Nov 19 2008
Now Is The Time To Get Bailed Out, Even If You Don’t Currently Need It
With all of this talk of foreclosure moratoriums, bailouts, and loan modifications, the popular thought is just to let your mortgage enter foreclosure merely to get a better rate from your lender. So, how do the lenders expect to separate all the people who need a mortgage modification from those people who just want one?
The Federal Housing Finance Agency is attempting to implement a program that will modify the loans of certain troubled borrowers until the payments are reduced to 38% of the homeowners’ income. The Agency’s plan is to modify 2.2 million troubled loans by the end of 2009.
It’s not as simple as just asking for the restructuring though. The FHFA program would only be available to homeowners who can first demonstrate some change in financial circumstances. Even interpreted broadly, there must have been some hardship involving death, medical bills, job change or simply a reset in the rate of an adjustable-rate mortgage.
The programs will also require that the subject properties have high loan-to-value ratios, that the borrowers currently reside in the property, and that the borrowers are gainfully employed. But what stops everyone who meets these qualifications and has an adjustable-rate mortgage above the ideal income thresholds from skipping two or three payments to qualify for a reduction?
Sure, a missed mortgage payment may remain on a credit report for seven years and missing several mortgage payments in a row would badly damage a credit score, more so than missing most other types of payments, but credit can be repaired and a modification would prevent a foreclosure from being stapled to your credit report, so that damage wouldn’t be as tragic as a bankruptcy, or the like.
Because of the low level of risk, some homeowners, particularly those with little debt beside their mortgage and little anticipation of future borrowing, will be tempted to take a run at the system. The programs offer reductions in interest rates, extending the loan terms, and principle forbearance, saving potentially hundreds of dollars a month. After all, it’s a lot easier making on-time payments when the payments are thousands of dollars a year cheaper.
Now is the time to take advantage of the current system. There is no need to fear foreclosure if you know how to delay long enough to modify your loan and get a better deal for you and your family. Find out more at www.ForeclosureDefenseSecrets.com.
