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Massachusetts, like most states, was hit hard during the 2007 to 2010 housing crisis and is still feeling the effects of the recession. Unemployment is high, at 8.2 percent, with over 288,000 people unemployed. However, there is good news. All the main industry sectors, including construction, financial activities and professional and business services are reporting modest but significant improvements.
However, the foreclosure figures are far from modest, they are excellent. Only one in every 1,749 homes received a foreclosure in January 2011. Nevertheless, that still means there are 19,230 homes that are currently under foreclosure.
The government has set a variety of government programs to provide help to homeowners in Massachusetts. In this article we will look at one of these special programs, the New England Mortgage Relief Fund.
This fund is sponsored by five banks: Citizens Bank, Webster Bank, Bank of America, TD Banknorth and Sovereign Bank, which are working together with the Federal Reserve Bank of Boston to help homeowners save their homes from foreclosure.
Eric Rosengren, CEO of the Boston Federal Reserve Bank recently praised the Mortgage Relief Fund and the banks that back it for their work in assisting financially troubled homeowners.
Up to date, the banks have committed $125 million towards the relief fund. Although significant, this amount does not reflect the magnitude of the problem faced by thousands of homeowners. Just between Connecticut and Massachusetts there are over 25,000 homes in foreclosure, and that does not include the other four states in New England.
The fund does not aim to help all struggling homeowners. It focuses on borrowers who are loaded with high interest mortgage payments for homes that are worth less than their mortgage balance, but have good payment histories on their credit history. This initiative seeks to provide refinance loans and loan modifications for responsible borrowers who have who are in financial difficulties. This subgroup of borrowers represents up to 25 percent of subprime borrowers in New England. Subprime loans include loans with interest rates which are much higher than current interest rates. Because their homes are not worth as much as their mortgage balance, many borrowers are locked into their mortgage even though they have good credit and could otherwise refinance their mortgage to lower interest rates.
It is encouraging to see how competing banks have united behind this program. The money committed to the fund is used for shared advertising and other running costs of the program.
If you want to apply for this government sponsored mortgage help program visit www.mortgagereleieffund.com or contact your bank and ask if you qualify as a beneficiary of the Mortgage Relief Fund.
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