HOPE NOW for Troubled Borrowers

If you're facing some tough financial times, you're under a lot of stress right now, to say the least.  It is important to know there is help out there. Troubled borrowers need to know what their options are without having to go to a variety of different mortgage lenders.

The national HOPE NOW counseling hotline, manned by HUD-approved counselors, can assess your situation and provide you with information regarding the option that might be right for you.  The counselors are are part of a non-profit organization called the Homeownership Preservation Foundation.  In mid-December, about 180 counselors assisted in over 22,000 calls received daily, and the counselor growth has increased to over 400 the first of this year.

The solution for you depends on your particular situation.  A few examples from this month's Realtor Magazine:

Owners who are able to stay current even with a rate reset

Solution:  Counseling and refinancing. Lenders may be able to take these borrowers through a fast-track process into a more affordable loan.

Owners who face default after a rate reset

Solution: Counseling and rate freeze of up to five years.  To qualify, the borrower must be eligible for refinancing (e.g., have a loan-to-value ratio of greater than 97 percent), occupy the property as a primary residence, and have a credit score of less that 660 that hasn't improved more than 10 percent since the loan orginated.

Owners already in default

Solution:  Counseling and loss-mitigation strategy, such as a short sale or deed in lieu of foreclosure.  Under the mortgage debt forgiveness law signed by President Bush December 20th, borrowers who receive debt forgiveness as part of a loan workout over the next three years won't have to pay federal tax on the forgiven amount.

The most important advice right now is if you're a troubled borrower, call the hotline right away.  The number is 888-995-4673 (888-995-HOPE) and is available 24/7.  For more on Hope Now, see http://www.hopenow.com/.