FHFA’s expanded “home affordable” program likely to help struggling borrowers

As home prices fall, homeowners find that their homes are worth less than what they owe towards mortgage payments. The Federal Housing Finance Agency (FHFA), on account of rising negative home equity, has expanded the home affordable program to allow lenders to offer new mortgages to borrowers even if their home’s value exceeds the mortgage amount by as much as 25%, as long as the borrower has been regular in loan payments in the past year. The government feels that “good” borrowers may become part of the next wave of foreclosure unless offered assistance.

According to zillow.com, 22% of homeowners nationwide have negative home equity. In states such as California, Nevada, Arizona Las Vegas, and Florida, over 40% of homeowners have negative home equity in certain areas. The new version of home affordable program will lower monthly mortgage payments for troubled borrowers. The program covers only loans purchased by Fannie Mae and Freddie Mac.

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