Hope for Homeowners Expanded to Cut Down Foreclosed Homes

Time icon May 25th, 2009 by Autor Joseph Smith

The Hope for Homeowners loan refinancing program which was launched by the Bush administration in October last year has been expanded by President Obama on Wednesday to save more houses from becoming foreclosed homes.

President Obama signed into law a housing bill that included the expansion of the Hope for Homeowners program, the protection of lenders from investor lawsuits, the protection of renters of foreclosed homes and the expansion of assistance programs for the homeless.

When the Hope for Homeowners scheme was launched last year, federal officials expected to help about 400,000 homeowners save their houses from becoming foreclosed homes, but after a period of seven months, only 51 homeowners have been helped by the program nationwide.

The Obama administration saw the problems in the Hope program so it enhanced the program by expanding eligibility to the program, lowering participation fees, simplifying documentation requirements and providing cash incentives to lenders and servicers who help borrowers save their houses from becoming foreclosed homes.

The housing bill also added another provision to the Making Home Affordable program launched by President Obama in February. It issued legal protection to servicers or lenders who modify loans under the Affordable program or refinance under the Hope for Homeowners program from lawsuits filed by investors affected by loan modifications.

Since the launching of the Obama program, it had already modified 70,000 loans. Although Obama’s program provides incentives both to lenders and borrowers, housing advocates argue that both the Affordable and Hope programs involve lenders on a voluntary basis.

Obama had planned to make loan modification mandatory through a bankruptcy reform bill, but it was rejected by senators.

Another provision in the housing bill is the allocation of $130 million in funds for nationwide foreclosure prevention programs, such as foreclosure prevention counseling, consumer education, hiring of more field workers and information drives against foreclosure fraudulent activities.

Homelessness was also addressed in the bill. A funding of $2.2 billion was allocated to finance programs to help homeless Americans and mitigate the impact of homelessness on neighborhoods.

The bill also requires mortgage lenders to inform borrowers who finally owns mortgages if their mortgage loans are sold to investors or other third parties.

Lastly, the bill provides protection to tenants who are caught in foreclosures. Banks who own foreclosed homes must give at least three months to renters to find another rental and must notify them properly.

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