Bailout Bill May Help Borrowers

Homeowners at risk of foreclosure may benefit from provisions in the bailout bill designed to modify their mortgages.

The National Association of Realtors said it's pleased with many of the provisions in the revised "Rescue Package" because not only does it help troubled borrowers, but fewer foreclosures will help stimulate many housing markets that have been sagging for the past year.

As of right now it's not been determined which loans will be modified, but many supporters of the provision are hoping that a quick and efficient system is put into place in order to determine loan modification criteria on a large scale, rather than work on each loan case by case.

The plan requires the government to come up with a system to modify loans it acquires through the bailout plan. Changes might be multifarious: lengthening the loan, reducing interest rates or writing down some principal.

Also, borrowers who live in the home and whose loans meet certain criteria, can go into the "Hope for Homeowners" program that was setup during the last housing bill signed into law in July. This program provides the borrower to refinance into a fixed rate loan through the Federal Housing Administration.

The largest problem that still looms deals with the loans the government acquires that are packaged in securities and are no longer held by the originator of the loan, but a servicer. Not a great deal is known, lenders, servicers, and owners of distressed assets are waiting to find out more details as to how to solve the problem and what role the tax payers will play with respect to losses.

Overall, borrowers should engage with their lender, communicate on a regular basis as to their "current status". If the borrower doesn't have time to do this it would be in their best interest to contact a Loss Mitigation company. They can spend the time to reach and inform the lender as to their status. A Loss Mitigation specialist will help negotiate your interest rate with your lender and help you save your home.