Tennessee’s Great Save Might Stop Foreclosures
Posted on October 10, 2008
Filed Under Foreclosures |
Many people with adjustable rate loans about to reset are just on the brink of home foreclosure. Some people are able to handle the increasing rates, but just as many are unsure how they will pay their mortgage when the monthly bill gets higher. To help these people and hopefully stop the skyrocketing number of foreclosures, Tennessee is about to launch a new program called “Great Save.”
Under the Great Save program, people with adjustable rate mortgages will be allowed to refinance their homes into 30 year fixed rate mortgages they can afford. The interest rate that will be offered on these new loans will be 5.8 percent, which is lower than most loans being give out in the current market.
The loans will go through the Tennessee Housing Development agency (THDA), which normally does not refinance homes. Normally, they only provide funding for homebuyers, but a new change in federal law has made it possible for them to help struggling homeowners in a different way.
The THDA will be sending out about 2,000 letters to homeowners with adjustable rate mortgages that are soon to reset. These letters will urge these people to consider their options before falling behind on payments. The campaign is intended to catch people who may need the help before they actually get too far behind on payments. They are trying to stop the foreclosure epidemic by preventing the next round of delinquencies from even happening.
These letters contain a very important message to people who may need the program but might put off contacting them. The catch is that the Great Save program will not accept people who have low credit scores, and that includes people who have a dropped score as a result of being behind on the loan they are seeking help for. Therefore, it is extremely important that the homeowners who need help seek the program out before they are behind on payments. It requires some looking ahead and foreseeing problems rather than reacting to a possible foreclosure too late.
Further, the Great Save program will not help people unless they have a down payment or equity in their home. This will eliminate a lot of lower class homeowners who do not have equity and are behind on their payments because they don’t have any money. If they did have money for a down payment to refinance, they likely would not be behind on the payments in the first place.
The program pretty much is going to help those with equity in their homes and wish to refinance to avoid the raise in their adjustable rate loan. Many who truly need the help will not qualify for the program. It is obviously not going to be much help to a lot of people, but for some people it might help stop their home from potentially going into foreclosure or the owners from being forced into a short sell.
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