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Mortgage Rate Relief Plan: Who Qualifies For Help?

HOPE NOW lays out its Rate Freeze program for 360,000 sub-prime borrowers

Thursday, the White House revealed its HOPE NOW program, aiming to help sub-prime borrowers freeze their initial “teaser” rates for a period of five years.

The program is receiving a lot of ink in the newspaper dailies but sometimes it’s unclear exactly what the program offers, and to whom.

Let’s look at the details and see who qualifies and who doesn’t.

Mortgage loan type

Qualifies: Sub-prime mortgage
Doesn’t qualify: everyone else.

Date of mortgage origination

Qualifies: January 1, 2005 to July 31, 2007
Doesn’t Qualify: Everyone else

Date of first interest rate reset

Qualifies: January 1, 2008 to July 31, 2010
Doesn’t qualify: Everyone else

Previous mortgage delinquencies

Qualifies: No more than one 60-day late in the last 12 months
Doesn’t qualify: Multiple 60-day lates, or one 90-day late

Potential payment increase

Qualifies: Payment will increase by more than 10% at first adjustment
Doesn’t qualify: Everyone else

Credit score

Qualifies: Less than 660; less than 10% improvement since closing
Doesn’t qualify: Everyone else

Because of the restrictions, only a small subset of the 1.8 million sub-prime loans issued between January 1, 2005 and July 31, 2008 are eligible for the rate freeze. A New York Times article estimates that figure to be 360,000.

For homeowners not qualified for the HOPE NOW program, mortgage servicers will attempt remortgage their loans, or evaluate the homeowner for a rate reduction and/or for debt forgiveness on a case-by-case basis.

If you’re not sure whether you have a sub-prime loan, or whether you can benefit from the “interest rate freeze” program, reach out to your loan officer or call HOPE NOW.

Who Qualifies for Help, And What Qualifies as Subprime?
Ruth Simon
The Wall Street Journal Online
December 7, 2007

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