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More housing woes: What you can do

June 11, 2008

There appears to be more bad news in the housing market. According to some industry analysts, the sub-prime mortgage meltdown is going to get worse by next spring when hundreds of thousands of adjustable rate mortgages are going to reset. The resetting of those loans is predicted to cause a new wave of foreclosures.

This story on Yahoo Finance details the problem. The story also spotlights one borrower who is sinking under the weight of her option ARM. This borrower’s attitude towards her home loan was a bit dismaying. She has decided that foreclosure is her only option.

Here’s what the story says about her situation:

“The option ARM was initially a blessing and then a curse for Deborah Shaw, a 52-year-old systems analyst for

Santa Cruz County, Calif. In 2004 she bought a $575,000 two-bedroom house with her boyfriend with a 40-year fixed mortgage. But when she and her boyfriend split, Shaw could no longer make the payments. She refinanced into an option ARM, which allowed for a $1,600 minimum payment (she was paying $2,300 on the fixed loan).

Shaw planned to avoid a recast by selling the house in a couple of years, but the housing slump changed everything.

Shaw now thinks her loan has already recast, which means that her monthly payment would more than double. Shaw doesn’t know for sure, because she stopped answering her lender’s daily phone calls and, since April, stopped making payments entirely. She says foreclosure is her only option.”

Ms. Shaw’s first mistake was ignoring calls from her lender. Her second mistake was that she allowed herself to be completely in the dark about what is going on with her mortgage. Her third mistake was to give up making payments altogether.

Possibly her biggest mistake was that she threw in the towel and apparently hasn’t attempted to get help.

If you are a homeowner who is behind on your mortgage or who is concerned that you might fall behind, please get help right away.

In addition to the Hope Now hotline, there are many reputable local agencies that offer housing counseling to those who are in danger of losing their home.

At Advantage we have certified counselors trained to help people with housing issues. Our counseling services are free, and we work with the U.S. Department of Housing and Urban Development and the Pennsylvania Housing Finance Agency to help homeowners.

You do not have to wait until you have received a foreclosure notice to call for help. Your best chance to avoid foreclosure or falling behind on your mortgage payments is to find assistance as soon as you realize you are struggling.

Foreclosure is only inevitable if you give up and don’t even try to work out an arrangement with your lender.

Written by admin · Filed Under Housing 

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