Here’s the deal, or new “New Deal,” as it’s being called: Congress is expected to give the green light to a sweeping housing and mortgage reform plan that pledges to bail out the roughly 400,000 homeowners with failing loans. (Note that last month the nation’s foreclosure rate soared 7% to one in every 483 households, according to RealtyTrac.) The highlights of the rescue plan include letting troubled borrowers (you know who you are) qualify for 30-year fixed mortgage refinancing backed by Uncle Sam. Prospective homeowners may also have some help coming their way, as mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) would raise the limit on loans they can buy from lenders in pricey housing markets to $625,000. That’s up from the current $417,000. There’s also $150 million reserved to help stressed-out borrowers on the possible verge of foreclosure and to demand more stringent disclosure rules from lenders.
While the House ruling is being aimed for before the July 4 holiday, let’s not forget this is the federal government at task. Prepare for delays. The implementation of this plan, if approved, will take time, and in some cases much too long for borrowers hanging by a loose string, veering closer and closer to losing their homes. In the meantime, here’s an S.O.S plan for concerned borrowers, some strategies to help keep head above water.