Here’s the deal, or new “New Deal,” as it’s being called: Congress is expected to give the green light to a sweeping housing and mortgage reform plan that pledges to bail out the roughly 400,000 homeowners with failing loans. (Note that last month the nation’s foreclosure rate soared 7% to one in every 483 households, according to RealtyTrac.) The highlights of the rescue plan include letting troubled borrowers (you know who you are) qualify for 30-year fixed mortgage refinancing backed by Uncle Sam. Prospective homeowners may also have some help coming their way, as mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) would raise the limit on loans they can buy from lenders in pricey housing markets to $625,000. That’s up from the current $417,000. There’s also $150 million reserved to help stressed-out borrowers on the possible verge of foreclosure and to demand more stringent disclosure rules from lenders.
CALL YOUR LENDER
Don’t assume that because you’ve missed some monthly mortgage payments your bank is plotting to ruin you. Understand that banks don’t want your house on their hands. Speak with your loan officer about possibly refinancing and alternative loan plans, even if they’re temporary (three to six months), to help you get back on track. “Re-approach them, just as you would any lender and go through your debt to income ratio, be able to show tax returns and pay stubs and re-qualify for the loans,” says Alexis McGee, President of Foreclosures.com. It’s not likely you’ll be forgiven altogether, but you may score better mortgage terms, she says.