In an effort to help struggling homeowners to avoid foreclosure and stay in their homes, a Housing Rescue Bill was passed by congress and signed by President Bush, in July of this year. In the last few weeks many of my e-newsletter subscribers have asked me about this Rescue Law Program. They want to know how this program works, and if indeed is going to really help them.



Most homeowners have not idea how this new program is suppose to help them to avoid foreclosure, if in fact is going to do that, and if this financial crisis will affect the Rescue Program. They want to know who may or may not qualify, but mostly they want to know, if they do qualify for help, if it would come with any strings attach? Will be anything in the small prints that they should know or be aware of?

The New Housing Rescue Law is expected to ease the struggling housing market and help homeowners to avoid foreclosure; but the reality is that this Bill is intended to bolster the Mortgage Finance giants Fannie Mae and Freddie Mac (this was developed before they had to be bail out by the Government) and not exactly to the majority of struggling homeowners in a direct way.

The answer is yes to both questions. The homeowners who get to qualify and pass the vigorous scrutiny, and finally qualify for a FHA backed home Mortgage Loan ,in order to avoid foerclosure there are a lot of things that you need to be aware of, and you better read well because, as usual, it is very likely that you will not be explained with details all the strings that come attach along with this Rescue Law. And this financial crisis will indeed affect the Housing Bill.

In many, many cases people will be better off by keeping their homes for as long as they could, then letting it go to foreclosure, rent for a year or two, and then when the home prices stop decreasing, star fresh and buy a new property. Going back to the Bill; before homeowners can get FHA backed mortgages; they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years.

This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the current value of the house. In areas with high foreclosure rates where prices have plummeted by as much as 40%, that will mean a substantial loss for the lender.

With the financial crisis that we as a Country are facing at this time, the hight rate of foreclosure and the pressing need of cash that most Lenders have, I do not believe it would be a big dilemma for the Lenders to accept 85% to 90% of the actual appraised home value, but there are other things involve in this.

The fact is that the lenders will not sign off on a exercise unless they are sure that they will lose less money on that than they would by allowing a house to go through the costly foreclosure procedure. In this case there are many factor that need to be taken into consideration like; Will Fanny maid or Freddy Mac have the financing cash available at the moment, or if a probable new buyer will find credit, if they decide to finally foreclose your property and then sell the property in the market or in an home auction.

There is a predetermined up front cash cost for borrowers to bear, and In fact the refinanced mortgages loans do come with many strings attach, so the homeowners who are facing foreclosure must be aware of what they are getting into, since it is not as simple as we may be bound to believe. In my website I explain everything you need to know in details as well as what you should do, and if you will or will not qualify for this Rescue Law Bill.