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Subprime Mortgage Freeze Will Help Some Homeowners with Bad Credit
By Francine L. HuffMortgage Credit Problems Columnist
Chances are if you have bad credit and can't pay your mortgage,
you're wondering how an agreement between the federal government and lenders
can help you. The plan involves lenders freezing some subprime mortgage rates for
five years. While the plan is expected to keep some homeowners who've fallen
behind on payments out of foreclosure, not everyone will qualify for this
relief. Here's what you need to know about the plan.
Which Mortgage Loans Qualify
According to Credit Suisse Group
analysts' estimates, more than 30% of people with subprime adjustable-rate mortgages
are already behind on their monthly payments--and that's before their loans
reset. That has led to the bank to estimate that 775,000 homes carrying $143
billion of mortgage debt will be foreclosed upon in the next two years. But
only some subprime mortgage borrowers could actually be helped by the plan to
freeze interest rates. That's because the plan only targets subprime mortgages
issued from January 2005 to July 2007 that will reset between January 2008 and
July 2010. It is estimated that the plan
could help over a million people.
Some May Refinance Mortgages
To be eligible for subprime
lenders to freeze interest rates, homeowners must have less than 3% equity in
their home and be more than 60 days behind on their payments. But if you have a
credit score above 660 you'll probably have a tough time getting your subprime
lender to freeze your monthly payments but you may be able to qualify for other
programs such as an FHA refinance. Other people who need help may qualify to
refinance their mortgage or obtain a Federal Housing Administration loan.
If you're not sure whether you
qualify for help under this plan, you can call a 24-hour hotline set up to
answer your questions about subprime mortgages at 1-888-995-HOPE.
Sources
White
House
"Fact Sheet: Helping Americans Keep Their Home,"
www.whitehouse.gov.
Bloomberg
"Bush Aims to Prolong Expansion With Subprime
Freeze," by Alison, Vekshin, www.bloomberg.com.
About the Author
Francine L. Huff is a
freelance journalist and the author of The
25-Day Money Makeover for Women. She
has appeared on a variety of TV and radio shows.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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