Posted on: 23rd May, 2008 07:48 am
Please read this article from today's edition of USA Today. This addresses many of the same questions we see on this forum day after day
Help for mortgage holders in trouble
By Stephanie Armour, USA Today
In and around Gilbert, Ariz., the mortgage crisis has hit hard. New homes sit abandoned to foreclosures, their windows broken and yards overgrown.
Deede Wockenfuss, with Assist-2-Sell, a realty brokerage, sees the fallout up close. She lives near neighborhoods with vacant homes, and her office regularly fields calls from homeowners who can no longer pay their mortgages. "I have people saying, 'I can't afford this; I'm upside down,' " Wockenfuss says. "They can't refinance, and they can't move. They say, 'Please, tell me what to do.' " Rising payments from adjustable-rate mortgages, mounting job losses and an epidemic of unaffordable loans have thrown more homeowners into a dire situation: They're no longer able to pay.
Housing experts and counselors offer a host of suggestions — from trying to reach a deal with your lender, to consulting credit counselors, to walking away without paying the mortgage, to trying to sell, to letting the bank take possession.
It can be hard for a confused homeowner to cut through a thicket of conflicting advice, some of which may be unreliable. Here's what experts recommend for homeowners at risk of being unable to make their loan payments:
Don't do nothing at all
The one thing not to do is to take an ostrich-in-the-sand approach, ignoring pleas and letters from lenders. Lack of communication with a lender will only exacerbate problems. Lenders who don't hear from delinquent mortgage holders often have to start legal action that can lead to foreclosure. "The worst thing you can do is avoid the phone calls, letters and/or visits from your lender," Wockenfuss says. "The sure way to go into foreclosure is to not talk with your lender."
Ask your lender to help
Typically, lenders don't want a home to go into foreclosure, because it saddles them with both a house and a financial loss. Many lenders are willing to work out alternative payment plans with homeowners who have fallen slightly behind or are struggling to make payments. These steps might include lowering the mortgage rate, extending the life of the loan or letting homeowners make up missed payments through a payment plan.
"I'd call your (mortgage) service provider and say, 'What can you do?' " says Mark Zandi, chief economist of Moody's Economy.com. Try not to delay. Homeowners should contact their lenders as soon as they know they'll have trouble making their mortgage payments. And they should keep copies of all correspondence and a log of all the service providers they speak with.
Approach lenders with a plan
One mistake some mortgage holders make is simply to call their lenders and say they can't pay, says Joel Naroff of Naroff Economic Advisors. Instead, they should suggest a loan-modification or repayment plan. "Approach them and say, 'This is what I can't pay,' and not just that you can't pay," Naroff says. "You have to have a suggestion — say, 'I can pay this much every month.' "
Expect the unexpected
Lenders are sometimes willing to make concessions to people who are several months behind on payments. But with foreclosures mounting, banks are facing more requests for loan modifications. As a result, some homeowners, even those who have never before failed to make a mortgage payment, might find lenders less flexible than they'd hope.
Critics have also complained that some of the aid programs aren't doing enough to make a dent in the vast number who need help. A February report by the State Foreclosure Prevention Working Group found that only seven in 10 delinquent home borrowers were on track for assistance. The report found a "large gap" between the number of homeowners needing help and the number receiving it.
Gary Blagdon of Gold Hill, Ore., who runs an auto wholesale dealership, bought a $350,000 home in 2005 with an adjustable-rate mortgage that required an initial $1,655 monthly payment. As his ARM has reset, Blagdon says he's been unable to pay the higher amount and has fallen behind on the mortgage. Recently, an appraiser valued his home at $80,000 less than what he'd paid for it.
Before his ARM reset, Blagdon says, he consistently paid his mortgage each month. Even so, his primary lender, Blagdon says, has refused to lower his interest rate despite Blagdon's promises to continue paying the monthly payment he was making when he bought the house.
