Help for California Subprime Borrowers... Maybe... Maybe Not.

On Tuesday Governor Arnold Schwarzeneggar's office issued a press release stating that the Governor had set up a deal with Countrywide, GMAC, Littonand HomEq to help subprime borrowers who are in trouble avoid selling their homes or winding up in foreclosure. These four account for 25% of the subprime mortgage loans. The question will be whether or not these lenders cover enough loans to help California borrowers facing foreclosure or if it is just another government deal that sounds good but is really a lot of smoke and mirrors.

I couldn't find any concrete information. One piece of information I read said that in order to qualify borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate. I had a lot of questions and couldn't find answers. I was curious if you had to be current on your payments. Should you contact your lender ( if it is one of these four) before your payment increases? Would this program work if you have refinanced?

However the Modesto Bee has a story that says the Governator may well be blowing smoke and that no one agreed to anything that was new or groundbreaking. The Bee has quotes from all four lenders who say they didn't make an agreement with the Governor. The plan being touted by the Governor is simply what they have been doing for months in an effort to help their clients who may be in trouble avoid foreclosure.

As Mama used to say... somethin' smells real bad....someone isn't telling the whole truth and nothing but the truth. Guess we'll have to wait for next week to find out the rest of the story.

In the meantime here is a little good advice... If you know your loan is going to reset and you can't make the payment call your lender immediately. You may have to wait on hold for a long time or repeat the same story over and over but be patient. If you persevere you will find the right person and you might be able to work out something with the lender. Don't wait until you get into big trouble to contact your lender.

You might also check out these sites:

The "HOPE Hotline" (1-888-995-HOPE or http://www.995hope.org/), which provides free mortgage counseling 24 hours a day, seven days a week.

A website with helpful information for prospective homebuyers, as well as homeowners who are experiencing difficulty in keeping payments current: http://www.yourhome.ca.gov/ and the Spanish language version: http://www.sucasa.ca.gov/.