Posted by: Mike | December 6, 2007

Don’t Stop Now

Details are being released today on the Federal plan to help stop foreclosures. The program is called “Hope Now” and it’ll soon be splashed all over the media. There will be plenty of talk around the water cooler this week, (much of it wrong). Before I get into the details of the plan let me ask you one question – just one.

Why were you considering a short sale?

Don’t answer that yet. Think about it for a while. Take a day if you need. Be honest, it’s only for you to know. Now write your answer on a piece of paper and tape it to the bathroom mirror so you can see it each and every day. It might say something like;

    • I can’t afford my payment.
    • I can afford my payment but it’s getting difficult.
    • I want my life back, I’m tired of working for my mortgage payment.
    • I was sold toxic loans I should have never been in.
    • I have no equity left, why should I stay?

I ask you to do this so you remain focused. The reason you originally considered a short sale was valid. It was valid then and it’s valid today. It’ll be valid tomorrow too. As you hear news reports about various bail out programs you will naturally be tempted to think there is help coming. It’s the opposite of buyer remorse and it’s perfectly normal.

No matter what you hear at the water cooler, let’s get the story straight.

  • This workout is for subprime loans. Have a Payment Option Arm? You are not included. They are not Subprime.
  • The rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.
  • Borrowers who have credit scores below 660 and haven’t risen by 10 percent since the loan was issued will be given priority.
  • Borrowers must not be more than 60 days behind in their payments.
  • You must have less than 3 percent equity in their property.

Additionally, according to their website here are the Lenders that are talking to the Hope Now program:

  1. AIG / American General Financial Services, Inc.
  2. Aurora Loan Services, Lehman Brothers
  3. Carrington Mortgage Services
  4. IndyMac Bank
  5. Litton Loan Servicing
  6. Morgan Stanley Home Loans
  7. Ocwen Loan Servicing
  8. Wilshir Credit Corporation, Merrill Lynch Home Loans

Even if you did happen to fit into all five rules and your lender is listed one of the 8 mortgage companies (why is there only 8 out of hundreds of mortgage companies?), this bailout might not be the best option for you. Look again at that piece of paper on your mirror. How would freezing your rate today change what you wrote?

My advice as a mortgage insider:

If you were heading down the short sale path – stay on it. Don’t make the mistake of putting all your hopes in something that might not happen. Work only with true real estate professionals that have your best interest at heart. And don’t put any credence in anything you hear at the water cooler.

Mike Mueller


  1. Good advice, this bailout package, if it even passes into existence as the wonderful program it’s designed to be and doesn’t fall flat on its face somewhere in the Washington bureaucracy, should just be one option to end a foreclosure.

    And homeowners who trust in just one solution are often left very disappointed when things don’t work out. The more they understand about what options are available to them, the more likely they will find a viable solution to save the home.

  2. Thanks Nick. We’ll see how it all pans out.
    I would hate to see someone pull out from selling their home, especially if they need to, just because they heard this plan was going to save them.

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