"I asked them if they could work with me to get payments to what they were before," Blagdon says. "I've made, like, 20 phone calls."
Seek outside assistance
Outside assistance programs are an option. The Federal Housing Administration can help subprime borrowers who can afford the starter rate on their subprime mortgages — but not the higher payments once they adjust.
The Bush administration expects about 500,000 families to refinance into FHA-insured prime-rate mortgages by year's end. The relief plans allow the FHA to insure new, more affordable mortgages.
The Department of Housing and Urban Development can sometimes help those with FHA-secured loans (800-569-4287). The Hope Now alliance (888-995-HOPE) is another resource; it deploys counselors, servicers, investors and others to try to help at-risk homeowners remain in their homes.
Credit-counseling services report doing brisk business helping homeowners by serving as a liaison between mortgage holders and lenders in working out loan modifications. One such service, Novadebt, a non-profit based in Freehold, N.J., aids homeowners with both credit and mortgage concerns. Calls to Novadebt from people having trouble paying their mortgages have surged recently.
"We can take a bird's-eye view of their expenses," says Diane Gray, director of counseling at Novadebt.
For those who are two or more months behind on mortgages, lenders may agree to let them repay that money over a 12-month period or to refinance an ARM to a fixed rate at a lower monthly payment.
"The minute you feel overwhelmed and living paycheck to paycheck, it's worth it to call," Gray says. People "don't have to have an emergency. When they tell their story, they feel so much better."
So many people are in trouble across this country. We've seen it in our forums, our neighborhoods, our prayer meetings...If we know of folk suffering, we need to spread the word that there is help available of all sorts. I think this article is beneficial - is it the final answer? Of course not, but all the ammunition we can get to help alleviate the problems so many face is well worth the trouble to obtain.
Help for mortgage holders in trouble
By Stephanie Armour, USA Today
In and around Gilbert, Ariz., the mortgage crisis has hit hard. New homes sit abandoned to foreclosures, their windows broken and yards overgrown.
Deede Wockenfuss, with Assist-2-Sell, a realty brokerage, sees the fallout up close. She lives near neighborhoods with vacant homes, and her office regularly fields calls from homeowners who can no longer pay their mortgages. "I have people saying, 'I can't afford this; I'm upside down,' " Wockenfuss says. "They can't refinance, and they can't move. They say, 'Please, tell me what to do.' " Rising payments from adjustable-rate mortgages, mounting job losses and an epidemic of unaffordable loans have thrown more homeowners into a dire situation: They're no longer able to pay.
Housing experts and counselors offer a host of suggestions — from trying to reach a deal with your lender, to consulting credit counselors, to walking away without paying the mortgage, to trying to sell, to letting the bank take possession.
It can be hard for a confused homeowner to cut through a thicket of conflicting advice, some of which may be unreliable. Here's what experts recommend for homeowners at risk of being unable to make their loan payments:
Don't do nothing at all
The one thing not to do is to take an ostrich-in-the-sand approach, ignoring pleas and letters from lenders. Lack of communication with a lender will only exacerbate problems. Lenders who don't hear from delinquent mortgage holders often have to start legal action that can lead to foreclosure. "The worst thing you can do is avoid the phone calls, letters and/or visits from your lender," Wockenfuss says. "The sure way to go into foreclosure is to not talk with your lender."
Ask your lender to help
Typically, lenders don't want a home to go into foreclosure, because it saddles them with both a house and a financial loss. Many lenders are willing to work out alternative payment plans with homeowners who have fallen slightly behind or are struggling to make payments. These steps might include lowering the mortgage rate, extending the life of the loan or letting homeowners make up missed payments through a payment plan.
"I'd call your (mortgage) service provider and say, 'What can you do?' " says Mark Zandi, chief economist of Moody's Economy.com. Try not to delay. Homeowners should contact their lenders as soon as they know they'll have trouble making their mortgage payments. And they should keep copies of all correspondence and a log of all the service providers they speak with.
