People fall behind on their mortgage payments and face foreclosure for a variety of reasons. Most of them never wanted this to happen. They want to do all that they can to save their homes.

Their mortgage companies also want to see them save their homes. Any time a mortgage company forecloses on a home they end up losing a substantial amount of money.

The current foreclosure crisis in the United States dates back to late 2006 and 2007 when mortgage companies which did sub prime mortgages started to go out of business. Initially there was a dramatic increase in the number of people with sub prime mortgages who fell behind on their mortgage payments and faced foreclosure.

Other people faced foreclosure due to job loss, mounting medical bills for a severe illness,, student Federal loan
, death or divorce and other reasons. However, because the increase of the number of cases of people with sub prime mortgages facing foreclosure was so dramatic the entire focus shifted to them, student Federal loan
, .

Prior to the Making Home Affordable Modification Program which was announced by the Obama Administration in March of 2009, the Bush Administration put in place 2 Federal Housing Administration (FHA) Programs to address the problem. Both of these failed miserably.

The first was the FHA Secure Program. This program targeted people with adjustable rate mortgages. Both FHA and the Bush Administration were reluctant to take on a lot of risk. The program was very restrictive.

This FHA Secure Program allowed a person with an adjustable rate sub prime mortgage to refinance their mortgage if the interest rate on their mortgage was going to, student Federal loan
, reset to a higher rate. The higher rate would cause their monthly payment to increase a level the person could not pay.

The mortgage companies were called on to be the policemen. They had to be able to prove that they only allowed people to refinance their mortgages who definitely would not be able to make the monthly payments after the interest, student Federal loan
, rate reset. After all, these mortgages were reserved for people who would fall behind and face foreclosure if they were not helped.

To be eligible for this program a person had to have made their monthly mortgage payments on time every month for each of the six months prior to the date they applied. If any of their payments during that six month period was more than thirty days late, they were not eligible.

The maximum housing ratio allowed was 31%. That means that the total monthly payment for principal, interest, taxes, insurance and association dues had to be no more than 31% of the person’s gross monthly income. Gross Monthly income is the income paid, student Federal loan
, by an employer before taxes and other deductions, student Federal loan
,, student Federal loan
, .

The maximum total debt ratio allowed was 43%. That means that the total housing payment plus the monthly payment for autos, student loans and credit cards could be no more than 43% of the person’s gross monthly income.

In, student Federal loan
, July of 2008 the FHA Secure program, student Federal loan
, was expanded. At that point people who were going to fall behind on their mortgage payments due to economic setbacks could apply for a mortgage under this program.

The FHA Secure Program was in effect from September, student Federal loan
, 5, 2007 through December 31, 2008. It did not help the people it was intended to. Most people facing foreclosure could not even qualify for a mortgage under the program.

The initial estimates were that it was going to impact 400,000 mortgages. Only about 4,000 people facing foreclosure got new mortgages through the FHA Secure Program.

Why did it fail?

First, it was too restrictive. People facing foreclosure are late on their mortgage payments. Typically the foreclosure process does not start until a person is three months behind on their payment. These people were excluded from applying.

Second, the housing, student Federal loan
, ratio of 31% and the total debt ratio of 43% were too tight. The program targeted people with adjustable rate, student Federal loan
, sub prime mortgages. While the interest rates on these mortgages were high, the typical housing ratio for most of these people was close to 40%. The total debt ratio approached 50% and sometimes was higher. Here again most people in this group were excluded from, student Federal loan
, applying.

On December 19, 2008 the FHA announced that it was not going to extend the FHA, student Federal loan
, Secure program. The program was going to terminate on December 31, 2008 as originally scheduled. While the FHA said that continuing the program would have too great a financial impact, the real reason was that it never accomplished what it was intended for – to help people facing foreclosure save their homes.

As a real estate investor since the 1980′s Mark Elkins has seen the devastating impact foreclosure has had on common ordinary people. This has led him to study and gain much knowledge and insight into how to help people in foreclosure to take the offensive, reverse the process, save their home and minimize their losses. Please visit his website, http://www.stopforeclosureanswer.com

Mark Elkins
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