An article on avoiding foreclosure appeared recently at the KSLA web site in Shreveport. It wisely mentions government backed FHA programs:
An estimated two million Americans could default on loans over the next two years as their loans reset to a much higher rate, according to the U.S. government. With thousands of Ark-La-Tex residents in an ‘adjustable rate mortgage,’ also called an ‘a.r.m.,’ there are steps they can take before their payment adjusts and becomes unpayable.
Officials with the Bush Administration say they’re aggressively dealing with rising numbers of mortgage foreclosures. In front of a congressional committee, officials from the Departments of Treasury as well as Housing and Urban Development said they’re working with an industry group called “Hope Now,” to deal with the crisis.
Under Secretary of Treasury Robert Steel told the committee, “it’s clear to all, that the earlier we identify struggling borrowers the more likely it is that services and lenders will be able to refinance or modify their mortgages into something more sustainable for the long term. If we wait until borrowers miss several payments, their credit profiles will be tarnished and they will have far fewer refinancing options.”
Steel also told federal lawmakers that lenders need to offer clear and understandable information on the mortgage products they sell. But he also said home buyers have a responsibility to use that information and understand their mortgages.
Many people in ‘Adjustable Rate Mortgages,’ a.r.m.’s, are told that within those 2, 3, 5 or even 7-years is a great time to improve their credit to refinance. But when that doesn’t happen some homeowners get in big trouble.
It’s a homeowner’s nightmare: Your home going on the auction block. That imagery combined with our report Thursday on how the local housing market is bucking the national downturn, prompted KSLA News 12 viewer Earl Ford to call us. Ford recalled, “I was thinking about you know I could be in that same predicament, you know. I thought about my family, chance of losing our home.”
Shannon Donaldson told KSLA News 12, “if you’re on an adjustable rate mortgage and let’s just say you know that it’s going to adjust in December or, you know, January, start right now.”
Donaldson owns CastleRock Mortgage Group of Louisiana and told us what her first step for her client would be: Pull up their credit report to see where they may need to improve their the score if it’s not high enough to refinance.
She estimated that scenario applies to 1-in-3 people with an a.r.m. Some lenders are working with clients without the cost of re-financing, added Donaldson. “And the lender set them on a fixed-rate mortgage.” But that’s no guarantee, especially with a low credit score.
Donaldson pointed to a new F.H.A. program that can also help those facing a new, much higher monthly payment after adjustment, “as long as you were current until your payment adjusted, that they will re-finance those customers.” said Donaldson.
The Ford family’s second a.r.m. in seven years ‘adjusts’ in January. So what then? Earl Ford’s wife Kellye intimated, “I don’t know. He usually works the deals and I usually pay the bills. (laugh). So, I don’t know.”
For those who wait until the foreclosure notice arrives, a year ago some lenders would buy you out. But, that option is no longer available. Even bankruptcy is not a sure thing for keeping your home because of tougher restrictions.
