by Amber Stewart

Created on: August 13, 2008   Last Updated: September 03, 2008

THE BASICS OF FORECLOSURES

You see ads for them almost everywhere. They have been in the news constantly and on the minds of millions of homeowners nationwide. They are foreclosures. Whether you are just buying your home, having trouble with your mortgage payments, or looking to buy a foreclosed property, this article will tell you the need to know facts about foreclosures.

Foreclosures happen when home owners go into default on their loans because they are unable to make their payments. This process is different from state to state but normally takes anywhere from 6-12 weeks. Foreclosures have been on the rise for a couple of years due to higher interest rates and increasing mortgage payments. There are millions of families out there facing this crisis right now who are not sure what they can do about it. These are hardworking Americans who, when buying their home, thought they were living the American dream and definitely not expecting this to happen. With so many families becoming homeless and thousands more moving in with relatives just to have a roof over their heads, Americans are asking where is the government and what are they going to do.

Within the last two years the Bush administration has begun looking into and taking steps to resolve this crisis. Legislation to update the Federal Housing Administration has been passed which 1) lowers the down payments required so more Americans are able to buy a home 2) allows the FHA to insure bigger loans and give them more pricing flexibility. There has also been a new FHA initiative created called FHA Secure that will allow those people with qualifying credit and whom have not made payments on time due to rising interest rates, to refinance. They are also able to switch from an adjustable rate loan to a fixed loan. Premiums will now be based on the individual risk of each loan. Since the creation of the FHA Secure program, more than 210,000 families have been able to refinance and keep their homes. This number is expected to be near 1 million by the end of 2008.
The government is also looking at ways to help struggling families refinance. They are working with groups such as FHA, Fannie Mae, and Freddie Mac in order to expand financing options and to help families understand their choices before going into default.

In July 2008, a bill was passed that would give $180 million to lenders and companies like HUD and FHA for pre-foreclosure counseling. It also created a permanent affordable housing trust fund that

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