Since yesterday’s announcement of the government’s mortgage bailout plan I have received numerous phone calls from distressed home owners asking if this plan will allow them to keep their homes and avoid foreclosure.  The short answer to that question is “maybe”, but for the majority of homeowners considering a Short Sale the answer is “probably not”. 

There have been many news accounts of the plan that was presented yesterday.  You would be hard pressed not to be able to find an accurate reporting of the announcement in your local newspaper today or on any of the major internet news websites, but the bottom line is that only a very small and specific subset of those facing foreclosure will be helped by this plan.

Those eligible for relief under this plan are subprime borrowers who financed their homes with Adjustable Rate Mortgages (ARMS) between January 1, 2005 and July 31, 2007 and be facing a rate reset on their ARM between January 1, 2008 and July 31, 2010.  If you meet these guidelines you may qualify to have your current interest rate frozen at its current level for up to 5 years.  The big disclaimer here is that if you have an ARM that would qualify, you also must not be able to afford your mortgage if the rate were to reset in accordance with your original mortgage program.

There are several things this plan does not do.  It does not lower the rate that a borrower currently pays.  It does not offer assistance to people who cannot meet their current mortgage obligations.  This bailout plan also does not apply to investment properties; it only applies to owner occupied homes.

Unfortunately the biggest disappointment in this plan is that it does not affect those facing the loss of their home to foreclosure due to life changing hardships including death, serious illness, divorce, and job loss.  Fortunately, for many of those affected by these misfortunes, a Short Sale solution remains a possibility.

Do you qualify for a Short Sale in the Dallas / Fort Worth area?  Need to speak with a Short Sale Specialist?  Please email or call today for more information. I will be happy to schedule a consultation so that we can get started on helping you move forward.