Beleaguered Homeowners Get Housing Help

Homeowners are struggling to survive as their adjustable-rate mortgage payments are on the rise. Help is out there for the thousands of homeowners who've been put into mortgages that they can't afford.

In Greek mythology, Atlas was ordered to carry the sky on his shoulders as a punishment for betraying the Gods. In the modern era, many homeowners are stuck carrying an equally impossible weight, but they've done little to deserve the sentence. Thankfully, non-profits and state-run programs are working hard to alleviate the pressure.

American Dream becomes a nightmare

When the mortgage industry was booming, almost anyone could get a home loan. Looking back, it's clear that many lenders didn't do a good job ensuring that their clients understood the details of the mortgage that they were taking on. Those homeowners have since learned that they've been slipped a sour substitute for the American Dream. Teaser rates, initial fixed rates, and interest-only periods have expired. They've been replaced with higher payments, set to go up even more, and principal balances that are dangerously close to exceeding the value of the underlying property itself.

Making things worse is lenders' reluctance to offer these strapped homeowners what they desperately need: a mortgage refinance with more affordable terms. The credit crunch has made lenders more conservative than ever, at a time when a little flexibility might be everyone's best option.

Help is on the way

Government agencies and non-profits are recognizing the need to step in and help beleaguered homeowners. Some groups provide debt counseling and assistance with lender negotiations, with the ultimate goal being to refinance oppressive mortgages into something more affordable. Other groups offer competitively priced mortgage refinancing programs, designed specifically for subprime borrowers.

The Neighborhood Assistance Corporation of America (NACA) (link: www.naca.com), for example, has a no-fee refinancing program that carries a low, fixed interest rate. NACA's qualification standards are based on character traits, with less emphasis on credit history. Another group, Homeowner's HOPE (888-995-HOPE, 24 hours a day), provides free counseling and assistance to help homeowners avoid foreclosure. The Ohio and New York state governments are helping, as well. Ohio's "Opportunity Loan" program refinances adjustable-rate mortgages into more stable and less expensive 30-year fixed loans. Opportunity Loan can also arrange for second mortgages to help with the closing costs and counseling to head off future problems. New York's program is called "Keep the Dream." It assists homeowners in refinancing into low-rate 30- and 40-year fixed mortgages.

These assistance programs are primarily targeted to adjustable-rate borrowers who aren't able to refinance to a fixed-rate loan on their own. Eligibility requirements include the demonstration of an existing or impending mortgage hardship. In the current state of affairs, there's no shortage of eligible borrowers. Tens of thousands of homeowners have contacted NACA, HOPE, and similar programs, looking for a way out from under the crushing weight of an over-priced mortgage. At last, a ray of hope is beginning to shine.

By:Catherine Brock