Rhode Island Housing is a government agency that provides Rhode Islanders with help to buy, rent and keep a home. The agency does not spend tax dollars, but gets income from the sale of tax-free bonds. If you own, or plan to buy a house in Rhode Island you should continue reading. This is a summary of some of Rhode Island Housing’s main programs.

FIRSTHOMES 100 & 100+

FirstHomes is RI Housing’s main product for buyers. It provides borrowers with a low fixed rate 30 year mortgage with hundred percent financing. RI Housing also offers free counseling, education and continuing support with every mortgage.

FirstHomes 100+ offers the same deal plus funds to pay for essential repairs (no swimming pools, sorry) and repairs on the home. They will even assign a consultant to guide you through the renovation. That is what I call service.

Would you like to know if you can qualify for one of these loans? There is an online qualification form you can fill in. You will need to provide some paperwork:

Tax returns of the last three years with schedules and W-2 forms. Recent pay stubs, or another proof of employment, statements on your three most recent checking accounts. If you are self employed provide a year profit and loss statement.

Before applying you should request a free credit report at www.annualcreditreport.com and correct any mistakes that might be lowering your credit score. RI Housing might want to help low income buyers but they still need to protect their assets and cannot lend to high risk borrowers.

Although FirstHomes is (obviously) designed for first-time borrowers you can also qualify for this program if you have not owned a house in the last three years, you haven’t lived in the home you own for three years or you have an interest in living in certain areas of Rhode Island.

Home Repair Loans

RI Housing also offers loans to repair and upgrade your home. This money can be used to fix a variety of problems to keep your home safe. You can borrow up to $25,000 with a 20 year, fixed rate mortgage. The interest rates for these loans are the same as for mortgages

RI Housing also provides similar loans for Access Independence Home Repair Loans. This is carried out for the Mental Health Department. This includes remodeling on a house to make it suitable for a person with physical disabilities or limitations.

You can also apply for a Community Septic System Loan and a LeadSafe homes program. These programs provide financing to repair or replace your septic tank and to deal with the cost of making a property lead safe.

These programs are part of a comprehensive plan to provide inexpensive mortgages and help people keep their mortgages and homes safe.

However, there are more programs that could help you wade the current financial crisis or even plan for retirement. Read all about it in the final article of this series: Rhode Island Housing: Reverse Mortgages and Equity Loans.

(Second article of Help for California Series. Read the previous article.)

California Housing Finance Agency focuses attention on first time borrowers and renters. So whether you are planning to buy your first home or you lost your home and need to find a suitable rental in California this is an agency you will want to visit.

California Housing Finance Agency home purchase programs include:

- 30-year fixed mortgage, California Homebuyer’s Downpayment Assistance Program (CHDAP) .

- The CalHFA Housing Assistance Program (CHAP).

- The 30-year Fixed – Government Insured/ Guaranteed Mortgage.

- The Affordable Housing Partnership Program (AHPP).

- The Extra Credit Teacher Home Purchase Program (ECTP), among others. This article provides a brief description of each program. Please visit CalHFA for more details.

30-Year Fixed Mortgage Program.

This is a basic 30-Year first home mortgage created to reduce costs and allow low to medium income homebuyers to purchase their first home in California. This program allows for up to 95% financing of the house value on a long term (30 years) fixed interest that allows for relatively low monthly payments.

California Housing Assistance Program (CHAP)

This program provides first time homebuyers with a second loan to pay for the down payment. The payment of this second loan is deferred to allow buyers who can’t afford a down payment to take their first step on the property ladder.

California Homebuyer’s Downpayment Assistance Program (CHDAP)

This program is similar to CHAP but is designed for buyers with a moderate income and has more flexible requirements.

Affordable Housing Partnership Program (AHPP)

This program partners with local agencies in offering first time homebuyers with help to pay for the downpayment and closing costs. This program can be used with CalHFA’s 40-year loan but you can only get the reduced interest rates if you combine it with a 30-year loan.

