Housing Bill and Free Online Tool Can Help Your Family Avoid Foreclosure

August 6, 2008

The Housing and Economic Recovery Act of 2008 creates a new program to help hundreds of thousands of families save their homes from foreclosure and a new online tool will tell you in an instant if you're eligible.

The program is built on the idea, expressed by Federal Reserve Chairman Bernanke, that creating new equity for troubled homeowners is likely to be a more effective way to avoid foreclosures.  New loans will be based on a family’s ability to repay the loan, ensuring affordability and sustainable homeownership.

As well as the borrower's ability to pay, the bill takes other factors into account such as limiting loans on a per county basis to allow families in all areas of the country to access to the program. The criteria may seem overly complex and confusing for homeowners already stressed by the prospect of losing their home  A  free online tool just introduced by Lending Tree will help struggling homeowners quickly determine if they are eligible for an FHA loan under the new law's complex rules.

At this point, most homeowners have no idea if they qualify for a loan under the new bill . The new eligibility tool will help families cut through the bureaucratic barriers associated with the bill.

“We’ve discovered that most borrowers are unaware of FHA-insured loans and what it takes to actually qualify for one,” says Nicole Hall, editor in chief of the LendingTree Smart Borrower Center. “In light of recent news regarding the surging popularity of FHA loans, we’ve set out to make the eligibility process for an FHA-insured loan a lot easier to do.

Traditionally, FHA-insured loans have been seen as an alternative for lower-income borrowers, borrowers with low down payments or those with shaky credit histories but not anymore. Now, even well-to-do borrowers in affluent housing markets can qualify for an FHA loan. The new law raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500.

In addition to helping homeowners directly, the new housing law provides an additional $3.92 billion to communities hardest hit by foreclosures and delinquencies with supplemental Community Development Block Grant Funds. The grants will be used to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in house values of neighboring homes.

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