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Relief for Underwater Homeowners Coming?

Across the country, 12.5 million homeowners owe more on their mortgage that their property is worth.  At least 4 million homeowners have lost their homes due to foreclosure since 2007.  In an effort to assist responsible homeowners and to boost the housing market, President Obama in his State of the Union Address announced a proposal to improve the housing market by offering a refinancing program to underwater homeowners who do not have conventional agency mortgages.

The President's plan will provide homeowners who are current on their mortgage loans with an opportunity to refinance their mortgage loans, take advantage of the current low interest rates and save an average of $3,000 per year.  To qualify for this refinancing program, any homeowner with a mortgage loan that is not currently guaranteed by Fannie Mae or Freddie Mac may be eligible if they meet the following criteria:

1.  They will need ot have been current on their loan for the past 6 months and may have not missed more than one payment in the last 12 months.

2.  They must have a current FICO score of 580.

3.  They have a loan that is within the mortgage limits for their home counties set by the Federal Housing Authority, and

4.  The loan they are refinancing must be for a single-family, owner occupied principal residence.

Under the President's plan, the costs associated with refinancing will be reduced and it will provide homeowners with an opportunity to build equity in their property.  Although this plan is merely a legislative proposal at this point, homeowners may currently seek relief under a similar program; Home Affordable Refinance Program (HARP).  HARP, however, is only available to homeowners that currently have a mortgage loan that is guaranteed by Fannie Mae and Freddie Mac and meet the following criteria:

1.  The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009,

2.  The mortgage cannot have been refinanced under HARP previously, unless it is a Fannie Mae loan that was refinanced via HARP from March-May 2009,

3.  The current loan-to-value ratio (LTV) must be greater than 80%, and

4.  The borrow must be current on the mortgage at the time of the refinance, with a good payment history for the past 12 months.

In the State of Illinois, homeowners who are current with their mortgage loan but owe more than what their property is worth may seek relief through a recent $25 billion settlement reached between IL Attorney General Lisa Madigan and the five largest bank mortgage servicers.  Up to $3 billion of this settlement will help homeowners who are current on their mortgages refinance their underwater mortgages.

There are a variety of federal and state programs for mortgage assistance, and the mortgage companies have their own programs as well.  To wade through them all, it is wise to seek the help of an experienced mortgage assistance attorney in Chicago.  The attorneys at Ledford & Wu can assist you determining which program you qualify for, if any, and what assistance is available.

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