30-Year Fixed- Government Insured/Guaranteed Mortgage

This program combines a 30-year mortgage with a CalHFA junior loan or second loan to pay for closing costs and downpayments.

Extra Credit Teacher Home Purchase Program  (ECTP)

This program is designed for Californian teachers and school staff that are looking to buy a new house. Besides providing a low interest mortgage and help with the downpayment this program can “forgive” the interest on the loan for eligible borrowers.

As you can see, help is available for those that are willing to look for it. This is not to say that all struggling borrowers or hopeful first-time homebuyers are going to get the help they want. Some cases are lost causes, and need to rearrange their finances before they qualify. However in many cases a little research and investment in time and effort can land you on the mortgage deal you have always wanted.

California has several organizations and programs to help struggling homeowners get back on their feet. If you are a California resident and you fear you could lose your home this article is for you. If you are looking to buy your first home read on; California has several first-time homebuyer programs also.

However the first tip you should follow when thinking of refinancing, modifying a loan, or buying a new mortgage is to contact a housing counseling agency. They are agencies approved by the Housing and Urban Development department, and provide free (or low cost) professional advice.  Delaying action could cost your home or at the very least extra costs and fees on your mortgage.

One of these agencies is the Consumer Credit Counseling Service of San Francisco, which manages the Housing Education Program. This program provides free or low cost education to homebuyers and borrowers through education materials, workshops and personal counseling. Their early delinquency intervention program and post-foreclosure help program are of special interest. For a list of approved housing counseling agencies in California click here.

Unfortunately the housing crisis we are now suffering does not seem to be going away soon. Layoffs continue, health costs are rising and home prices remain low. This has created a housing “perfect storm” that has affected millions of homeowners.

Government mortgage aid programs in California focus on two areas: education and funding incentives for lenders. Education is important for lenders because often it is a lack of understanding of the foreclosure process that makes homeowners lose their homes. Obviously sometimes homeowners simply cannot afford their mortgages and their best choice is to find the most graceful way out of their mortgage.

However, in other occasions help is available and foreclosure can be avoided. This series of two articles will look at three types of California mortgage aid programs: mortgage protection, buying and tax credits.

CalHFA is one of the main mortgage aid providers in California. Set up in 1975; it has been around through various housing crisis. It is a State chartered affordable housing bank designed to offer affordable low interest loans. The agency can afford to offer the service thank to the sale of tax-free bonds, which are repaid with the interest of mortgage loans. No tax dollars are used to fund the agency.

Home Openers mortgage protection program is automatically included with every CalHFA mortgage at no extra cost. The free service covers your mortgage costs if you involuntarily lose your job and are receiving benefits from the California Employment Development Department and are making an effort to look for work. These payments will be covered for six months, giving you time to rearrange your finances. This forbearance period of six months is an excellent safety net you can use to arrange your loan modification if you think your situation will continue.

Learn about more mortgage aid programs in the second article of this series.

Myths, especially in financial matters, are dangerous. For instance, the myth that the value of homes can only go up; that there is no investment as safe as bricks and mortar was one of the catalysts of the housing crisis of 2008. Unfortunately there are still myths around that are affecting the decisions homeowners make.

Myth 3.  This is only happening to me, foreclosure is a rare problem.

This is a especially easy myth to debunk. According to the U.S. Treasury department over seven million homeowners are at risk of foreclosure. That represents a huge chunk of the total homeowners in the U.S. Factors like a drop in home prices, high levels of unemployment and rise in mortgage payments have created a “perfect storm” that is affecting homeowners of all walks of life. You are certainly not alone. However the steps you make, especially early on, will determine if you become a statistic or you save your home.

Myth 4. I’m receiving all kinds of offers of help from loan modification and housing counseling agencies. Can they all be scams?

