The head of an Iowa program that helps homeowners avoid foreclosure says many troubled borrowers may not qualify for help under a massive housing bill awaiting President Bush’s signature. The bill aims to let as many as 400,000 homeowners trade their expensive adjustable-rate mortgages for more affordable federal loans.
Iowa Mediation Service executive director Mike Thompson says only those who are spending 40 percent of their income on debt will qualify. "That’s going to be some fairly strict approaches that we have to look at and so there will be people that this just doesn’t fit," Thompson says, "…and people who are severely in debt may not be eligible."
Thompson worries this may be the federal government’s only effort to offer cheaper mortgages to Americans facing those significantly higher balloon payments. "The 400,000 they want to serve could happen pretty readily and the money could run out," Thompson says, "and therefore states, in particular, that are doing different things to solve it on an early level like Iowa could be at a point where people say, ‘Maybe they’re doing so well we don’t have to worry.’"
Thompson’s agency is helping nearly 2000 Iowa borrowers facing possible foreclosure. Calls to the Iowa Mortgage Help hotline have jumped 10 to 15 percent since the June floods.
The U.S. Senate gave final approval to the mortgage bailout bill this weekend. Democrat Senator Tom Harkin voted for it; Republican Senator Charles Grassley voted against it. President Bush had raised objections to the bill initially, but Bush now plans to sign it into law.