If you are about to face foreclosure, you are not alone. In any given year, one in 450 homes will enter foreclosure. Unfortunately, 2009 was not any given year and in some areas the foreclosure rate was far worse, especially in certain areas of the country. For example, according to RealtyTrac's foreclosure report, one in 60 Las Vegas homeowners is facing foreclosure. In Fort Meyers, Florida it was not much better, at one in 65 homeowners, while Bakersfield, CA has a foreclosure for every 85 homes, and in Phoenix it is 1 in every 110 homes.
Foreclosure rates like these are what prompted the federal government to initiate some financial assistance programs to try and stem the tide. The problem is not just for those being foreclosed upon. It affects all the other homes the in the neighborhood as well. According to the Apgar and Duda report "Collateral Damage: The Municipal Impact of Today's Foreclosure Boom" Homes surrounding a foreclosed property can experience a property value decrease of up to $ 220,000.
This also affects state and local governments, who must bear a large percentage of the associated costs, including increased law enforcement, administrative, fire department, court costs, and legal fees. In some cases this can exceed $ 30,000 per property. Faced by such dire circumstances, it is easy to see why local, state, and federal government assistance programs have popped up to assist homeowners avoid foreclosure.
Here are some of the more widely used government programs aimed a blunting the effects of the home foreclosure boom. On the state and local level, there are Access for Housing Finance Agencies (HFAs) that provide mortgages to first-time home buyers, and refinancing opportunities to at-risk borrowers. Most state governments have initiatives to assist homeowners who think they are about to be in trouble.
For example, Washington state has the Department of Financial Institutions. The agency will help homeowners through a variety of means including a partial deferral of property taxes, counseling, and more. Most states have similar agencies or departments.
The State of California offers financial help to various agencies that will help individuals. However, due to the state's ongoing budget problems as of December of 2008 the California Department of Finance suspended most payments to such programs in an effort to conserve funds.
In Colorado, the State Division of Housing implemented a 90-day foreclosure deferment program that gave homeowners a 3 month window to rescue their homes. There are restrictions to this and other such programs, such as the home must be an owner occupied primary residence, the loan obligation must be less than $ 500,000 and the homeowner must intend on living there as their primary residence after the foreclosure has been settled.
Most states have some sort of similar financial assistance programs for endangered homeowners. You can couple the state assistance with the even more valuable help you can get from the federal government.
A great resource to help save your home is available through the federal government. If you are having trouble making your monthly mortgage payment and fear you may be at risk for foreclosure, you can see a Housing and Urban Development (HUD) approved housing counselor. Such counseling is provided free of charge, paid for with federal tax dollars. Their job is to show you what programs are available and help you determine the best alternative to keep your home.
If you have an FHA mortgage, and a good share of troubled homeowners are so financed, there is also the FHA special forbearance or loan modification program. As the name suggests, it is for FHA backed loans only. The program requires a written special forbearance agreement between a borrower and lender. It is for homeowners whose FHA insured mortgage is at least three months but not more than 12 months overdue. In addition the property mus have not yet entered foreclosure.
To be eligible for the FHA forebearance program you must:
– Have a good payment record and a stable employment history prior to this default
– Have a verifiable loss of income or increase in living expenses
– Be actively seeking employment, but not have received a firm commitment of re-employment when the lender is reviewing the borrower's financial information.
– Be a current owner-occupant, and must continue to occupy the property as a primary residence during the term of the special forbearance agreement.
If you need more direct financial assistance, the federal government has you covered with a number of aid programs. One of the best known is the Obama administration's Making Homes Affordable program. This federal program is aimed squarely at home owners who in imminent danger of losing their homes to foreclosure. The mortgage modification portion of the homes affordable program is commonly known by its acronym, HAMP, or Home Affordable Mortgage Program. Homeowners are eligible for mortgage interest rates as low as 2%, and even a reduction in the mortgage principal, if one is necessary to bring their mortgage loan into the realm of affordability.
These state and federal government financial assistance programs can really help you to keep your home when it would have otherwise entered foreclosure. The HAMP program in particular can be a lifesaver.