Dishonest housing counselors are a problem in the U.S. After the housing crisis began hundreds of self proclaimed loan modification agents and housing counselors appeared out of nowhere. However, it would be unfair to say all of housing counselors are scams. Some are experienced agents that can provide valuable help. The key with housing counselors and loan modifications is to go for the free ones. This is a counterintuitive decision. We are used to thinking that you have to pay for quality; that the best professionals cost money. In housing counseling and loan modifications this is not true. The government has sponsored approved agencies all over the country so that you can receive quality advice for free or for an inexpensive fee.

Having said that if you decide to pay for advice on avoiding foreclosure and your agent asks you to:

a) Buy your home and then rent it back to you.

b) Pay fees upfront.

c) Sign things you don’t understand.

Then run. These are telltale signs of scam artists out to make a quick buck on desperate homeowners.

Myth 5. I’m too many months behind in my payments; there is no hope.

Although it is true you aren’t doing yourself any favors by delaying getting help. There is always time to try and save your home. Housing counselors and loan modification agents cannot work miracles but they certainly try. Sometimes a change in your budget or a mortgage workout with your lender can provide the break you need to rearrange your finances. Even if you cannot save your home you  can find alternatives to a foreclosure that dampen the negative effects to your credit of a foreclosure. Housing counselors can also help you take advantage of rental programs if you do end up losing your home.

Foreclosures have hit the American dream hard. Few things represent in our society than owning your own family home. And few things make us feel failure as hard as when we lose it. The housing crisis that started in 2008 is still affecting us today. Millions of homeowners are at risk of losing their homes, while hundreds of thousands already have. This has, quite naturally, created a mass hysteria, which is the perfect breeding ground for myths. Myths are a great read when they tell the stories of ancient heroes; but they are dangerous when people base important financial decisions on them.

We will dedicate two articles on debunking six myths that are widespread among homeowners nationwide. Unfortunately these misunderstanding are sometimes stopping homeowners from getting the help they need.

Myth 1. I am only one month behind; I can easily catch up. I am not at risk.

Foreclosure procedures start when you are behind in your payments, whether one month or ten. If you do not act quickly you could lose your home. Remember that when you are a month behind in your payments you owe two months: the one you are behind on and the current one. Ideally you should ask for help before you are behind in your payments. The earlier you contact a free housing counselor the more chances they will have to help you. Contact your lender and explain you are struggling with your mortgage payments as soon as you as you can. This gives the message you are serious about paying your mortgage, and increases the likelihood your lender will grant you a loan workout.

For free professional housing advice contact the Housing and Urban Development Department (www.hud.gov) or the Home Ownership Preservation Foundation (888-995-HOPE).

Myth 2. My lender would prefer to foreclose on my mortgage than help me keep it.

This is a dangerous myth because it creates a sense of helplessness. “If the mortgage company wants me out of this house, what can I do?” The truth is of course different. Mortgage companies are in the business of lending money for profit not owning, managing and selling homes. A recent study by the TowerGroup consulting company revealed that lenders lose $58,000 on average for every foreclosure. This happens because foreclosed homes rarely are sold for the balance of the mortgage, and the lender must also cover the fees and costs that go with selling a house.

The bottom line is that mortgage companies prefer you catch up with your payments and save your home. Of course, if they realize you can’t afford any payments and there is little chance you will be able to do so in the future; they will cut their losses and foreclose. That is your job;  to prove them you can afford reasonable payments if you are granted a loan modification.

Times are not easy for Michigan homeowners, as in the rest of the U.S. thousands of homeowners are facing the possibility of losing their homes to a foreclosure. From January to May 2010 alone, there have been 74,475 foreclosure filings and 9,703 foreclosure sales in Michigan. However, there is hope for those that are willing to fight for their home. Even when a homeowner simply cannot afford their home; there are alternatives to foreclosure if you take advantage of federal and state mortgage help programs.

