Word: loan
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...most important thing is to call your mortgage servicer--which may not be the outfit that made the loan--and talk to the loss-mitigation department as soon as you sense trouble. The more temporary the help you seek--a forbearance, say--the more likely you are to get it. Lenders prefer workouts to foreclosure, but attitude is key. "It's not easy to be polite when you feel dragged through the mud, but this is an art, not a science," says Scott Thompson, president of the realty group Mortgage Resolution Services. If you seek relief for an investment property...
Borrowers could refinance their mortgages with fixed-rate loans under a cautious remedy proposed by Bush on Aug. 31. But this will apply to only the 80,000 who have 3% equity in their home and can prove their original loan was being repaid until it was reset...
Later this month, the Fed could cut interest rates, which would lower payments for those struggling to pay their adjustable-rate mortgages. The Fed has issued guidance urging loan-service companies to work with borrowers who are in danger of default...
...last big mortgage debacle, the savings-and-loan crisis, was made mostly in Washington. The S&Ls were required by law to borrow short (via savings deposits) and lend long (via 30-year, fixed-rate mortgages). When that led to big losses in the inflation-racked early 1980s, Congress encouraged thrifts to grow their way out of trouble, in part by financing commercial real estate, with disastrous results...
These firms face little of the interest-rate risk that bedeviled S&Ls. And they can shove most of the credit risk--the chance that a loan will go bad--onto the buyers of their mortgages. As a result, investors were initially willing to purchase only the lowest-risk loans--the good-credit, 20%-down variety. Fannie and Freddie still do that because they're required to by law. But in the past few years, private investors looking for higher returns began pouring money into iffier loans, underestimating the danger...