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Face Tough Times, Don't Ignore your Mortgage Problems

By Peter Olson, Esq.

Here's a nice recent overview from the Trib. of many of the "help" programs out there for homeowners...

Hope for Homeowners

Designed for borrowers who are under water with their mortgage but can afford a new one insured by the Federal Housing Administration, the new program will insure up to $300 billion of refinanced, troubled mortgages into 30-year, fixed-rate loans.

A new mortgage cannot be more than 90 percent of a home's new appraised value, meaning lenders must agree to write down a portion of the loan and the new mortgage amount can't exceed $550,440.

The catch? Lender participation is totally voluntary. The other potential hitch is that if the loan in question carried a piggyback loan, any subordinate lender would have to agree to release their lien on the property.

Call the existing lender or a new lender to see if you qualify. The program runs through Sept. 30, 2011.

FHA Secure

The year-old program offers FHA-insured mortgages to borrowers who are either current or delinquent on their non-FHA adjustable-rate mortgage. The loan-to-value ratio of the new loan depends on how many payments were missed so a gap loan may be necessary. Delinquencies must have occurred because of payment shock associated with an interest rate reset or the recasting of an Option ARM.

If you don't currently qualify, stay tuned. The federal government is considering extending the end date of the program, now Dec. 31, and may also expand the program's eligibility to include borrowers with fixed-rate mortgages, Burns said.

A list of approved FHA lenders is available at www.hud.gov/ll/code/llslcrit.cfm.

Hope Now

The national private partnership of housing counselors, mortgage servicers and investors was established to assist borrowers who are afraid to call their lender directly or don't know where to turn for assistance. Callers to the hotline, which operates 24 hours a day, seven days a week, receive help in contacting their mortgage servicer or an appropriate housing counselor. The phone number is 1-888-995-HOPE.

Illinois Statewide Foreclosure Prevention Network

The state program offers counseling to families and works with lenders to refinance borrowers into 30-year, fixed-rate mortgages that carry interest rates of 5 to 8 percent, closing costs of less than $1,000 and no prepayment penalties.

Typical participants have a credit score of at least 590 and while they have kept up with their payments, an interest-rate adjustment is, or would, make the mortgage unaffordable. For more information, call 1-877-793-3470.

Local housing advocacy groups

Many local groups work directly with lenders on behalf of troubled borrowers to modify the terms of mortgages.

Another plus of contacting your local group: Some mortgage servicers and lenders have given counseling agencies a better set of phone numbers so it's easier to reach a decision-maker. Some agencies also operate their own aid programs, so it pays to ask. For instance, in July the Northwest Side Housing Center began piloting an effort to provide troubled borrowers with "gap" loans of up to $50,000 that cover the difference between a refinanced loan and the loan it is replacing.

Full post as published by Closing Real Estate in Chicago on November 07, 2008 (boomark / email).