The
Survival Guide
It’s a national crisis: Could you be at risk of losing your home? Who should worry? You should be concerned if you’re having trouble making your mortgage payments, for whatever reason. You may be dealing with illness or unemployment, instead of the kinds of loans that sparked the current crisis. If you’ve missed mortgage payments or are struggling to pay your mortgage for any reason, seek help. Even if you’re not struggling now, you could face a problem in the future. Reasons to worry ARMs:
You should worry if you have an
adjustable rate mortgage (ARM) about
to “reset” to a much higher rate. Not
long ago, when the housing market was
strong, mortgage companies and brokers
aggressively marketed these loans with
low teaser rates to moderate-income
people, encouraging them to buy more
home than they could afford. Many of
these homebuyers thought that once the
loan rates were reset, they would be able
to refinance their homes and still afford
the payments. But then the housing
market weakened, and refinancing
became difficult.
Creative financing:
You should
worry if you have a decent income and
good credit and were offered creative
financing—such as Option ARMs,
80/20 loans or interest-only loans—to
encourage you to buy more home than
you could afford. Many homeowners
took loans that stretched their resources,
and they could be facing trouble soon.
DO: Look at your loan documents.
Even if you think you know the terms of your loan, it’s worth a review. Many people who think they have a fixed-rate mortgage (one in which the interest rate doesn’t change) have been surprised to find out that they don’t. Find an interest-rate explanation. You’ll want to check whether that rate is fixed for 15 or 30 years or set to change after a much shorter period. Some loans have fixed rates for a limited period, then adjust to higher payments. Is it too late to avoid foreclosure? It depends. If you are more than 60 days late on your mortgage, you will get—or may already have gotten—a letter from your loan servicer, the company that collects your mortgage payments for your lender. The most important thing to do is open that letter, and take action. That letter may include a phone number to call for help or a list of housing counselors. If you have thrown these letters away, or misplaced them, call one of the numbers in the help list in this brochure. DO: Open that letter from your loan servicer!
It’s important to take action as
soon as possible. Call for an appointment
right now.
How quickly can I get help?
Usually, you can get an appointment
with a counselor right away. But a lot
of people need help, so if you can’t get
an appointment right away, try another
agency. The options available for help,
and how long each takes, depend on
the kind of loan you have and your
circumstances.
Bottom line: In most cases, you probably
won’t be forced out of your house for a
while. But it’s important to act quickly so
the situation doesn’t get any worse. The
longer you wait, the harder and costlier
the problem gets.
How can counseling help?
A housing counseling or credit counseling
agency will review your case and contact
your lending institution. The counselors
will work on your behalf and will know
about options that might benefit you.
For example, they might work with your
lender to get you more time to pay, or
work out a plan for you to catch up, or
renegotiate the original terms of your
mortgage. They may be able to get your
bank to agree to take your home without
going through the process of foreclosure
or a sheriff’s sale.
Counselors also may be able to help you
address your problem and minimize the
damage to your credit report.
Will a counselor be able
to save my house?
Not always. For example, a borrower’s
income may not be high enough to
support payments on the house. In other
cases, homeowners owe more than their
house is worth, which makes it difficult
for them to correct their situation by
getting a new loan at a lower interest
rate. But sometimes, even difficult
situations like these can be resolved.
The best way to find out is to call for an
appointment right away. The longer you
wait, the harder it is to resolve
the problem.
Millions of mortgages written in the last few years have ended in foreclosure.
The first wave hit about a year ago, and in the next few months, we’ll see many
more. Find out if you’re at risk, and where to find help.
Here is a sample
of a letter sent by
a bank if you are
behind in your
mortgage
A publication of the Federal Reserve Bank of St. Louis, in cooperation
with the Federal Reserve Bank of Philadelphia.
AVOID THESE PITFALLS
Don’t: Assume that ads or Internet offers for foreclosure relief
are legitimate.
These are often companies that take your money and
disappear. Many make a point to sound friendly and understanding and
make tempting claims, like “credit scores don’t matter” and “we’ll save
your house and cut your payments in half.” Some scour public records
and send out letters to those facing foreclosures. Be suspicious. The
best call you can make for legitimate help, besides the agencies listed in
this brochure, is the Department of Housing and Urban Development
(HUD), 1-800-569-4287.
Don’t: Assume
that you have a fixed-rate mortgage. Check your
original documents.
Don’t: Hand over cash
to anyone without talking with a
HUD-approved agency.
