Two-Thirds of Struggling Homeowners Meet Key Criteria for Housing Bill Relief, According to Survey by CCCS of Greater Atlanta

ATLANTA, Oct. 6 GA-CCCSAtlantaSurvey


ATLANTA, Oct. 6 /PRNewswire/ -- Almost two-thirds of homeowners who called
Consumer Credit Counseling Service (CCCS) of Greater Atlanta for foreclosure
prevention counseling in recent months appear to meet the threshold
requirements for relief under the new federal housing bill that took effect
Oct. 1, according to a recent survey of those homeowners.


Of 591 people surveyed in late September, 381 of them, or 64.6 percent,
said they met five key eligibility criteria for the mortgage refinancing
program.


On July 30, President Bush signed the Housing and Economic Recovery Act of
2008. The law created a new program called Hope for Homeowners intended to
help families save their homes from foreclosure. Mortgage lenders
participating in the program can allow "at risk" borrowers to refinance their
current mortgage into a new fixed-rate loan insured by the FHA. Lenders'
participation in the program is voluntary.


"Our survey results indicate this new FHA program holds the potential to
help a large number of Americans struggling to pay their mortgage," said
Suzanne Boas, president of CCCS of Greater Atlanta. "Not everyone will be able
to meet the terms. But if someone meets the basic criteria laid out in the
housing bill, it would be worth a phone call to their lender to ask about the
FHA program."


Homeowners must meet several requirements to be considered for the
program. People who called CCCS of Greater Atlanta in July and August trying
to avoid foreclosure were surveyed about these requirements by email from
Sept. 19-23.


To be counted among the 64.6 percent of survey takers who appear to meet
the threshold criteria, people needed to indicate that they live in the home
with the problem mortgage; their mortgage was originated before January 2008;
they didn't have an existing home equity line or other second mortgage; they
did not own another home and they spend at least 31 percent of their gross
monthly income on mortgage debt.


From those surveyed, the top challenge to participation in the FHA program
is paying off a home equity loan or second mortgage. Thirty-five percent of
respondents reported that their home secures more than one loan.


A second mortgage or home equity loan must be paid before a homeowner can
qualify for the refinance program. It is possible to pay off the second
mortgage through proceeds from the new FHA loan. That could be difficult if
the first and second mortgage are held by different lenders because only the
primary loan qualifies for the FHA program.


Also, nearly 20 percent of respondents say they don't spend at least 31
percent of their gross monthly income on their mortgage -- a threshold
required by the FHA refinance program.


Borrowers who qualify for the FHA program are responsible for paying loan
origination fees, as well as an insurance premium to FHA equal to 1.5 percent
of the principal annually.


There are several other conditions:



-- The borrower must certify there was no misrepresentation in their
application for the existing loan.


-- The borrower must agree to share both initial equity and future
appreciation with The U.S. Housing and Urban Development Department (HUD).


-- The equity sharing agreement provides that if the house is sold within
the first year, 100 percent of the initial equity (generally 10 percent of the
value of the property at origination) will go to FHA. After 1 year, FHA is
entitled to 90 percent of the initial equity. The percentage keeps dropping in
10 percent increments to 50 percent after the fifth year, where it stays.


-- In addition to the initial equity which is a fixed amount, 50 percent
of any future appreciation of the property must be paid to HUD when the
property is sold.


-- The FHA loan will be a 30-year fixed rate mortgage and may not exceed
90 percent of the current appraised value of the property. An additional 3
percent mortgage insurance premium will be financed in the mortgage making the
initial loan to value 87 percent.




CCCS of Greater Atlanta serves clients in all 50 states and has 18 offices
in four states. It is the headquarters for the CredAbility Network, a family
of agencies serving consumers in north Georgia, south Florida, middle
Mississippi and east Tennessee as well as nationally via telephone and
Internet. CCCS is accredited by the Council on Accreditation and is a member
of the Better Business Bureau and the National Foundation for Credit
Counseling (NFCC). Governed by a community-based board of directors, CCCS is
funded by creditors, clients, contributors and grants from foundations,
businesses and government agencies. Service is available at offices throughout
metro-Atlanta and north Georgia in English, Spanish and American Sign
Language. CCCS offers around the-clock help by phone at 1-800-251-CCCS or at
its Web sites, www.cccsinc.org and cccsenespanol.org .



SOURCE  Consumer Credit Counseling Service (CCCS) of Greater Atlanta