The bailout plan, now re-named the Emergency Economic Stabilization Act has been signed into law.
Although there are many facets to the bill, two sections in particular are designed to address struggling homeowners directly: Section 109, Foreclosure Mitigation Efforts and Section 110, Assistance to Homeowners.
Both of these sections encourage “a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures.”
Modifications to residential mortgage loans, may include the following:
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Reduction in interest rates
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Reduction in principal
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Other similar modifications
It is important to note that the legislation makes it VOLUNTARY for lenders to make modification to existing loans. The coming weeks should reveal how these two provisions of the bill will be implemented.
However,the most important thing that you can do right now if you need mortage assistance is to reach out to your lender and ask for workout options. In most cases, your lender would rather explore options to keep you in your home than to pursue foreclosure.
