The federal government has formed a new alliance called HopeNow to help consumers struggling to make their mortgage payment or those facing foreclosure. The initiative announced last week and promoted by the Bush administration, includes 11 of the nation’s largest mortgage service companies, which hold nearly 60 percent of all the country’s mortgages, as well as mortgage counseling agencies, investors and several large trade organizations.

The intent behind the new group is to help coordinate efforts between mortgage lenders and debt counselors to provide consumers facing trouble with their mortgage a “workout,” a plan to help the consumer stay in their home by lowering the loan’s interest rate or negotiating a payment plan for past-due payments.

It is believed that nearly 2 million homeowners, whose ARM mortgages are beginning to reset to a much higher rate from their introductory interest rates, will be looking for help, and the new initiative will speed the communication between lenders and debt counseling organizations. This will also help avoid a recent move towards payday cash advance loans.

The new initiative plans to target homeowners in danger of foreclosure through mass-mailings and special toll-free numbers where they can learn about their options to refinance. Time is critical in this situation as many of the ARM loans are quickly reaching the end of their introductory rate. Homeowners are encouraged to contact their lender as soon as possible if they believe they will not be able to make higher-interest rate payments.

The federal government also announced recently that it would change the Federal Home Loan Administration insured-loan program to allow more people to qualify for FHA-insured loans. This announcement, coupled with lower interest rates, resulted in a slight increase in the number of mortgage loan applications recently, both for new purchases and refinance.

In order to improve housing standards and conditions for Americans, the federal government established the Federal Housing Administration (FHA) in 1934.

Today, the FHA offers loan options for consumers. FHA loans are insured by the Federal Home Loan Administration to offer consumers better, more affordable mortgage rates. The FHA is not a mortgage lender. Instead, they are a government organization that insures loans for mortgage lenders against default. There are programs for consumers who are looking to refinance and even for those looking for a loan to remodel their current home.

These loans are geared towards consumers who:

• Are first-time homebuyers.
• Don’t have a great deal of money saved for a down payment.
• Want to keep their monthly payments low.
• Are concerned about qualifying for a loan due to less than perfect credit.

Since the federal government insures FHA loans, those who qualify for this type of loan often are more desirable for lenders. FHA loans also offer competitive interest rates, low down payments, usually no more than three percent, and the money is allowed to come from a family member, employer or charitable organization as a gift; many other loan programs do not allow this.

There are many options available for consumers facing foreclosure. The federal government has recognized the need to improve the current mortgage crisis facing many Americans and has provided outlets for consumers. These are only a few options available for homeowners who are concerned about their adjustable rate mortgage interest rates going up. It is important for consumers to contact their lender to discuss their options, as well as looking for other lenders or programs designed to help homeowners stay in their homes.