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The FHFA could make avoiding home foreclosure easier for some

On Behalf of | Apr 24, 2016 | Firm News, Loan Modification vs. Bankruptcy

Despite the fact that the recession and the housing market crash are considered to be over, there are still thousands of homeowners here in Florida and elsewhere whose mortgages are underwater (homeowners owe more than the home is worth). In response to this, the Federal Housing Finance Agency (FHFA) wants to make avoiding home foreclosure easier for some. Fannie Mae and Freddie Mac, which are regulated mainly by the FHFA, might be in a position to help some 33,000 homeowners who are seriously delinquent on their mortgage loans.

Certain criteria must be met in order to be up for consideration. Obviously, either Freddie Mac or Fannie Mae must guarantee the mortgage loan in question. The owner must be occupying the residents and must be at least 90 days behind on mortgage loan payments as of March 1. Furthermore, the balance on the loan cannot exceed $250,000.

For those 33,000 people chosen for a principal reduction of their mortgage loans, this is good news. However, a staggering number of homeowners are unable to make their payments, and their mortgages remain underwater. One statistic indicates that 820,000 homeowners across the country owe nearly twice what their homes are worth, which is a significant problem.

Florida homeowners who are in this situation could be facing foreclosure. They need to know that in the absence of assistance such as is being offered to the lucky few under this new FHFA plan, avoiding home foreclosure could be as simple as filing for bankruptcy. Many people who want to keep their homes file for Chapter 13 bankruptcy, but, depending on the circumstances, it might be possible to do so in a Chapter 7 as well. It would be advisable to seek the advice and assistance of a bankruptcy attorney to explore every available option in order to secure the best possible outcome to this dilemma.

Source:, “Feds address the lingering underwater mortgage issue“, Mark Huffman, April 15, 2016

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