Bush Signs Foreclosure Bill; Who's Getting Short-Changed?

It's official: The Hope for Homeowners Act of 2008 has been signed by the president and now we shall see who this helps. For struggling homeowners in Maryland, here's a quick breakdown of the criteria to qualify:

In order to apply for this program, you must:

• Have a loan originated prior to 2008
• Be paying paying more than 31% of your monthly income on your mortgage
• The program qualifies for PRIMARY RESIDENCE ONLY
• Have your income verified

The program will not take effect until October, 2008, runs through September, 2011, and here's the kicker (There's always a catch, right?):

Lenders can pick and choose which loans to refinance under the program!

This means that if your lender isn't in the mood to adjust your loan, you're out of luck! The catch is that the bank WILL be losing money on the deal, as the loan is essentially going to be giving owners 10% equity (Loans can only be up to 90% LTV), so I would imagine that even though 400,000 people are theoretically "eligible", far fewer are going to be given a break as the lenders will be eating crow on the deal.

This isn't a free money deal for the homeowners, however:

If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What's more, homeowners can only retain equity gains based on a sliding scale.

The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter. The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value.

This has a big impact on OUR area because of all the military families in the area that are struggling to make payments. If you get re-assigned in a year, you lose all of your financial gain in the home!

The entire 694-page bill can be viewed at: http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf