The Detroit Answer To Mortgage Crisis
There seems to be many people, politicians and government agencies getting into the mix of fixing bad mortgages. Detroit has a new program in place to help those who are struggling to make their payments. Detroit is a city filled with problems. Large industries such as the automotive industry have moved away because of lack of profits. The city was the poorest and most unstable in the country for several years. It is no wonder a program like this would be offered to those in the city looking for a silver lining.
One program created by the Federal Department of Housing and Urban Development (HUD) will allow borrowers who have FHA loans to get help. The program allows the mortgage lender to submit an insurance claim on the mortgage. Typically, the government insures FHA loans, so lenders are less likely to face default themselves. When the borrower begins to fall behind on their mortgage payment, the lender issues an insurance claim on that loan. HUD then moves the loan to a company for servicing and works directly with the home owner to restructure the loan to make it more affordable. This initiative went in place just this month. It is designed only for those whose loans are in arrears, not those that have failed.
Is this a good opportunity for investment? From the prospect of the home owner, it can be. I say “can” because it is not always a good option for all borrowers. The problem is, if the home owner simply cannot afford the loan payments, even at the refinanced rate, it won’t help them. Yet, for many of these people, the problem is that their rates have adjusted and that is what has caused the problem. In these situations, this new FHA program may be just what these individuals need.
Why is the city doing this? There is evidence that any one city will be hurt by just one foreclosure within a neighborhood. One foreclosure may significantly cause home property values to fall significantly. Therefore, it is in the best interest of any city to consider programs that offer this amount of support.
FHA loans are helpful here and you do not have to be in default to get help. If you are struggling to make your payments, contact an FHA representative as soon as possible to get help. What’s more, remember that programs like this are showing up around the country, in many of the cities hurt the most by foreclosures.