With the housing market in shambles, the federal home loan program has been the saving grace to people finance real estate in the United States. Even the Federal Reserve has taken on a bigger role to in an effort to ease the housing crisis and increase the liquidity. The Federal Housing Administration has taken the biggest load for home financing as the private lenders continue to wait on the sidelines until the dust settles in the marketplace. If you are a first time home buyer, the best federal home loan is the FHA mortgage in most cases.
Obama Extends HARP Refinance Program: In an effort to help underwater borrowers find a refinance solution, President Obama extended the Home Affordable Refinance Program for another 18 months and loosened some of the requirements and restrictions. For example, in the past borrowers were restricted to 125% refinancing and now the HARP loan program has removed the cap so the borrowers in severely underwater regions could refinance their homes.
Federal Housing Finance Agency Considers More Mortgage Relief initiatives: Representative Zoe Lofgren, recently proposed securing mortgage reduction for people who are stuck in an underwater loan by enabling them to acquire a temporary reduction in the interest rates of those homeowners who file for bankruptcy. Lofgren said "I am encouraged that the Federal Housing Finance Agency is considering a plan similar to the one I've long advocated." Allowing homeowners to pay down the principal balances" and linking this effort "to the bankruptcy process will help those who truly need it and avoid the administrative failures that have plagued other modification initiatives," she said. Lofgren's plan would allow homeowners to pay down principal on their mortgage lien and reduce negative equity during a 5-year period with no interest.
According to the Federal Reserve, the purchase mortgage plan is expected to last through June 2012 "should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative."