Colli Real Estate

subprime arm freeze?

I have an 80/20 mortgage on a 2 year arm. The arm expires August of this year. After that, it will readjust itself every 6 months. Does anyone have any FIRST HAND experience with applying for the interest rate freeze? I am paying 12% (!!!!) on the 20% and 8% on the 80. So a interest rate hike will guarentee foreclosure. For the ones that want to put me down, I had no idea that we would be in a recession when I applied for the loan. My husband and I both worked full time jobs and owned a business. We were very capable of paying the high amount until the economy took a down turn and we both lost our jobs as well as a severe decrease in our business. In addition, we were always taught that real estate is an investment. With the housing market collapsing, we will never be able to get what we paid. This program has come out to help people out do to the bad times and I intend to take advantage of it. If you want to put me down, at least answer the question as well. Thanks

You would need to contact your mortgage company (the 2nd) to find out how willing they would be to help you. You should be able to provide proof of the hardship the adjustment would cause…if you can do that, they should work with you. People tend to not realize that the Fed Rate has no barring on the adjustment of an ARM loan. It is typically based on the LIBOR. 12%+ is typical with a HELOC or even 2nd Mortgages. People also need to realize that the “adjustment” is at the mortgage companies discretion…they do not have to adjust the loan if they don’t want to.

Please remember that freezing your rate is only temporary. The freeze isn’t necessarily permanent. If you have opportunity to refinance the 2nd…that may be your best option. If things get worse, you can also look to short-sale your home as a last resort. If it gets to that point, make sure you are aware of the “Mortgage Debt Relief Act of 2007″. If things get to a point where you are in danger of losing your home, that new legislation may come in handy for you.

Good luck with you situation. I hope things work out for you.

Brian G.

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Tags:   arm · freemarket · freeze · rates · refinance,No Comments