If you have an adjustable interest rate home mortgage through Countrywide Financial Corp., GMAC Mortgage, Litton Loan Servicing or HomeEq Servicing, you might qualify to have your introductory interest rate temporarily frozen.
An agreement announced Tuesday, Nov. 21 by Gov. Arnold Schwarzenegger to freeze adjustable interest rates for some of the state’s highest-risk borrowers seeks to avert a tidal wave of new foreclosures. Half a million California homeowners are reported to have subprime mortgages.
The state’s agreement with the four lenders covers more than 25 percent of the state’s subprime mortgage loans, which generally require periodic increases in payments after initial low "teaser" rates.
Analysts agree that it costs lenders tens of thousands of dollars to foreclose on a home. Real estate markets statewide, including in the Mountain Communities, are sagging because of the number of foreclosures already depressing prices.
"This common sense approach does not involve a government subsidy or bailout," Schwarzenegger said in a statement.
To get help, borrowers must occupy their homes, have made their payments on time and prove they cannot afford the loan’s new rate. If this fits your situation, contact your loan servicer to apply.
"My guess is there are quite a few of these in the Mountains, but to my knowledge there is no way of knowing for sure," Realtor Gary Wilson said.
"To lose your home… through a foreclosure is an emotional crash and it sometimes takes years to recuperate…," Schwarzenegger said. "But we don’t have to sit idly by to watch the American Dream become the American Nightmare."
It was unclear how long the loan servicers would freeze the interest rates. A representative from the California Department of Corporations predicted a two to five year window.
–Reported by Patric Hedlund
This is part of the November 30, 2007 online edition of The Mountain Enterprise.
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