chicago-condos & Chicago Real Estate & Chicago Mortgage pcherry on 07 Sep 2010 11:08 am

New Federal Program Aimed At Bailing Out Underwater Homeowners

September 7, 2010 - Back in March the Federal Housing Administration publicised a new program aimed at homeowners who have underwater homes. When a homeowner owes more on his or her Chicago condo or home than it is currently worth, that is called being underwater or having an upside down mortgage. Data from housing market analysts and teh Federal Housing Administration puts the number of U.S. single-family homes and condos that are underwater at about 11 million.

This new program may have been advertised this past spring, but just started this week. Under the guidelines of this new effort to stem foreclosures, the FHA will approve lenders and mortgage companies to refinance home loans as long as the lender will subtract or forgive a minimum of 10% of the original loan amount.

Knocking down the principal of the loan will help borrowers to pay it off sooner as well as decrease the amount of interest accumulated. In the long run it also helps lenders because it gives the borrowers a better chance of paying off close to the full loan amount. Banks generally get much less of a return on foreclosures or short sales.

While this new program may not help to thin out the high number of Chicago condos for sale, it may help some homeowners who are possibly facing foreclosure because they can’t refinance their Chicago mortgages.

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