Many people in Las Vegas own houses that are underwater, sometimes well into their second mortgages. The federal government knows this, and along with a settlement it (along with state governments) reached with lenders in February, it announced a new plan to help “more responsible homeowners refinance.” Here are a few important things to know about the plan:
(1) Refinancing fees will be cut for loans already insured by the Federal Housing Authority (FHA). The government estimates that 2-3 million borrowers might be able to save money under the new fee structure. Typical borrowers will save roughly $1,000 that they wouldn’t have been able to save otherwise.
(2) The plan works by lowering refinancing borrowers mortgage insurance premiums.
(3) According to the White House, the typical FHA borrower has $175,000 in mortgage debt. At a 4 percent rate refinancing, that borrower would pay about $1,010 per month, and under the fee reduction plan would pay only $915.
(4) The plan works on top of other programs the President has come up with, namely, increasing access to refinancing for those with loans held by Fannie Mae and Freddie Mac via the Home Affordable Refinance Program (HARP).
There has not been much comment on the latest plan. The New York Times mentions it in contrast to the President’s unwillingness to do more to reduce borrowers’ mortgage principals.
If you have an underwater home, it’s not too late to do anything about it. You may be able to find relief via a mortgage modification, refinancing at lower rates, short-selling, offering the bank the deed in lieu of foreclosure, and filing bankruptcy. A Chapter 7 bankruptcy can allow you to discharge an underwater second mortgage while filing in Chapter 13 can help you strip second mortgagees’ liens on your house. Consult with an experienced Las Vegas bankruptcy attorney to take your fresh start.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.