Foreclosures rates continue to rise, borrowers have found themselves trapped in loans where payments and principle balances balloon, and housing values continue to plummet. This is mixing a toxic cocktail of homeowner despair. However, the government is trying to formulate an antidote.

Refinancing the Mortgage Mess

The antidote comes in the form of a series of reforms, most of which fall within the recently signed Housing and Economic Reform Act. Unfortunately, this 900 page bill, filled with a myriad of loan programs, government refinance assistance, and Federal Housing Administration (FHA) modernization is going to take a little professional help for the average homeowner.

On close examination of this legislation and the resulting FHA loan programs, it is obvious the intent is to prevent foreclosures. Many of the previous risk-based provisions, like loan amount limits, risk-based pricing, and foreclosure and bankruptcy limitations, have been lifted or removed.

Government Refinance Assistance

Government agencies, like Housing and Urban Development (HUD) and FHA, are not necessarily known for simplicity. And this recent reform is no different. Although full of home buyer and refinance assistance it is riddle with qualifying calculations and caveats. So, fitting into one of these new FHA loans is going to require guidance from a professional loan counselor.

Acknowledging this complexity, HUD is diligently working with mortgage brokers and lenders to swiftly train and certify competent new FHA lenders. HUD is crisscrossing the Nation, in a series of traveling road shows, providing in depth training to lenders and familiarizing them with these new mortgage refinancing options.

Borrower Education

The obvious conclusion is that there is likely a refinance solution to most borrowers' pending payments shocks, ballooning balance, or financial set backs. The trick is finding it. Then the challenge is navigating the loan qualifications. This is where a little education becomes critical.

First, do your research to get a basic understanding the refinance assistance available. Resources like our own Government Back Loan guide or HUD's refinance resources.

Second, find an approved FHA lender--these are the only lenders eligible to provide you the government refinance assistance offered under this new legislation. These approved lenders can be found within our own mortgage broker and lender directory or at the HUD website.

Finally, make sure that you understand all of your refinancing options. Ask lots of questions of your mortgage professional. Ensure that the refinance assistance and advice you are getting makes sense and is financially manageable for you.