The treasury department announced the improvements to a federal housing program Friday morning on Capitol Hill.
The new changes target two specific groups of homeowners: those with mortgages higher than their homes are worth and those who are unemployed.
For the first time, the federal housing program will help some unemployed borrowers by giving them a six-month break on their mortgages while they look for work.
Also, the bank could charge no more than 30 percent of what the homeowner is receiving in unemployment benefits.
Additionally, lenders will get incentives to offer more refinancing options to those who are paying mortgages valued higher than their home is now worth, which is called being "underwater."
There is optimism, but if you're in crisis, help can't come soon enough. The program is expected to impact some Chicago area homeowners.
In the western suburbs, there is an urgency for some home sellers to get out from under their mortgages. High unemployment is fueling a new wave of homeowners fighting foreclosure.
"Now, approximately 70 percent of the families coming through our doors are impacted by unemployment or underemployment where they have had their hours cut," said Dru Bergman of the DuPage Homeownership Center, a HUD-certified agency that helps homeowners try to save their homes, or at least save their credit.
New programs announced by the federal government will offer welcomed relief to some of their clients.
"This is the place where they've raised their children and put down roots, and they also see a moral obligation to want to stay in that home," Bergman said. "The financial realities are so pressing that they, sometimes, don't make that a reality for them."
Federal attempts to persuade banks to forgive some of the principal on underwater mortgages is encouraging. The Illinois Association of Mortgage Professionals works with sellers and buyers. Underwater mortgages impact both sides.
The association's president hope to see more done to help underwater homeowners.
"We're facing another ten years, another decade, of people walking away from their homes. Their principals aren't written down because they simply can't afford to sell the home. So, this is a critical issue," said President Jeri Lynn Fox.
Homeowners looking for help should call the company that sends their mortgage bills, called their mortgage servicer.
For unemployed homeowners looking for a break in payments, the program will be available in coming months.
Those trying to get a principal reduction are advised that it depends on your lender's willingness to participate.
Homeowner should also remember, when calling your servicer, keep notes. If there is legal action, you can show your attempts to keep up with payments.
To find a HUD certified couselor:
Neighborhood Works America
Details about Friday's announcement:
US Treasury - Housing Program Enhancements
Preserving Homeownership Orientation Session
Metropolitan Family Services
222 E. Willow Street
Wheaton, IL 60187
9am - 1pm
DuPage County Administration Building
421 N. County Farm Road
Wheaton, IL 60187