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© 2008 National Financial Awareness Networkhttp://www.nfan.comPage 1 of 3
 
Hope for theHousing Market
 
© 2008 National Financial Awareness Networkhttp://www.nfan.comPage 2 of 3
Hope for the Housing MarketHope for the Housing MarketHope for the Housing MarketHope for the Housing Market
It’s no secret the housing market is in trouble. Mortgage foreclosure rates are soaring.One in every 134 homes was foreclosed in the first half of 2007, twice the figure theprevious year.
1
Last year saw the largest decline in home prices in 37 years.
2
Therewere over 1 million foreclosures in 2007 and experts predict that figure could double in2008. Right now, over 5% of homeowners are at least 30 days behind on their mortgagepayments; almost 1% are over 90 days behind and likely to enter foreclosureprocedures.
3
 
What Happened?
 
An Aug. 16 Forbes article offers a good summary of what happened to the housingmarketing over the last few years:[R]ising home prices prompted lenders to offer liberal mortgages for eager borrowers. Loans were issued with two-year teaser rates allowingborrowers with limited assets and income to buy homes that might havebeen beyond their means. The idea was that rising prices would permitborrowers to sell or refinance before their monthly payments rose. Thatstrategy came undone when prices leveled off and interest ratesincreased, and subprime borrowers began defaulting on their loans.Many homeowners who were no longer able to afford their mortgages were forced toforeclose on their homes after their fixed rates reset to higher adjustable rates. Fallinghousing prices meant that selling or refinancing as a way to free up cash becamedifficult or impossible. But for some homeowners, there may be hope in 2008.
Hope Now
Hope Now is voluntary plan intended to help subprime borrowers (borrowers with lowcredit scores) who are unable to meet their payments after their loans’ adjustable ratesincrease. It is designed to help homeowners in one of three ways:
 1.
By
locking in fixed rates for five years
thereby delaying the shift to adjustablerates, which could give homeowners time to save or plan.
2.
By
helping homeowners refinance
their existing mortgage or helping them intoa
new private mortgage
.
3.
By moving homeowners into a Federal Housing Authority
“FHASecure” loan
.Unlike other private loans, an FHASecure loan does not consider a borrower’scredit score, though it does analyze borrowers’ credit histories and review their payment- and debt-to-income ratios. The FHA does not actually make the loans,(FHA-approved lenders do that). Instead, the FHA insures the loans, whichmakes the loans are more attractive for lenders.
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