Approach lenders with a plan
One mistake some mortgage holders make is simply to call their lenders and say they can't pay, says Joel Naroff of Naroff Economic Advisors. Instead, they should suggest a loan-modification or repayment plan. "Approach them and say, 'This is what I can't pay,' and not just that you can't pay," Naroff says. "You have to have a suggestion — say, 'I can pay this much every month.' "
Expect the unexpected
Lenders are sometimes willing to make concessions to people who are several months behind on payments. But with foreclosures mounting, banks are facing more requests for loan modifications. As a result, some homeowners, even those who have never before failed to make a mortgage payment, might find lenders less flexible than they'd hope.
Critics have also complained that some of the aid programs aren't doing enough to make a dent in the vast number who need help. A February report by the State Foreclosure Prevention Working Group found that only seven in 10 delinquent home borrowers were on track for assistance. The report found a "large gap" between the number of homeowners needing help and the number receiving it.
Gary Blagdon of Gold Hill, Ore., who runs an auto wholesale dealership, bought a $350,000 home in 2005 with an adjustable-rate mortgage that required an initial $1,655 monthly payment. As his ARM has reset, Blagdon says he's been unable to pay the higher amount and has fallen behind on the mortgage. Recently, an appraiser valued his home at $80,000 less than what he'd paid for it.
Before his ARM reset, Blagdon says, he consistently paid his mortgage each month. Even so, his primary lender, Blagdon says, has refused to lower his interest rate despite Blagdon's promises to continue paying the monthly payment he was making when he bought the house.
"I asked them if they could work with me to get payments to what they were before," Blagdon says. "I've made, like, 20 phone calls."
Seek outside assistance
Outside assistance programs are an option. The Federal Housing Administration can help subprime borrowers who can afford the starter rate on their subprime mortgages — but not the higher payments once they adjust.
The Bush administration expects about 500,000 families to refinance into FHA-insured prime-rate mortgages by year's end. The relief plans allow the FHA to insure new, more affordable mortgages.
The Department of Housing and Urban Development can sometimes help those with FHA-secured loans (800-569-4287). The Hope Now alliance (888-995-HOPE) is another resource; it deploys counselors, servicers, investors and others to try to help at-risk homeowners remain in their homes.
Credit-counseling services report doing brisk business helping homeowners by serving as a liaison between mortgage holders and lenders in working out loan modifications. One such service, Novadebt, a non-profit based in Freehold, N.J., aids homeowners with both credit and mortgage concerns. Calls to Novadebt from people having trouble paying their mortgages have surged recently.
"We can take a bird's-eye view of their expenses," says Diane Gray, director of counseling at Novadebt.
For those who are two or more months behind on mortgages, lenders may agree to let them repay that money over a 12-month period or to refinance an ARM to a fixed rate at a lower monthly payment.
"The minute you feel overwhelmed and living paycheck to paycheck, it's worth it to call," Gray says. People "don't have to have an emergency. When they tell their story, they feel so much better."
So many people are in trouble across this country. We've seen it in our forums, our neighborhoods, our prayer meetings...If we know of folk suffering, we need to spread the word that there is help available of all sorts. I think this article is beneficial - is it the final answer? Of course not, but all the ammunition we can get to help alleviate the problems so many face is well worth the trouble to obtain.
Hi George,
This is a very good informative article. People should get help from it.
The delinquent borrowers don't contact with the mortgage company ASAP they face problem with their mortgage the biggest problem. They need to contact the lender whenever they face problem with their monthly mortgage payments and this advice we have given time and again.
Best of luck,
Larry
This is a very good informative article. People should get help from it.
The delinquent borrowers don't contact with the mortgage company ASAP they face problem with their mortgage the biggest problem. They need to contact the lender whenever they face problem with their monthly mortgage payments and this advice we have given time and again.
Best of luck,
Larry