Mortgage Foreclosure & Refinance Resource

Today, Treasury Secretary Henry Paulson, with the support of President George W. Bush, unveiled a plan to aid some of the mortgage holders survive the jump in their ARM mortgages.

To qualify under the bailout,

• The loan must have been issued sometime between Jan. 1, 2005 and July 31, 2007
• You need to be facing a reset of your interest rate sometime between Jan. 1, 2008 and July 31, 2010.
• If you’re well enough off that you can afford the higher mortgage payments after a reset, you won’t qualify.
• If you’re in bad enough shape that you can’t handle the current low interest rate, you won’t qualify. If you’ve already fallen behind on your mortgage payments, you’re not eligible for the rate freeze.
• The plan excludes people who don’t live in the homes for which they have mortgages so that speculators can’t benefit.

Parallel the announcement of the bailout, the Mortgage Bankers Assn. said that foreclosures had reached a record high in the third quarter. The share of mortgages that have entered foreclosure hit 0.78% in the quarter, up from the previous high of 0.65% set in the previous quarter. At the same time, delinquencies for all mortgages rose to 5.59%, from 5.12%, in the second quarter. As noted above, none of the people who are delinquent or facing foreclosure will be helped by the plan.

If homeowners are going to pay less on their mortgages than originally planned, then somebody is going to lose money. Not just the big Wall Street banks —although many such firms have invested in these securities—they’re also pension funds for teachers, firemen, and police, as well as mutual funds whose clients include all sorts of individual investors. They probably even include homeowners who are facing the prospect of higher payments on their adjustable-rate mortgages.