won’t sign off on a workout unless they think that they’ll lose less money on that than they would by allowing a home to go through the costly foreclosure process.
Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home’s current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.
To bring this article home, I thought I’d check up on how many homeowners in the LAX area have foreclosed and could have used some help from this upcoming bill. These stats are from the second quarter of 2008.
Playa Del Rey: 5 foreclosed homes
Playa Vista: 8 foreclosed homes
Westchester: 12 foreclosed homes
Oh, and here’s some music to help set the mood.
