Real Estate Facts: Avoid Foreclosure

542 Words

Realtors build communities in part by expanding homeownership opportunities and getting people into homes of their own. Those are noble goals, but helping homeowners stay in their homes is also important to sustain those communities.

[Full name and title of local board/association president/spokesperson] explained that in this marketplace of rising mortgage delinquencies and foreclosures, that goal can be challenging, to say the least.

Over the past few years, lenders invented new types of mortgages to help families buy their first home and refinance their existing mortgage. Many of those mortgages helped families without cash for a down payment, or with less-than-perfect credit, qualify for loans known as “subprime” loans.

Subprime loans have a higher interest rate and higher costs, such as prepayment penalties. In recent years, a very popular, widely available mortgage product was the hybrid adjustable-rate mortgage (ARM). Hybrid ARMs have an initial period with a lower interest rate (“teaser rate”) followed by significant increases over the remainder of the loan.
A growing number of borrowers with hybrid ARMs and other nontraditional forms of loans are seeing monthly payments jump beyond their means. With overall credit markets tightening, refinancing can be difficult but there is hope, according to [spokesperson’s last name]....

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