Michigan foreclosure law has changes in the last two years to adapt to the rise in foreclosures. For instance, since July 5, 2009, state law requires lenders to work with you (and all other troubled borrowers) to avoid a foreclosure. There are also specialized government and non-governmental mortgage aid programs that focus on providing help to Michigan troubled homeowners. These include the Department of Housing and Urban Development section for Michigan, the Michigan Foreclosure Prevention Project, the Michigan Attorney General Office and the Foreclosure Intervention and Neighborhood Stabilization Collaborative.

All of these organizations agree that when your lender starts foreclosure proceedings you must immediately contact a free housing counselor or an attorney. In some cases you might even want both.

A housing counselor will help you understand the foreclosure process in Michigan and provide you with a list of mortgage workouts available to you. They will also help you communicate with your lender and collect all the information you need to negotiate a mortgage workout with your lender. The good news is that housing counselors are free. Contact counselors federally approved by the Housing and Urban Development by calling  800-569-4287 or visit www.HUD.gov. Or visit a state approved counselor by calling 866-946-7492 or visiting www.michigan.gov/mshda.  You can also contact the Michigan Foreclosure Prevention Project (http://miforeclosure.mplp.org), an organization that combines the services of legal aid offices and housing counselors throughout Michigan, as well s the Legal Services of South Central Michigan (LSSCM) and the University of Michigan Law School.

A foreclosure starts a legal process which will end in you losing your home if you don’t take steps to avoid this from happening. Foreclosure and bankruptcy attorneys have experience in dealing with debt problems, and can help you negotiate with lenders. If you cannot afford a lawyer you can find legal aid at www.michbar.org/public_resources/legalaid.cfm. They can provide you with a list of lawyers that do pro bono work (free or for reduced fees) for low income borrowers.

Contacting government and state approved agencies will protect you from so-called foreclosure prevention specialists which are often scam artists that prey on vulnerable borrowers. Remember there is no need to pay for a housing counselor, help is available for free.

Finding a housing counselor and an attorney is only the beginning, to avoid foreclosure you are going to have to contact your lender and negotiate a mortgage workout. Our next article Avoid Foreclosure Michigan: Contact Your Lender and Negotiate will look into further steps Michigan homeowners must take to protect their homes.

The perfect mortgage storm hit Michigan towards the end of 2008 and is still affecting homeowners. Rising unemployment levels, higher monthly mortgage payments and a drop in housing price have caused Michigan to have one of the highest foreclosure rates in the U.S.

What can homeowners do to avoid a foreclosure? As explained in our previous article, federal and state institutions (government and nongovernmental) advise troubled borrowers to contact a housing counselor and attorney as soon as possible. Michigan law provides borrowers with 14 days from receiving the foreclosure notice to hire a housing counselor and/or attorney. If you haven’t already check that article for a list of state and federal approved agencies that provide housing and legal advice for free.

Once you have contacted a housing counselor Michigan law provides you with 90 days to negotiate a mortgage workout with your lender. There are steps you must take immediately if you are at risk of losing your home to a foreclosure.

First, review your mortgage documentation and make sure you understand what type of mortgage you have. There are three main types of mortgages: Fixed rate Mortgages, Adjustable Rate Mortgages and Hybrid Adjustable Rate Mortgages.

Fixed rate mortgages don’t change the interest rate applicable to the mortgage; monthly mortgages remain the same throughout until the loan is paid. If your mortgage is not a fixed rate mortgage and you plan to stay in your home for a several years you should consider refinancing your mortgage to a fixed rate.

Adjustable Rate Mortgages have interest rates that constantly change depending on the going interest rate. This means your mortgage payments can rise or drop. This makes it harder to budget and if interest rates rise you may not afford your mortgage payments.

Hybrid adjustable rate mortgages provide fixed mortgage rates for some months or years and then switches to an adjustable rate. These mortgages are sometimes designed to attract customers with low initial mortgage payments.

Second, contact your lender. Unfortunately many homeowners panic when they receive a foreclosure notice and ignore calls and mail from their lender. This will only lead to losing your home. You have 90 days to fix your mortgage, act quickly. Your housing counselor sometimes can give you contact details for your lender’s loss mitigation department. This department aims to resolve delinquent mortgages and put them back on track. The earlier you contact your lender the more options you will have; many workouts and mortgage aid programs only work if you are one or two months behind in your payments.

