Here is a gift that can keep on giving. But it may be as elusive as landing a Zhu Zhu toy for your kid by Christmas.
If you're struggling to make home-mortgage payments and losing your home is a real possibility, some banks are offering sweet deals on loans, some with rates as low as 2%, according to CNNMoney. About 80% of loan modifications in the second quarter of this year resulted in lower payments, according to the Office of the Comptroller of the Currency. Three months ago that number was about 50%. Unbelievably, only 4% of all homeowners in need of so-called "workouts" are getting them.
Why? One reason is that not all banks are on board the loan-modification train. Also, many people are unaware of programs to help struggling homeowners, and some prefer to just walk away, thinking they can't possibly get a new loan, brokers say. That's a shame, because borrowers who lower their monthly payments by 20% or more re-defaulted only 34% compared with the 63% who didn't.
One white knight trying to rescue homeowners is the Neighborhood Assistance Corporation of America, or NACA, a nonprofit, HUD-certified counseling agency, which is touring the country with its Save the Dream Tour. It's hit 11 cities, offering free counseling to homeowners seeking help for mounting mortgage messes. Some attendees get low-interest-rate loan commitments the very day they attend, because NACA has guaranteed deals with some lenders.
Some of the big banks are offering so-called "workouts," but it's no cakewalk, brokers say.
"I tried to modify one of my own home loans and the bank lost the paperwork six times," said Los Angeles-based broker Marc Shenkman. "It's a joke, really. I've heard of one person who got a deal," but he knew someone who had an "in" with a lender, Shenkman said.
Dan Weiss, another L.A.-based mortgage broker, says that "you'd better have all your ducks in a row. You pay more if your credit score is under 740."
Temporary mortgage modifications are doing a pretty swift business, but only 31,382 of more than 700,000 loans through the federal government's Home Affordable Modification Program had turned permanent as of the end of November. Still, at least you can get temporary help. And earlier this week, Fannie Mae and Freddie Mac, the mortgage giants, said they would suspend evictions from Dec. 19 to Jan. 3.
The bottom line is that although paltry, some help is available to struggling homeowners. You just have to grit your teeth and go for it.
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