Lower My Mortage
“Lower My Mortgage!” Thousands of homeowners are demanding that our nation’s
government respond to their pleas. Yet, Congress has authorized a plan that will have a
relatively small impact on the thousands of mortgages and homeowners hoping to avoid
foreclosure. One of the primary stumbling blocks is the rigid criteria that make it difficult to
access for the majority of homeowners who are in trouble.
Eligibility requirements for participating in the plan include:
• Only homeowners with loans through Fannie Mae and Freddie Mac qualify
• Borrowers can’t owe more than 105% of the value of their home
• The home must be the primary residence
• If a homeowner has a second mortgage, it must agree to subordinate
• The debt ratio can’t be above 31%
And even for those who meet these qualifications, it is still up to the lenders to choose to
participate. This is an optional program, not a mandatory program.
If the first three don’t rule out a borrower, the last two likely will. Many people who financed
their homes between 2002-2007 took out 80/20 loans. The primary loan was 80% of the home’s
value, then they financed the remaining 20% with a secondary lender. With these homeowners
struggling to make payments, often close to foreclosure, it is unlikely that a secondary lender
will agree to subordinate. In essence, agreeing to subordinate means that they will give the
primary loan company first rights to all money that is generated by the sale of the home…
potentially leaving them with no income to satisfy the debt.
The debt ratio of 31% is certainly a solid measuring stick of a healthy credit rating, but we are a
nation in serious economic trouble. The average American has taken a huge hit to their wallet
and likely has used credit sources to stay afloat before getting to this point. By creating such a
conservative debt ratio criteria, the plan again eliminates many of those in greatest need.
However, there are other options for avoiding foreclosure. “We recommend that homeowners
hire a licensed and bonded mortgage broker to represent them in negotiations.” reports a source
from Sell Home Owner. It is easy to let the pressure of today’s economy build into a feeling of
hopelessness. But before you walk away from your house, contact a debt negotiations specialist
like Sell Home Owner (www.sellhomeowner.com) for help.
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