September 7, 2007. The Federal Reserve in addition to banking regulators issued special guidelines urging loan servicing companies to work with borrowers currently in danger of defaulting on their home mortgages.
The new guidance which is not mandatory provides hope that companies that collect payments on mortgages would consider the Fed's advice.
More and more borrowers with subprime and alt A mortgage products are facing the very real possibility of losing their homes through foreclosure as their payments reset and become unaffordable.
An estimated 2 million adjustable rate mortgages are scheduled to reset by the end of 2008. These mortgages with initally low interest or "teaser" rates will adjust to much higher rates that will in some cases will double or even triple the monthly payment.
The joint statement also encouraged the mortgage servicing companies to consider referring borrowers in trouble to qualified homeownership counseling services which would help acheive the ultimate goal of keeping families in their homes.
By Rick Arbutine, REALTOR/DIRECT MORTGAGE LENDER, Direct: 407-928-8113
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