Q: I have an adjustable rate loan and a second mortgage. I’m making the payments but it’s tough, if I can get a lower rate, I certainly want to. What about refinancing? My house isn’t worth what I paid for it 2 years ago and I financed the whole thing with an 80% ARM and a 20% second. What are my options?
A: This is a struggle for many homeowners, especially in our area where 100% financing has virtually gone away. However, assistance may be available. I refer to the Economic Stimulus Act of 2008 recently signed by President Bush:

The Administration Has Taken Steps To Help Struggling American Homeowners
In September, the President and his Administration launched a new initiative at the Federal Housing Administration (FHA) called FHASecure. FHASecure expands the FHA's ability to offer refinancing by giving it the flexibility to work with homeowners who have good credit histories but cannot afford their current payments. By the end of 2008, the FHA expects this program to help more than 300,000 families refinance their homes.

Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson have facilitated the private-sector HOPE NOW alliance. HOPE NOW has developed a plan under which up to 1.2 million homeowners could be eligible for assistance. This plan will help subprime borrowers who can afford the current, starter rate on a subprime loan, but would not be able to make the higher payments once the interest rate goes up.

President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007, which will help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages. This Act created a three-year window for homeowners to refinance their mortgage and pay no Federal taxes on any debt forgiveness they receive.
A: I also encourage borrowers to carefully review correspondence from their lender. The borrower may have 10 days to respond with financial information to determine if new payment options are available on their existing mortgage. See the following regarding HOPE NOW Alliance and Project Lifeline (Article dated February 19, 2008 from www.thetruthaboutmortgage.com)

"I am impressed with the HOPE NOW Alliance’s swift adoption of Project Lifeline. Just last week we saw six servicers take the lead and agree to this initiative,” Treasury Secretary Henry Paulson said in a statement on his website.  “Now that all HOPE NOW members have signed on, more than 90 percent of the subprime servicing market and nearly 70 percent of the entire mortgage servicing market is committed to this coordinated method of reaching more homeowners.”

As part of the plan, letters will be sent out to delinquent homeowners more than 90 days behind on their mortgage, at which point they have 10 days to respond and provide additional financial information so the lender can determine new payment options.

Project Lifeline will allow seriously delinquent homeowners to delay foreclosure proceedings for 30 days while lenders attempt to work out new terms to avoid one.

“Project Lifeline is one more means of helping homeowners, and combined with the other parts of HOPE NOW’s outreach, these initiatives can make a measurable difference. I look forward to seeing reports of the impact of these commitments,” Paulson said.


These answers have been provided by Wendy Devereaux of Suburban Mortgage, Inc.