President Bush signed the Hope Now initiative in December to slow the flow of defaulted subprime mortgage defaults. The non-profit HUD-approved Homeownership Preservation Foundation should have by now approximately 550 to 600 counselors staffing the phone to talk to concerned conusmers. The number is 888-995-4673. They estimate receiving around 2500 calls a day, so expect to be on the phone for a while. The counselor will ask for information about your financial situation and make a determination, including eligibility to participate in the initiative. So before calling gather your mortgage papers, income verification and monthly expenses together so you will be prepared to answer their questions.
Home Owners are eligible if:
- They are current and expect to stay current after the rate resets, but are looking to refinance.
- They are current but face possible default after rate resents.
- They are in default before their rate resets.
The initiative applies only to purchase-money mortgages, not home equity loans, and only to borrowers who secured financing during the height of the houseing boom--Jan 1 2005 to July 31, 2007 and whose rate resets between Jan 1, 2008 and July 31, 2010. Lenders estimate there are 1.2 million borrowers eligible.
The counselors can help borrowers who don't meet eligibility for the initiative too. Income problems as a result of a job loss and unexpected expenses like a medical emergency cause people to fall behind.
Troubled borrowers who call the Hope Now number will find that their solution will depend on their situation. If you are able to stay current even with a rate reset Lenders may be able to take these borrowers through a fast-tract process into a more affordable loan.
Owners who face default after a rate reset they may freeze the rate up to five years. To qualify they must be ineligible for refinancieng, occupy the property as a primary residence and have a credt score of less than 660 that hasn't improved more than 10 percent since the loan was originated.
Owners already in default a loss-mitigation strategy, such as a short sale or deed in lieu of foreclosure, my be the solution. Under the mortgage debt foregiveness law signed by President Bush, borrowers who receive debt foregiveness as part of a loan workout over the next three years won't have to pay federal tax on the forgiven amount. Those who don't call in time may not be able to avoid foreclosure. If you are in default now, please call Real Estate Agent Evelyn Johnston, short sale specialist to discuss your options at 574-304-7148 or email evelyn@evelynjohnston.com.
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