...the FHA plan seeks to reduce mortgage-related payments to 31% of monthly income. But it gets there in a different way, by focusing on changes in the principal amount rather than the interest rate.
Under the FHA plan, mortgage servicers can reduce the amount of principal on which the borrower must make loan payments by as much as 30% to get monthly payments to affordable levels. The borrower makes the reduced payments for the life of the loan, but is responsible for paying off the full loan amount when the home is sold or the loan is refinanced. This approach is designed to fit guidelines set by Congress, FHA officials said.
It will be interesting to see the specifics of the deferment. If it only requires the repayment of the principal without the interest arrears that seems like a huge boon to FHA borrowers.
1 comment:
All these gov't programs are designed to keep housing inventory levels from reaching higher levels. The Gov't is betting on another RE bubble to bail them out!
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