There are five main alternatives to foreclosure, three of which involve keeping your home: repayment plan, forbearance, loan modification, selling your home or a deed in lieu of foreclosure. Talk to your counselor or attorney about which alternative is best for you.

Third, you need to get organized and collect all the paperwork your lender’s loss mitigation department will need. This includes a budget, proof of income, record of mortgage payments and copies of all correspondence with your lender. This will help you fill in all the forms your lender will ask for when looking for a loan workout. For more information on the Michigan foreclosure process visit www.michigan.gov/mshda.

Underwater mortgages, loans where the debt exceeds the market price of the homes, are in for some difficult times according to First American CoreLogic, a real estate consulting firm. According to their forecasts underwater mortgages will not regain equity until at least 2017. Unlike Pharaoh’s dream the seven bad years are to come before the good ones. Or did we already get those during the housing market boom years. This forecast was design for the New York City area, but its results could reflect the trend of other regions.

This is not good news for mortgage holders who were already planning a strategic default on their loans. Strategic defaulters are borrowers that can afford their mortgage, but decide to stop paying and let their home go because they feel it will be underwater for the foreseeable future and paying for it is throwing good money after bad.

Of course the forecast described above is just that an educated guest. The report based the forecast on historical data and the average rate of appreciation of the last 30 years. The problem with using historical  data, especially during crisis years, is that it is not always useful. The president of the New York Association of Mortgage Brokers, Robert Duquette, thinks that this forecast is pessimistic. He makes the point that the economy is already showing signs of recovery and that it is pessimistic to think it will take seven years. Although, he would say that wouldn’t he? It is like asking a Casino manager how likely it is for clients to hit the jackpot. You know he isn’t going to underestimate your chances.

What we do know for sure is that underwater homes are a problem in New York and the rest of the U.S. According to the same First American report, around 116,000 of the 1.1 million mortgage holders in the New York City region owe more than their homes are worth. This is below the national average. The percentage of underwater homes is estimated around 24% of the 11.3 million mortgages in the U.S.

Another factor that might hurt areas like New York, California and Florida, with high housing prices, is the mortgage rate for jumbo loans. Government mortgage programs help keep interest rates down for borrowers of loans under $729,750. In recent years jumbo loans, loans over $729,750, have still enjoyed low interest rates. If this changes, states with high house prices might suffer, and take longer to recover.

So what is the best advice for the owners of underwater homes? First do not make knee-jerk decisions. First think of the value of your home to you. Prices rise and drop but if you and your home enjoy living in your home and you can afford the payments then it has a value that debt-to-value rates cannot measure. However, in some extreme cases it is true there is little sense, at least from an investment perspective, to continue paying for a home. Banks know this which is why they are starting to offer incentives to certain homeowners which they consider are at risk of strategic default. These programs offer homeowners cash incentives if they pay their mortgage or find alternative financing without foreclosing.

These programs are still new and banks are keeping their cards close to their chest, which is understandable. They do not want a queue of homeowners at their doors asking for handouts. We will provide details of these programs as soon as we have more information. Whatever your situation it is worth contacting a reputable housing counselor and asking for advice before making any drastic decisions.

The housing crisis has not only hit those that own a mortgage. Those that own their homes outright have also seen the value of their homes drop, which reduces the money they have unlock from their home. One way to unlock cash from your home is to buy into a reverse mortgage. Reverse mortgages are, as their name suggests, a mortgage but backwards. Instead of paying monthly payments the bank pays you monthly payments, a lump sum, or a line of credit you can use when and how you like. This way you can stay in your home but still enjoy the cash. This is a personal finance version of having your cake and eating it.

