More hope for homeowners at risk of foreclosure.

Lately, there have been moves by both the Federal Government and individual banks to provide relief for homeowners who are at risk of going into foreclosure. When the FDIC took over Indymac bank, with no fanfare, they did something which is a breakthrough which until now has been greatly resisted: they started rewriting loans.

Borrowers who are at risk of foreclosure are getting letters offering to cut their payments to just 38 percent of their incomes. They do this by offering modifications that can include: lower interest rates, longer term loans and possibly reductions in principal. The FDIC under chairman Sheila Bair wants to take this program nationwide by offering this program to all Fannie Mae and Freddie Mac customers.

Now, three banks have joined in on the process by offering modifications similar to these. The three banks are: Bank of America, J. P. Morgan and Citigroup. They came about through different circumstances but they've finally arrived at the same junction: homeowner relief. Bank of America was forced into this when it purchased Countrywide. To settle a lawsuit against Countrywide, Bank of America agreed to rework the loans of homeowner in foreclosure who meet certain criteria (sub-prime or adjustable rate mortgages) in the following eleven states: Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington. Citigroup decided to do a similar thing on its own for homeowners in similar distress. JP Morgan the purcharser of Washington Mutual, decided to put a halt on all foreclosures for the next 90 days beginning November 1st. It will use that time to work with the homeowners in providing relief to them.

This provides hope to homeowners currently in distress and who have managed to hold on this long that other banks will either decide to follow these banks on their own or will follow suit under the threat of lawsuit. If you are at risk of being foreclosed on, there is reason for hope, but do not bury your head in the sand and hope that something will happen automatically, call your lender and start to make it happen.