HUD's Hope For Homeowners Program Expected To Give Mortgage Market Boost

Washington, D.C. (AHN) - Relief was offered by the federal government to struggling homeowners whose homes are in danger of foreclosure through the launch of the Hope for Homeowners program Wednesday.

Rolled out by the Department of Housing and Urban Development, the program will help homeowners refinance their mortgages through a more affordable government-back mortgage.

Under the program, those who had a house mortgage before Jan. 1, 2008 could apply if they had paid at least six times on their current loans and do not down a second unit. If their lender approves the application, the mortgage could be refinanced into a 30-year, fixed-rate loan.

Among the pre-conditions for approval of the refinancing are a certification from the borrower that they can not pay their current loan without the assistance package and their month amortization are over 31 percent of their gross monthly salary as of March.

According to the Congressional Budget Office up to 400,000 embattled homeowners are expected to be helped by the program during its three years life. The program is part of the housing rescue bill passed in summer which insured $300 billion in mortgages.

But John Taylor, chief executive of the National Community Reinvestment Coalition, belittled the effect of the program on the mortgage crisis. Taylor pointed out in September alone 300,000 foreclosure filings were made, while the Hope for Homeowners program targets providing assistance to 400,000 homeowners only.

"Have no illusions, this is going to help some homeowners, but it's not going to solve the foreclosure crisis by any stretch," Taylor said,

Massachusetts Attorney General Martha Coakley said prior to the launch of the program, problematic homeowners had their houses foreclosed due to lack of meaningful assistance from companies that service their mortgages. Coakley added loan modifications will stabilize the housing market, stop the rise of foreclosures and ensure cash flow to bring back value to mortgages and mortgage-back investments.