Get help if…
• You don’t understand your loan
documents;
• Your mortgage payment has
suddenly increased dramatically;
• You have a fixed-rate mortgage
and have missed one or more
payments;
• You have refinanced your
original mortgage at a much
higher rate.
DO: Call a credit or housing
counselor and make an
appointment.
The counselor
can explain the terms of your loan,
can help you figure out if your
ARM can be changed to a fixed-rate
mortgage, and can help with
other mortgage
issues.
EMERGENCY
HOTLINES
HOPE hotline:
1-888-995-HOPE (This national hotline may have a high volume of calls. Be persistent.) HUD:
1-800-569-4287 will help
you find an approved housing
counselor. Or you can visit www.
hud.gov/offices/hsg/sfh/hcc/
hcc_home.cfm.
Arkansas
Credit Counseling of Arkansas
1111 E. Zion Rd Fayetteville, AR 72703 479-521-8877 1-800-889-4916 ccoa@ccoacares.com www.ccoacares.com Family Services Agency, Consumer Credit Counseling Service
740 S. Salem Road, Suite 104 Conway, AR 72032 501-450-9399 1-800-255-2227 wcohns@fsainc.org www.helpingfamilies.org Southern Good Faith Fund
2304 W. 29th Ave. Pine Bluff, AR 71603 870-535-6233 aduran@southerngff.org www.goodfaithfund.org I llinois Beyond Housing Illinois Homeownership Center
2 Park Place Swansea, IL 62226 618-233-4990 www.beyondhousing.org Western Egyptian Economic Opportunity Council
1130 N. Sparta Steeleville, IL 62288 618-965-3193 www.weeoc.org/Homebuy/homebuyer.htm I n diana Indiana Statewide Foreclosure Hotline
1-877-GET-HOPE www.877gethope.org HOPE of Evansville
608 Cherry St. Evansville, IN 47713 812-423-3169 www.hopein.com Community Action Program of Evansville
27 Pasco Ave. Evansville, IN 47713 812-425-4241 www.capeevansville.org Housing Partnership Inc.
(See Kentucky listing.) K e n t u c ky Don’t Borrow Trouble
1-866-830-7868 www.dontborrowtrouble.com Louisville Metro
Dial 2-1-1 www.louisvilleky.gov/foreclosure Housing Partnership Inc.
333 Guthrie Green, Suite 404 Louisville, KY 40202 502-585-5451 www.housingpartnershipinc.org Louisville Urban League
1535 W. Broadway Louisville, KY 40203 502-561-6830 www.lul.org Legal Aid Society
416 W. Muhammad Ali Blvd., Suite 300 Louisville, KY 40202 502-584-1254 1-800-292-1862 www.laslou.org T enne s s ee Memphis Housing Counseling Network
1548 Poplar Memphis, TN 38104 901-725-8361 http://memphis.earnbenefits.org/mhcn Affordable Housing CDC
206 E. Main St. Jackson, TN 38301 731-422-1366 www.affordablehousing.tn.org Jackson Housing Authority
125 Preston St. Jackson, TN 38301 731-422-1671 West TN Legal Services
P.O. Box 2066 Jackson, TN 38302 731-423-0616 www.wtls.org Mi s s i s s ipi Enterprise Corporation of the Delta/HOPE Community Credit Union
4 Old River Place Jackson, MS 39202 601-944-1100 www.ecd.org Mi s s ouri Beyond Housing
4156 Manchester Ave. St. Louis, MO 63110 314-533-0600 www.beyondhousing.org ACORN Housing Corp.
4304 Manchester Ave. St. Louis, MO 63110 314-531-6204 www.acornhousing.org Better Family Life
724 N. Union, Suite 301 St. Louis, MO 63108 314-367-3440 www.betterfamilylife.org Urban League of Metro St. Louis
3701 Grandel Square St. Louis, MO 63108 314-615-3600 www.ulstl.org Catholic Charities Housing Resource Center
4532 Lindell Blvd. St. Louis, MO 63108 314-367-5500 www.ccstl.org/Services/CCHRC.html Urban Neighborhoods Alliance
304 W. McDaniel St. Springfield, MO 65806 417-865-4774 www.unaonline.org WHERE TO GET HELP HOPE Hotline: 1-888-995-HOPE You may call the national hotline
or one of the numbers on this select list of agencies in the states served by the Federal Reserve Bank of St. Louis. Call today, and don’t be discouraged if you can’t reach someone right away. Be persistent, and get help as soon as you can. CA0824 5/08
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