Black MBA - Fall 2008 - (Page 38)

FEATURE Is the Middle Class Disappearing? balloon payments are due, Chambers says. With most adjustable rate mortgages, balloon payments are payable about five years after the mortgage begins. Chambers suggests changing to a 15- or 30-year mortgage with a fixed rate. Federal Reserve Chairman Ben S. Bernanke, in a March speech to the Independent Community Bankers of America at its annual conference in Orlando, Fla., discussed the impact of the mortgage crisis and some remedies offered by the federal government. “The FHASecure plan, which the Federal Housing Administration announced late last summer, offers qualified borrowers who are delinquent because of an interest rate reset the opportunity to refinance into an FHA-insured mortgage,” Explore Loan Workout Solutions with Your Lender If you can keep your mortgage current, do so. But if you are unable to make your mortgage payments, you might qualify for a loan workout option. Check with your lender to see which option may be available. Some options may not apply to your loan if it is not insured by the FHA. If your problem is temporary, call your lender to discuss these possibilities: • Reinstatement: Your lender is always willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option. • Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time. The money might come from a hiring bonus, investment, insurance settlement or tax refund. • Repayment plan: You may be able to get an agreement to resume making your regular monthly payments, plus a portion of the past due payments each month until you are caught up. If it appears that your situation is long-term or will permanently affect your ability to bring your account current, call your lender to discuss options: • Mortgage modification: If you can make payments on your loan but don’t have enough money to bring your account current, or you can’t afford your current payment, your lender may be able to change the terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways: • Adding the missed payments to the existing loan balance. • Changing the interest rate, including making an adjustable rate into a fixed rate. • Extending the number of years you have to repay. • Partial Claim: If your mortgage is insured, your lender might help you get a one-time interest-free loan from your mortgage guarantor to bring your account current. You may be allowed to wait several years before repaying this loan. You qualify for an FHA partial claim if: • Your loan is between four and 12 months delinquent. • You are able to begin making full mortgage payments again. When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must sign a promissory note, and a lien will be placed on your property until the promissory note is paid in full. The promissory note is interest-free and is due when you pay off the first mortgage or when you sell the property. Bernanke says. Congress has temporarily increased the maximum loan value eligible for FHA insurance, which should allow more borrowers, particularly those in communities with higher-priced homes, to qualify for this program and to be eligible for refinancing into FHA-insured loans more generally, he says. In cases where refinancing is not possible, the next best solution may often be some type of loss-mitigation arrangement between the lender and the distressed borrower, Bernanke says. Ward says that for most homeowners, the first option considered is refinancing the mortgage at lower rates. “But in cases where they may have had an interest-only loan, even refinanced amounts are a challenge because they are faced with mortgage rates much higher than the originally low interest rate,” he says. DISPROPORTIONATE EFFECT ON BLACKS Dorothy Hicks, a 75-year-old retired nurse in Oakland, Calif., had been in her home for almost 40 years and was about to lose it before she got help with refinancing. Her mortgage problem was not related to a new purchase, but a refinancing that she hoped would help open up more opportunities. “I refinanced my house to get enough money to start a business to sell school uniforms,” she says. “I was supposed to get $50,000, but I ended up with only $37,000. They were telling me I had to take care of this and that.” But the bigger problem was the interest rate. “I always told them I wanted a fixed rate. Then the payments started to grow. I tried to call the mortgage company and they wouldn’t return my calls,” Hicks says. “They wouldn’t even talk to me.” Hicks got help through ACORN, the Association of Community 38 BlackMBA • Fall 2008 • www.nbmbaa.org http://www.nbmbaa.org

Table of Contents Feed for the Digital Edition of Black MBA - Fall 2008

Black MBA - Fall 2008 Contents Online From the Chairman From the President & CEO Up Front Who is Middle Class? Life and Times of the Middle Class Modern Times CEO to CEO: Why Didn’t I Think of That? Pass it Forward 30 Years of Conference NBMBAA Board of Directors Honorary Co-Chairs Conference History Speaker Showcase Industry Theatre NBMBAA Case Competition® Scholarship Winners NBMBAA Chapter Presidents Conference 2009: New Orleans The New Face of Recruitment Part-Time is the Right Time Across the Pond On Campus Board Bound MBAs for the USA Market Reality: Good Tapping Company Resources On the Move Employer Profiles Leading Bias-Free Mentoring Matters Faith in Corporate Circles Mideast Region Steps Up its Game Collegiate Chapters All in the Family How to… International Markets Are You Happy? Survive and Thrive Striking a Balance Advertiser Index In Focus

Black MBA - Fall 2008

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