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Congress’s bailout plan gives the Secretary of the Treasury the authority to develop a plan to purchase mortgages from distressed homeowners, but it stops short of establishing specific processes and guidelines for the strategy to be implemented. We believe that the best solution would be for financial institutions to actively re-write mortgages as 30-, 40- or 50-year fixed-rate loans, as appropriate to the homeowner’s circumstances. Obviously, significant eligibility criteria will need to be considered within such a plan government funded mortgage programs can only do so much. Therefore, it is in the country’s best interests that the public and private sectors collaborate as to how an initiative like Home Sweet Home can be implemented. While participation in the program will result in increased costs to consumers over the lifetime of the loan, many homeowners would certainly be willing to pay more in the long-term in exchange for financial stability today.

The lending industry has already witnessed the consumer’s willingness to accept higher overall costs in exchange for lower monthly payments, ironically enough through the wide popularity of both ARM and hybrid products. The benefit of restructuring through this initiative is that government loans would require the lower monthly payment to be locked in – allowing for predictable budgets over the term of the loan. In addition, crystal clear disclosures, an uncommon occurrence in today’s lending climate, would detail the terms of the restructured loan in easily understandable language. Most important, millions of Americans would be able to remain in their homes and resume their place in the economic system as productive consumers.