Indiana/Ohio Mortgage Lender Reveals Gaping Holes in New Mortgage Relief Plan - Offers Alternatives

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Last week President Bush announced the new mortgage relief plan for borrowers trapped in high- risk adjustable rate subprime mortgages. The approval was granted last week in an effort to slow down the subprime mortgage market implosion. Legacy Financial Services' President, Cameron Moss, has reviewed this new plan and wants to ensure homeowners and borrowers know the facts and have a place to turn for answers and assistance.

Last week President Bush announced the new mortgage relief plan for borrowers trapped in high- risk adjustable rate subprime mortgages. The approval was granted last week in an effort to slow down the subprime mortgage market implosion. Legacy Financial Services' President, Cameron Moss, has reviewed this new plan and wants to ensure homeowners and borrowers know the facts and have a place to turn for answers and assistance.

At first glance this new plan would appear to be a gift from the heavens for borrowers facing eye-popping interest rate increases. Based on the government plan's initial qualification parameters, however, this plan will only serve a small fraction of the borrowers "stuck" in these high-risk subprime loans.

First, the plan will only help homeowners who have 3% or less equity in their home. Granted, this will assist homeowners who purchased their homes recently with no down payment, otherwise known as 100% financing. What about those buyers who bought last year? In most markets nationwide, the average rate of appreciation on a home is between 3-4%. What this means is that if you have owned your home for 1 year or more, you would fall outside of this relief plan.

Secondly, borrowers will need to prove that they were able to afford their house payment before their adjustment and also prove that the interest rate increase will cause them to fall behind on their mortgage payments. This will be very tough to prove because many are already struggling to keep up with their payments because of the higher interest rates that are common with subprime loans.

Furthermore, this plan ignores the fact that many of these homeowners accumulate unwanted and dangerous credit card debt in an effort to stay afloat with their mortgage payments. So, if they do qualify for this mortgage relief plan, did they really gain anything other than a delay of the inevitable?

The best opportunity for these unfortunate homeowners is to have congress step up and vote "yes" on Bush's second initiative to raise the government insured loan limits. Government insured loans are much more stable and have substantially lower interest rates than sub-prime loans. If congress can agree to pass this proposal, then homeowners will truly benefit by virtue of their improved cash flow.

Legacy Financial Services and Legacy Mortgage Group offers homeowners a broad set of refinancing solutions to homeowners struggling with their adjustable rate mortgages - both inside and outside of the FHA programs. We have done the work and have the expertise to have been certified as a fully FHA Approved lender. For Ohio and Indiana homeowners who are struggling, we are here to help.

About the Author: Cameron Moss is a Nationally Recognized Mortgage Expert and President of Legacy Financial Services, Inc, in Batesville, IN. He is also a Founding Member of NARLO - the National Association of Responsible Loan Officer; he serves on NARLO's Board of Directors and NARLO's Ethics Committee. If you would like additional information regarding this proposed new loan initiative, you can e-mail cameron(at)cameronstips.com or visit http://www.indianaloantips.com/bailout to access free consumer awareness information and special reports. Cameron can also be reached at 812-932-5626.

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Joseph Miramonti

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