Hope Financial: Mortgage Rescue Plan Starting To Work

At long last, the higher-ups have gotten up off their legislations and have started to actually hand out or trickle down that $700 billion dollar financial rescue plan so that those desperate among us can talk to their banks about keeping their homes. As of December 15, 2008, Fannie and Freddie, those super large, government controlled mortgage underwriters, will start getting various types of relief to homeowners at risk of foreclosure.

According to the US News' blog eligible borrowers will need to meet certain criteria which we've listed below:

* Be at least three months behind on their mortgage payments
* Owe the bank at least 90 percent of what the home is worth
* Live in the home as a primary residence
* Not be in bankruptcy
* Be able to prove that they're not just trying to skip out on the loan

Fannie Mae and Freddie Mac hold up to about 60% of all U.S. mortgages, and the new effort to modify the mortgage problems will be more stringent than the "voluntary" programs that have been reached between homeowners and banks. The government will also offer banks a bribe, uh, incentive package of $800 for every loan they rework. While this may seem unfair, it does give the banks a reason to help. Hopefully, this added incentive will open the doors to the banks to the desperate who are trying to hold on to their houses. Whatever, it takes to get that second chance for homeowners is our view.

If you qualify, your bank will work it so that the interest rates go down or they will extend the life of your loan so that the monthly payments will be more manageable. While this is a start, it by no means covers everyone. For those who are not completely underwater, this rescue package may not apply.

However, don't give up. There are some things that you need to be aware of that will change your view of the banks.

If you have a decent income and have been lucky enough to hang on to your job through these difficult times, there is a new federal standard that requires that your typical monthly mortgage payment should not exceed 38% of the total household income. However, if you fall below 38%, banks are still willing to work with you and your family. So you need to contact them. Many banks are starting to utilize an aggressive loan repayment program to get your monthly payments down. Calling your bank might mean the difference between making it and not making it.

Don't be afraid to call your bank. One of the biggest problems that banks have is that when things are going bad, they don't hear from the borrower until they have completely drowned. They want to work on a mortgage modification before you go down, but they aren't mind readers. Get ready to badger your bank. Demand help and keep asking until you get it. Banks may be overloaded right now, but bear in mind, they don't really want you to fail, because if you fail, they fail in the long run. So, keep asking, badgering, calling and appearing until you get some help.

The government also has a new program called Hope Now which, along with the Department of Housing and Urban Development's foreclosure prevention website, is a good place to start your search for help. The program has been slow in coming because while the government wants to help, it doesn't want to get scammed. There is a great potential with this much money for fraud and abuse, so get your paperwork in order. Gone are the days of undocumented "no-doc" loans, so you'll need to have everything ready for inspection when you show up.

Unfortunately, while a lot of loans are held by the government, there are even more which may include yours that are held by private holders who are under no obligation to help you. Check with the bank to see where you loan has wound up. The government is hoping that these private servicers copies the moves of Fannie Mae and Freddie Mac, so if you are with one of them don't give up. The government is seeking solutions in this area. Keep asking and nagging.

You never know who will help you, and it's up to you to keep your face, voice and plight in front of everyone and anyone who "might" help you. Sometimes the government will help the little guy, and with the new administration taking over in January 2009, you stand a bigger chance than ever before. Write, call and email anyone and everyone you even think might be able to help your cause.

In the end, remember one thing - it ain't over until it's over. So, keep on going and ask and ask again.

Tags: mortgages, housing, Fannie Mae, Freddie Mac, government intervention