Real Estate Central

ATLANTA, Oct. 6 /PRNewswire/ — Almost two-thirds of homeowners who
called Consumer Credit Counseling Service (CCCS) of Greater Atlanta for
foreclosure prevention counseling in recent months appear to meet the
threshold requirements for relief under the new federal housing bill that
took effect Oct. 1, according to a recent survey of those homeowners.

Of 591 people surveyed in late September, 381 of them, or 64.6 percent,
said they met five key eligibility criteria for the mortgage refinancing
program.

On July 30, President Bush signed the Housing and Economic Recovery Act
of 2008. The law created a new program called Hope for Homeowners intended
to help families save their homes from foreclosure. Mortgage lenders
participating in the program can allow “at risk” borrowers to refinance
their current mortgage into a new fixed-rate loan insured by the FHA.
Lenders’ participation in the program is voluntary.

“Our survey results indicate this new FHA program holds the potential
to help a large number of Americans struggling to pay their mortgage,” said
Suzanne Boas, president of CCCS of Greater Atlanta. “Not everyone will be
able to meet the terms. But if someone meets the basic criteria laid out in
the housing bill, it would be worth a phone call to their lender to ask
about the FHA program.”

Homeowners must meet several requirements to be considered for the
program. People who called CCCS of Greater Atlanta in July and August
trying to avoid foreclosure were surveyed about these requirements by email
from Sept. 19-23.

To be counted among the 64.6 percent of survey takers who appear to
meet the threshold criteria, people needed to indicate that they live in
the home with the problem mortgage; their mortgage was originated before
January 2008; they didn’t have an existing home equity line or other second
mortgage; they did not own another home and they spend at least 31 percent
of their gross monthly income on mortgage debt.

From those surveyed, the top challenge to participation in the FHA
program is paying off a home equity loan or second mortgage. Thirty-five
percent of respondents reported that their home secures more than one loan.

A second mortgage or home equity loan must be paid before a homeowner
can qualify for the refinance program. It is possible to pay off the second
mortgage through proceeds from the new FHA loan. That could be difficult if
the first and second mortgage are held by different lenders because only
the primary loan qualifies for the FHA program.

Also, nearly 20 percent of respondents say they don’t spend at least 31
percent of their gross monthly income on their mortgage — a threshold
required by the FHA refinance program.

Borrowers who qualify for the FHA program are responsible for paying
loan origination fees, as well as an insurance premium to FHA equal to 1.5
percent of the principal annually.

There are several other conditions:

— The borrower must certify there was no misrepresentation in their
application for the existing loan.

— The borrower must agree to share both initial equity and future
appreciation with The U.S. Housing and Urban Development Department (HUD).

— The equity sharing agreement provides that if the house is sold
within the first year, 100 percent of the initial equity (generally 10
percent of the value of the property at origination) will go to FHA. After
1 year, FHA is entitled to 90 percent of the initial equity. The percentage
keeps dropping in 10 percent increments to 50 percent after the fifth year,
where it stays.

— In addition to the initial equity which is a fixed amount, 50
percent of any future appreciation of the property must be paid to HUD when
the property is sold.

— The FHA loan will be a 30-year fixed rate mortgage and may not
exceed 90 percent of the current appraised value of the property. An
additional 3 percent mortgage insurance premium will be financed in the
mortgage making the initial loan to value 87 percent.

CCCS of Greater Atlanta serves clients in all 50 states and has 18
offices in four states. It is the headquarters for the CredAbility Network,
a family of agencies serving consumers in north Georgia, south Florida,
middle Mississippi and east Tennessee as well as nationally via telephone
and Internet. CCCS is accredited by the Council on Accreditation and is a
member of the Better Business Bureau and the National Foundation for Credit
Counseling (NFCC). Governed by a community-based board of directors, CCCS
is funded by creditors, clients, contributors and grants from foundations,
businesses and government agencies. Service is available at offices
throughout metro-Atlanta and north Georgia in English, Spanish and American
Sign Language. CCCS offers around the-clock help by phone at 1-800-251-CCCS
or at its Web sites, http://www.cccsinc.org and cccsenespanol.org .

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[Via Real Estate Newswire]