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Hope Now Initiative - Subprime Mortgage Crisis, Avoid Foreclosure

Find Help using the "Hope Now" Initiative

Last Updated: March 16, 2016

You found the home of your dreams, perhaps a few years back, when the housing market was sizzling red-hot. Your realtor and mortgage broker or banker were eager to help, getting a loan was a snap, there were so many lenders willing to hand out money to home buyers, no need to verify their income in many cases... what a trusting bunch we were! And, how short sighted "we" were, those people who signed on for loans that they knew they could not afford over the long term. The dream home has since transformed into a nightmare, with unaffordable payments due to the adjustable rates "we" didn't really pay attention to or just ignored while signing on the dotted line. You can't sell it, because everyone else is trying to unload their nightmares as well, and you either need a miracle or will facing a short sale, foreclosure, and possible bankruptcy if you don't do something quick. What to do?

A Little History

The crisis began in the United States with the bursting of the housing bubble and high default rates on "subprime" and other adjustable rate mortgages (ARMs). Subprime lending is a generally defined as the practice of making loans to borrowers who may not qualify for "A-grade" market interest rates because of problems with their credit history or the inability to prove that they have enough income to support the monthly payment on the loan for which they are applying. A long-term trend of rising housing prices and misleading loan incentives encouraged investors and homebuyers to take on new or additional mortgages, with many believing they would be able to sell quickly at a profit or refinance at more favorable terms later. However, once housing prices started to slide downward starting around 2006 in many parts of the country, refinancing became more difficult. Defaults and foreclosure activity increased dramatically as ARM interest rates reset higher. During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity according to a realtytrak.com report, up 79% versus 2006. If you spend any time watching or reading the news, you know that there has been very little indication that these numbers will improves anytime soon.

Help for Troubled Borrowers

With so many people in our country potentially facing unmanageable mortgage payments due to their subprime mortgages resetting to higher rates, troubled borrowers may be able to find relief from an initiative announced by President George W. Bush on December 6, 2007. The "Hope Now Alliance" is a cooperative effort between the United States government, counselors, investors, and lenders to help homeowners who may not be able to pay their mortgages due to escalating interest rates or other reasons. The most significant aspect of the initiative is an interest rate freeze that may give some borrowers unable to cope financially with the adjusting interest rates the time to work out a solution.

Hope Now Initiative

The most important thing you need to do if you are facing these issues, is to acknowledge the problem as quickly as possible and start the process of seeking a solution immediately, before it is too late. The following steps and recommendations provides some useful guidance for troubled borrowers who may be able to take advantage of the "Hope Now" initiative and gain the necessary assistance to prevent foreclosure or bankruptcy.

Eligibility

The initiative applies ONLY to homeowners with purchase-money mortgages; NOT home equity loans. In other words, if you refinanced since your original home purchase, you are out of luck. Additionally, borrowers must have secured their financing during the "height" of the housing boom, defined by the initiative as between January 1, 2005, and July 31, 2007. Home owners are eligible for the initiative if they are current and expect to stay current after the rate resets, but are looking for a more appropriate loan; if they are current but face possible default due to the rate reset; or, if they are in default prior to the rate reset.

In Summary

The Hope Now initiative was not designed to simply bail out those who irresponsibly took out a mortgage they could not afford. According to President Bush, "There are some responsible home owners who can avoid foreclosure with some assistance". While clearly many of these problems may have been "self-inflicted" by people who were looking to make a fast dollar or given misleading information, the effect of the entire subprime fiasco on our economy is a problem that affects us all. Understanding what you can do to minimize the fallout while learning from your (or others) mistakes is certainly valuable information. If you feel you are in jeopardy of being able to meet your mortgage payment commitments, the most important thing is to be proactive, and start the process of seeking a solution as soon as possible; there is help out there!

For more information, visit www.hopenow.com

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