Can You Stop Foreclosure Before It's Too Late?

Millions of homes in foreclosure and financial institutions breaking 52 weeks lows is the headline in today's world. Why so many foreclosures? What went wrong? Who's to blame? Who to sue? Those are the questions people ask themselves and nobody has a clear picture of how bad it really is out there. First, I blame all those greedy brokers who acted unprofessional and irresponsible when it came to borrowers. It was all about selling the best rates and programs that were going to make them a lot of money and not what was good for their borrowers.
Second, I blame the lenders for causing such a disaster in the financial market. I remember few years ago a program that was offered by Washington Mutual which had a start rate of 1.25% and it was called Option ARM. That was one of the worst programs I received to advertise, don’t get me wrong there were many others but this one stood out to me. Brokers were all over it and tried to put as many borrowers as they could into it. Why? Because it paid 2% of loan amount to brokers if they sold it. The ugly parts about that program were that it had a 3 year pre-payment penalty, up to 90% LTV, Negative Amortization, 5-year recast, No minimum credit scores, and pretty much anyone could qualify (self employed, retirees, etc). This had an adjustable full indexed rate of about 6.25% but you could pay the minimum payment which had a start rate of 1.25%. A borrower who could only a afford a $200,000 home could now afford a $350,000 home with this program. It gave borrower four different monthly payment options (Minimum payment, Interest only, 30 year amortization, 15 year amortization). Now imagine all those 90% LTV loans that were paying minimum payment for 5 years and now that LTV is not 90% but more like 110% and that full interest rate is 10%+ and not 6.25%. I’m surprised Washington Mutual didn’t bankrupt yet. Now imagine hundred more lenders like this offering this type of financing few years ago. Can you see why everything is falling apart? I feel very bad for all those people who bought these programs.

If you’re still in a program like this I suggest you refinance right now and get out of it. Before you refinance your should check your credit scores and then request free quotes and only get a fixed rate.

Subprime Borrowers & Those With Adjustable Rates
-If you have a subprime loan and your rate is over 7% you could probably qualify for a low rate loan now because your credit scores improved. If you made your loan payments on time and all other loan payments your credit scores may be up 50 to 100 points. You should check your credit history and find out what your scores are.
-If you have adjustable rate you should refinance now while the rates are in the 5%-6% range and loan limits are much higher and will be until Jan 2009. This is your chance to refinance a loan that was previously jumbo.

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