We all know someone who is having trouble keeping up with their mortgage, it might even be you. We need to let them know that there is help. I was reading an article in National Association of Realtors monthly publication titled Help Troubled Borrowers. If you have talked with these people, then they have probably mentioned that there are a lot of people out there that are calling and offering help. Please advise these folks to call 1.888.995.4673, (1.888.995.HOPE).
President George W. Bush announced sometime in the middle of December that he was going to help people in these defaulting sub-prime mortgages. Here is what you need to know to help anyone you know that is having trouble with paying their mortgages on time, or has experienced a rate increase that has made it near impossible for them to even pay at all.
President Bush’s HOPE NOW (HomeOwnership Preservation Foundation) is a voluntary effort by lenders, mortgage investors, and loan officers to help borrowers that are faced with default when their adjustable rate mortgages resets at a higher rate. One of the key parts of HOPE NOW is the interest rate freeze that would give these borrowers time to work out a possible solution.
Here are 7 very important pieces of information that you can tell these folks when facing these hard times.
1. Call the National Counseling Hotline
That number again is 1.888.995.4673, (1.888.995.HOPE). When they call they will speak with a HUD-approved counselor.
2. Expect to be on the phone about 45 minutes.
The counselor that you will be speaking with will be gathering as much information as possible to determine if you qualify for this program. to be eligible, you must be current on your mortgage, and expect to remain current after the rates are reset.
It is important to know that this only applies to purchase-money mortgages and not to home equity loans and only to those borrowers who entered into their mortgage January 1st, 2005 to July 31st, 2007 and whose rates are resets January 1st, 2008 to July 31st, 2010.
3. Expect a counselor to recommend a course of action.
Don’t be too upset if it takes more than a couple of phone calls before the counselor has enough information to make a recommendation. The main purpose here is to inform those people with all of their options available to work out a plan.
4. Servicers are increasingly amenable to be flexible.
It is said that servicers are much more flexible now than before the sub prime crisis. There are so many lenders out there that are overflowing with REO’s (Real Estate Owned – Taken back by the lender). They are just simply getting to the point where they just cannot take anymore.
5. Borrowers are receiving fast-track workout plans based on eligibility.
Servicers have the most flexibility in working with borrowers who are current on their mortgage and expect to stay current after rate resets. Refinancing is the typical solution for most of these borrowers. The HOPE NOW program is set up to counsel and recommend the best available replacement product, even if that product isn’t offered by the lender affiliated with the servicer’s company.
6. A Rate Freeze applies to some, but not all borrowers.
Eligibility for the rate freeze depends upon the borrower being current on their mortgage, however will not have the financial wherewithal to stay current once their rate resets and they cannot qualify to refinance. The freeze is intended to buy these borrowers time to fix their situation.
You may be asking, “what if I am not eligible?” Right now your option is traditional financial counseling.
7. Traditional remedies are open to the most troubled borrowers.
Last but not least, HOPE NOW is also designed to address those borrowers who are unable to make their payments even before the rate resets. For these borrowers their are few options. This is when those in this situation may need to start considering deed in lieu of foreclosure or short sale. Going with these options give the borrower the opportunity to leave the property without going through the painful process of foreclosure.
Counselors with HOPE NOW often bring a much broader view of possibilities than the servicer can offer. The most important advice that you can give someone you may know in one of these situations, is to encourage them to call the HOPE NOW hotline and start the process of seeking a solution to their financial woes.
This material again was taken from the National Association of Realtors (NAR) March Realtor magazine. Should you have any other questions or concerns, you can email me at ChadL@KW.com or you can reach me on my cell phone at 706.633.8186.