The problem with reverse mortgages is, as everyone knows, they are expensive. However, they just got cheaper. Big reverse mortage providers like Bank of America, Metlife and Wells Fargo have dropped the origination fees and other charges related to reverse mortgages. What has caused this generous display of philanthropy to the elderly? Lenders are selling reverse mortgages as securities on the stock market, and demand is high. This is because reverse mortgages are backed by the government have a shorter lifespan, and their performance is more predictable.

Another reason is that less people are taking on these mortgages because the prices of homes has plummeted. The Federal Housing Administration also reduced the maximum amount available for a secured reverse mortgage.

Lenders are sweetening the deal by reducing the cost of reverse mortgages by up to $11,000. This does not make reverse mortgages cheap, they are still pricey, but if you were thinking about buying one they might deserve a second look now they got cheaper.

Who are they for?

Reverse mortgages are for elderly (over 62) homeowners that own their home outright or have a very small balance on their mortgage. With a reverse mortgage a homeowner can borrow money and use their home as security while still living in it. The upside is that you do not have to meet mortgage payments until you either sell the house or die. In both cases the money from the sale (sale or immediate payback of the loan is compulsive in case of death of the borrower) is used to pay back the loan. Anything left over will be given to the homeowner or his survivors.

The downside is that these mortgages are expensive. Take this example. A 67-year old gets a $200,000 reverse mortgage on his $370,000 reverse mortgage on his home. His initial costs will easily amount to $16,000, servicing costs over $5,000, and don’t forget interest rates which by the time he hits 80 will amount to $364,000. Even if the property is worth $720,000 at the time of death, the heirs will only receive $100,000.

It is worth talking to your children and other heirs before going down this path. They might be happy to help you out now and protect their inheritance.

Anyway, make sure you contact a free housing counselor near you and ask for what government aid programs you are eligible before you choose to get a reverse mortgage. You might not qualify for government aid once you buy a reverse mortgage, which is another factor to weigh out when deciding  to buy a reverse mortgage.

If you are a resident in Georgia and are struggling to meet your mortgage payments you are at risk of losing your home. The Georgia Department of Community Affairs provides valuable advice on how to avoid foreclosure and find free help from professional housing counselors.

Every state has different laws on foreclosure process, so it is important to know your state laws. Local housing counselors can provide you with this and other important information. Georgia, for instance, is a nonjudicial state in foreclosure matters. This means that a lender does not have to go to court to start a foreclosure. Nevertheless the borrower must be at least 90 days (three months) behind on his payments. Also, the lender or a representative must advertise the date of the foreclosure for 30 days in a legal publication of your county.

How can housing counselors help?

Knowing what to do is not easy when you are worried you might lose your home. A certified counselor can help you ask for help in the right way to the right people. Counselors have lists of contacts for key people in the main lending companies. These are decision makers that have the authority to negotiate the terms of a mortgage workout. A counseling agency can also help you to write a financial hardship letter asking for a mortgage workout. Just writing this letter and filling legal forms can be a nightmare for some people. Free counseling agencies can help you with this at no cost to you.

Counseling agencies can also help you find out what alternatives you have in your specific circumstances. For instance, if you just lost your job you might be tempted to ignore your mortgage payments until you find a job. However, a housing counseling agency can help you ask your lender to reduce or stop payments until you have a job again. These choices might not be available if you wait too long without either contacting a housing counselor or your lender. Just remember that a housing counselor is paid to have your best interest at heart, and a bank does not.

Can counseling agencies give me funds to help me meet my late payments?

Although the government funding that pays for counseling agencies does not allow them to use these funds to provide direct financial aid, but they can put you in touch with others that can. Talk to your local housing counseling agency and ask what programs (government and private) are available to help you bring a mortgage current or pay for other expenses.

Even if you feel there is no chance of you keeping your home and foreclosure is unavoidable, you should still contact a housing counselor. They can explain to you how the Homeowner Affordability and Stability Plan can help you find alternatives to foreclosure.

Click here for a list of counseling agencies approved by the Georgia Department of Community of affairs or call 1-888-995-4673 to find your closest HUD approved agency.

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