To date, most lenders are not taking advantage of the FHA Hope for Homeowners loan program.  Rather then reducing loan balances to allow borrowers to REFI out of foreclosure, Lenders are pursuing direct loan modification and rarely reducing principal.

"I think lenders will be enthusiastic about the program but they have other things they'd like to do before they do a principal write down," said Brian Montgomery, Assistant Secretary for Housing at the Department of Housing and Urban Development. [MONEY.CNN.COM, September 17, 2008].

In addition, the credit crunch is scarying off new lenders.  So far, the firm has located only one lender willing to write the FHA foreclosure loans.  The requirements for these new loans are tight.  The new payment to gross income ratio for the new loan is only 31%.  However, that ratio is increased to 38% when a client successfully completes a 3 month loan modification.  Pursuing a loan modification with a law firm is a good idea.  The loan mod will improve the chances of getting a new loan as well as may improve the feasability of a Chapter 13 bankruptcy.

 Contact California Bankruptcy & Foreclosure Defense Lawyer Joseph Arthur Roberts today!