Helping Hands from State and Lenders to stop foreclosure

Posted on December 24th, 2007 by saman

Gov. Janet Napolitano has designed a strategy to help homeowners of Arizona who are under the danger of subprime mortgage meltdown due to rate changes. She developed this plan after meeting and discussion with representatives from GMAC, J.P.Morgan Chase, Washington Mutual, GMAC, Wells Fargo, Arizona Bankers Association and Countrywide.

The strategy to help borrowers includes information and contacts to avoid foreclosure.

In 2008, mortgages will reset and many mortgages with lower rates will expire, resulting into trillions of dollars added to the mortgage payments. In that condition, many more homeowners will have hard time to make payment.

“It is our duty, as the state, is to make sure that homeowners are really contacting and talking to their lenders, and even lenders show willingness to come out with a solution for the borrowers”, said Gov. Napolitano.

Quite a few months ago, directors of the Arizona Department of Financial Institutions and the Arizona Department of Housing approached lenders and began meeting with them to find out solutions.

After that effort they come to a conclusion at the end of this week’s meeting. All in the meeting had same views regarding these points.

· Joint effort to encourage borrowers under risk to call their lenders.

· To support troubled homeowners – by offering a helping hand – through a national toll free number, 888 995 4673 to use or visit Hope now website.

· Lenders to work out the sanction process to decide whether a troubled owner is eligible for a loan modification.

There are possibilities that lenders can, in some cases, stop the “teaser” rate of subprime mortgage or shift the borrower to a fixed rate loan. The group will talk and exchange data with other state agencies of Arizona to trace the problem in depth and the success of these plans.

“Borrowers are often frightened to make a call to their lender, thinking that they will add difficulties to worse the problem”, the governor explains, “It’s not true. Lenders can be more effective only when they know that an owner is in problem.”

Till Sept. 30, In Arizona, over 24,000 loans are either in foreclosure or are in the surge. It is predicted that one out of five subprime mortgages will end in foreclosure.

As a most common foreclosure effect, one can lose the house. With that, the affected person will lose all saved appreciation and equity gained over the years. When a person looses his home, he or she has to inform the same to the IRS and as a result there will be increased taxes. The person loses his or her credit when his/her home is in foreclosure and that is most serious consequence a home owner faces. This will result in declination to borrow money, application for credit or to rent an apartment. All these can affect a person for years.

It is important to negotiate with lenders to stop foreclosure. There are alternatives and you need to know about all available options to avoid most common mistakes. Reach out for assistance from the authority and professionals.