Rate freeze: Most won’t get help

At the same time it was announced that mortgage foreclosures are at an all-time high, President Bush unveiled a new plan (Hope Now) to help people with subprime loans to keep their homes. The plan as outlined would help approximately 1.2 million homeowners by freezing their introductory teaser interest rates for five years.

The problem began when millions of people bought homes with low starter interest rates, believing that the value of the homes would rise, allowing them to refinance. The reality is that the housing market has tanked and many homes aren’t worth what people paid for them, making refinancing impossible, just as all those interest rates are due to reset to much higher amounts.

Very few will actually be able to take advantage of the five-year interest rate freeze, however. The Center for Responsible Lending estimates that of the 1.2 million homeowners targeted for assistance, only 145,000 will actually qualify because of the strict guidelines.

Those with subprime loans have been asked to call 1-888-995-HOPE to speak with counselors “24 hours a day, 7 days a week” to get started on the paperwork for having their interest rates frozen for five years.

Here’s what happens when you call:

If you want information on foreclosure, they will talk to you.

If you want to learn more about the rate freeze, you’ll be told to call your lender.

You qualify for the rate freeze if:

• You have bad credit but are current on your payments, and you live in the house.

• Your mortgage was taken out between Jan. 1, 2005 and July 31, 2007, and if the interest rate is set to rise between Jan. 1, 2008, and July 31, 2010.

You do not qualify for the rate freeze if:

• You have good credit but are in danger of falling behind on your payments.

• You have equity.

• You have a traditional ARM, no matter how high the rate will go when it resets.

• You have bad credit and are behind on your payments.

• Your interest rate already reset.

• You don’t live in the house.

• You already refinanced.

The HOPE program is voluntary. Your lender doesn’t have to agree to help you with a rate freeze. If you fall behind in payments, the lender can still foreclose.