Advice for Troubled Borrowers
1). Call the national counseling hotline President Bush has publicized.
The number is 1-888-995-4673 and is available 24/7. The number puts you in contact with HUD-approved counselors affiliated with the Homeownership Preservation Foundation.
2). Expect to be on the phone about 45 minutes.
The counselor will gather information about your financial situation and make determinations on your eligibility. Homeowners are eligible if:
- They're current and expect to stay current after the rate resets but are looking to refinance into a better loan
- They're current but face possible default after their rate resets
- They're in default before their rate resets
- They have a purchase-money mortgage, not home-equity loans
- They secured financing between Jan. 1, 2005 and July 31, 2007
3). Expect a counselor to recommend a course of action.
The counselor's main job is to explain what options are available based on a borrower's situation and to have the borrower call the mortgage servicer to initiate a workout plan.
4). Servicers are increasingly amenable to be flexible.
5). Borrowers are receiving fast-track workout plans based on their eligibility.
Servicers have the most flexibility in working with borrowers who are current on their mortgage and expect to stay current after rates reset. Refinancing is the typical solution for these borrowers and the servicer is supposed to recommend the best available replacement product for the borrower.
6). A rate freeze applies to some, not all, borrowers.
It only applies to those who are current on their mortgage but don't have the financial wherewithal to stay current once their interest rates bumps up and can't qualify to refinance. It's intended to buy these borrowers time to fix their situation.
7). Traditional remedies are open to the most troubled borrowers.
Home owners who are unable to make their payments even before the rate resets still have options. Counselors can bring a broader view of possible solutions than the servicer can offer.
Reprinted from REALTOR magazine by permission of the NATIONAL ASSOCIATION OF REALTORS. Copyright 2008. All rights reserved.