Maryland Mortgage Initiative Could Save Troubled Borrowers

By Richard Barrington
Local Lender Columnist
May 1, 2008
Borrowers with variable mortgage payments have been most susceptible to falling behind on their loans, as sudden increases in monthly payments can make it impossible for some home owners to keep up. A new Maryland initiative for borrowers with adjustable-rate mortgages should help.

Like the rest of the nation, Maryland has experienced a spike in mortgage foreclosures, with most of the state's activity concentrated in Prince George's County. While the federal government is moving to assist troubled borrowers, Maryland is taking additional steps on the state level.

Maryland to the Rescue

The Maryland initiative starts with information. Mortgage lenders are being required to provide the state with the names of Maryland borrowers with adjustable-rate mortgages that are due to reset upward.

This information will allow the state to reach out to those borrowers with information about alternatives to foreclosure, including a Maryland program that provides zero percent gap loans for some troubled borrowers. The gap loan program is called the "Bridge to Hope Loan Program."

Buying Time to Refinance

Ultimately what the Maryland initiative boils down to is buying borrowers some time to refinance or restructure their loans. The six major lenders participating in a new federal program called Project Lifeline also give borrowers time to refinance by stopping the clock on foreclosures for 30 days and giving viable homeowners a chance to restructure or refinance their mortgages.

This opportunity to refinance is timely, because mortgage rates have trended significantly lower over the past several months. Restructuring -- typically, spreading the loan out over a longer time period -- can also help, but refinancing at a lower mortgage rate is what can really save homeowners some money.

Of course, along with the opportunity to lower interest rates, refinancing at a fixed rate will help borrowers add some stability to their budgets -- a move that could prevent future troubles.

Source:
Washington Business Journal

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.