Thoughts on the “Hope for Homeowners Act of 2008”

05 Aug Thoughts on the “Hope for Homeowners Act of 2008”

Less than a week ago, President Bush signed a piece of legislation, or what could be called a piece of something else, which I will gladly explain later. Don’t get me wrong, I am not against helping individuals save their homes; as a matter of fact, I help people save their homes or stay in their homes each and every day. I just don’t like being treated like an idiot by the individuals that we elect and send to Washington.

The new legislation, or now, as it is more appropriately called, the new law aims to help distressed homeowners; however, it has no teeth. The “Hope for Homeowners Act” creates a new program within the Federal Housing Administration (FHA). The new program is temporary and its purely voluntary. In other words, the Banks do not have to participate.

As you will see, many banks will not participate or will make it very difficult for individuals to qualify. The Act contemplates that new mortgages will replace old ones. The new mortgages, which the FHA will supposedly offer through approved lenders, will refinance homeowners existing loans. These new loans will be deeply discounted depending on the current market value of the home.

Before we look at the guidelines for these new loans, let’s think about something else for a minute: What government program has ever really worked like it was supposed to?

Immediately after President Bush signed the legislation, my phone began ringing with clients who wanted me to use the new law to save their homes and the media who wanted to know what the new law meant and how it could be used to save homes in Southwest Florida. Both groups of people were sad to learn that the new law wouldn’t be of much use in Southwest Florida.

The first part of this blog will give a good indicator of why the new law will not have much impact on the residents of Cape Coral and Lehigh Acres, where the foreclosures just keep adding up. We were all hoping that our elected leaders would do something to change the outlook for the rest of 2008 and beyond.

Who Is Eligible:

1. The individual must be the Homeowner who actually lives in the house, and not be an investor. In other words, no rental properties are eligible to receive a new mortgage.

2. Homeowners must certify that they have not intentionally defaulted.

3. Homeowners must have a mortgage debt of more than 31% of their monthly incomes as of March 1, 2008.

4. Homeowners incomes must be verified.

5. The troubled loan must have been no later than January 1, 2008.

Here is the sad part and it is all opinion on my behalf. I can see our elected officials sitting in their cushy offices in Washington saying to each other that something has to be done to stem the tidal wave of foreclosures. So, they call the mortgage lenders and say what are you going to do about this.

The mortgage lenders have already crunched the numbers and know how to exclude the maximum amount of homeowners and how to exclude the worst loans out there. Then they calculate in some wiggle room by putting eligibility requirements on it. then they slap a name on it that shows they really care about their constituents who are losing their homes on a daily basis. I am willing to bet that more thought went into naming this piece of trash than actually thinking about how it would really help the people that need it the most.

C’mon guys and gals, they are handing us this piece of legislation which is nothing more than trash, and they expect us to sit back and take it. If you don’t think this will be abused, you must have voted for it.

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Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.
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