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Rescue Programs for Homeowners

If you find yourself facing foreclosure, these programs may be able to help

By John Morell, FrontDoor.com | Published: 12/01/2008

Finding yourself in the foreclosure process is a horrible experience. There are certified letters from your mortgage company that you don't want to open, calls from bill collectors that you don't want to answer and knocks on the door from strangers who want to buy your house.

But don't think you're alone. In the last two years, 2.7 million homes have been foreclosed, according to the U.S. Treasury Department, marking an increase of 150 percent over the previous two years. If you find yourself in trouble or even if it looks like you're headed in that direction, take action now. Here is a list of organizations and programs that can help:

Association of Community Organizations for Reform Now: ACORN has worked as a group against subprime loans for years and for a 90-day moratorium on foreclosures to help troubled homeowners. People having mortgage problems can call them for help and counseling.

The Catch: None.

How to Contact: 866-67-ACORN

Bank of America/Countrywide Homeownership Retention Program: If you have a subprime loan with Countrywide Financial that originated before December 2007, you may be eligible for a loan modification that can include a freezing or a reduction of the interest rate, a reduction of the amount owed or assistance in refinancing into a conventional loan. Late fees and prepayment penalties are also waived during the modification process. Foreclosures on these mortgages will be delayed to see if the homeowner qualifies for the program.

The Catch: None, as long as you have a qualifying Countrywide loan.

How to Contact: Call 800-669-6607.

FHASecure: Created to help homeowners stuck with option adjustable rate mortgages and other non-FHA loans, this program helps people who may be upside down or behind on their payments to refinance into a conventional 30-year FHA mortgage. In the past, homeowners who had late mortgage payments had no hope of refinancing or had to take subprime loans with exorbitant interest rates. This programs allows them to get a regular mortgage at market rates.

The Catch: If your home doesn't have enough equity to cover refinancing costs or if the loan you need exceeds the FHA limit for your area, you may need to receive a second mortgage from the lender to cover the difference.

How to Contact: Call your lender to ask about your eligibility.

HOPE for Homeowners: This FHA program started in October is designed to help troubled property owners refinance into more affordable 30- or 40-year conventional mortgages. After the appraisal, which is likely to be less than the appraisal you may have had a few years ago, your "H4H" mortgage will pay up to 96.5 percent of your home's value. The participating lender agrees to write off the older inflated appraisal. You receive current market interest rates and the new loan covers all previous first, second or home equity loans you had on the property.

The Catch: You can't take out a second mortgage for five years except for emergency repairs. The FHA also shares a portion of the equity when you sell or refinance out of the loan.

How to Contact: Call and ask your lender about your eligibility.

Hope Now: An alliance of lenders and community groups formed Hope Now to reach homeowners in trouble, since many people going through the foreclosure process will "circle the wagons" and avoid the mail, phone calls and people ringing their door bell. Hope Now tries to make a connection between homeowners and their mortgage companies to ease them through the loan workout process and avoid a foreclosure sale. They also sponsor education events around the United States where you can seek help face-to-face with a loan counselor.

The Catch: None, the program is designed to help people mired in the mortgage default stage to work out a better situation with their lender.

How to Contact: Call 888-995-HOPE.

National Association of Consumer Bankruptcy Attorneys: If credit counseling doesn't work, your financial situation is worsening and your lender won't return calls with your foreclosure sale looming just ahead, it's probably time to talk to a lawyer. This group can direct you to a nearby attorney and also has information about the bankruptcy process.

The Catch: None, many bankruptcy attorneys don't charge for their initial appointment so you can get a good look at where you stand legally in your effort to save your home.

How to Contact: www.nacba.org

National Foundation for Credit Counseling: You'll find that this group's website, www.housinghelpnow.org, has a comprehensive, step-by-step guide showing what to do and what your options are if you're having trouble paying your mortgage. It also features a page alerting you to the latest foreclosure scams.

The Catch: None, they give you a good overview of what can be done to prevent foreclosure.

How to Contact: Call 866-845-2227 to speak with a housing counselor.

GO TO: Foreclosure Guide

Read the Top 10 Things to Expect in the Housing Market in 2009:

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