Lenders Providing Mortgage Solutions for Troubled Homeowners

By Karen Lawson
LoanPage.com Columnist

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In response to problems with rapidly adjusting option ARMs (adjustable rate mortgages with start rates as low as 1%) several large mortgage lenders have voluntarily agreed to assist homeowners in danger of losing their homes.

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Typically, a lender will evaluate each situation to best match its assistance options to the homeowner's circumstances. In the past few years, many borrowers have taken out a new home loan with very low initial interest rates. Almost two million of these mortgages will be adjusting to higher interest rates through 2008. This has caused legislators, mortgage lenders, and consumer groups to work together to assist homeowners having trouble with increasing mortgage payments

Understanding What Leads to Foreclosure

A number of factors can contribute to mortgage foreclosure. Problems with ARMs and "exotic" mortgage loans can occur when borrowers don't fully understand the terms of their new home loans. Some borrowers with "low documentation" loans who overstated their income, and those who took on subprime loans with high rates are finding themselves in trouble, especially in areas with stagnant or falling property values. Homeowners can't make their payments and they can't sell their properties.

Mortgage Lenders Can Help

Mortgage lenders prefer to avoid foreclosure in most cases. Each foreclosed property costs an average of $40,000, and this amount increases the longer the home is held in a lender's inventory. If your mortgage payment is about to adjust to an amount that you can't afford, contact your lender and ask about refinancing or modifying the terms of your mortgage. Lenders can provide assistance for a variety of financial situations. Cooperating with your mortgage company can help you save your home and avoid foreclosure scams.

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.

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