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Will foreclosure plan help Californians?

March 6, 2009 12:00:00 AM PST
The economic crisis is taking a growing toll on homeowners, across the nation and California. The number of homes facing foreclosures continues to mount. Federal plans to help stem foreclosures may not help homeowners in California.California home values have dropped so much that homeowners simply do not qualify for the president's foreclosure plan. They owe more than the value of their homes, and there is now way out.

The numbers are alarming. Almost 45 percent of homeowners in the Inland Empire are "upside down" on the mortgages: They owe more than their homes are worth. Will Herring from Mortgage Experts in Moreno Valley says even under the president's plan, financing would be nearly impossible.

"A lot of the things in the program, this stimulus program for the housing stimulus, isn't going to help Californians at all, especially in the Inland Empire," said Will Herring, Mortgage Experts Inc.

Under the Obama plan, people have to be current on their mortgage, and they can borrow up to 105 percent of the value of their homes. In Riverside and San Bernardino counties, that leaves very few people who qualify. Herring says his customers had mortgages that were at least 140 percent greater than their home values.

"Most of them bought their houses on 100 percent financing, stated income, and the value of the house now is down 50, 51 percent," said Herring. "I can't qualify them."

Tricia Powell lost her home. With her loan there was negative amortization. The loan principle kept growing, even as the home's value kept dropping.

"It was very difficult, because you felt guilty when you have children, and our last two are still at home," said Powell. We had to uproot them. You feel lost. It was also going to be our retirement home."

And some worry even with government intervention, adjustable rates will rise again, and a wave of foreclosures will continue well into next year.

"More short sales ... We've got to let this run out because people count for their houses," said Herring. "They overbought when they bought."


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