The Tacoma News Tribune reported on Friday, September 16, 2011, that the Congressional Budget Office recommended slashing monthly payment requirements for troubled borrowers covered under a Fannie Mae or Freddie Mac government guarantee system by way of reducing interest rates on loans that are, at present, well above the low mortgage interest rates available today in the open market. E.g. If your Fannie Mae or Freddie Mac loan is at 7.0%, lowering it to 4.5% would significantly reduce your monthly payment.
But are you eligible to lower your payment?
Because the lowering of your payment would likely be through a “refinance” plan where a new loan is issued in place of the older higher rate loan, you may not be eligible if you have a really rocky payment history or if you have little or no income. “Who” would qualify for the refinancing is still murky because there is as of yet not even a program, but just rather a report recommending the implementation of a program, so help directly to you could still be a long way off.
Secondly, if there is a second mortgage, the second mortgage could refused to cooperate with the refinancing of the first mortgage as the second mortgage would have to sign off on a subordination “agreement” where in the second mortgage agreed to stay in second place notwithstanding the refinance of the first Fannie Mae/Freddie Mac mortgage.
Thirdly, it was reported the same in the News Tribune (by way of a cite to a Los Angeles Times article) that lenders are stepping up foreclosure efforts after being slowed down for about a year by the “foreclosure gate” documentation and “robosigner” processing controversies of 2010 – early 2011, so if you are struggling with your mortgage payments, you may not have time to wait around for a new Fannie Mae/Freddie Mac program that may never materialize in response to the recent Congressional Budget Office report.
Lastly, even if a program to refinance Fannie Mae/Freddie Mac mortgages does show up to help someday, it could be an even better step to file a bankruptcy case in chapter 13 to strip off and get rid of your second mortgage or perhaps a simple “straight bankruptcy” chapter 7 case to get rid of burdensome medical debt, repossession debt, credit card debt, collections and uninsured car accident problems.
Getting back to our question, there are three considerations (1) if you have a low credit rating you cannot easily refinance, (2) if you have little equity you will not be able to refinance, (3) if you can’t refinance to pay off debts, consider bankruptcy and then apply to refinance in a couple of years, as many experts expect rates to remain low for quite a while and hopefully you will build some equity into your home and stop getting repeated monthly negative credit marks for late or missed bill payments as after bankruptcy most of your debts will be gone.
Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at staff1 . To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.