YOU ASKED, WE ANSWERED: Your Mortgage Questions

Feb. 8, 2008— -- Last week, "World News with Charles Gibson" invited viewers to submit their questions about mortgages. We read all your submissions and picked the most frequently asked questions for an expert to answer.

We sent those questions to a participating member of HOPE NOW, an alliance of mortgage counselors, servicers, investors, and other market participants. The organization reaches out to homeowners in danger of foreclosure, to provide a unified and coordinated response to help them stay in their homes.

Floyd Robinson answered your questions below. He is president of Consumer Real Estate and Insurance Services Group for Bank of America, a founding member of HOPE NOW.

Bank of America does not originate nor service subprime loans and has one of the lowest foreclosure rates in the nation. As one of the founding members of the HOPE NOW alliance, Bank of America supports efforts to provide awareness of options for homeowners who may be facing foreclosure.

Question: "I have been living in my home for just over 6 years. I am almost 60 years old, and over the last two years, I have had to have both knees replaced and an eye removed. I try very hard to pay everything but for some reason the money does not stretch far enough. My home is in foreclosure right now and I was wondering what to do. I keep getting these things in the mail telling me they will save my home. I guess I would like to know if there is an agency out there to help or should I just give it up and live in my car. Please if you anyway to help me I sure would be in your dept forever. God bless you and thank your for taking the time to read this."

Carol in New York

Floyd Robinson: The first thing you should do is attempt to communicate with your servicer. The servicer is a lender or company that is responsible for handling your loan payments.They also pursue foreclosures when a borrower stops making their payments. Because of the time and expense of foreclosing, while there are not promises, they may be willing to work with you on a repayment plan, or loan modification. Some foreclosure prevention solicitors attempt to assist borrowers and work with lenders. Sadly, many others do not, and there are many news reports of unscrupulous solicitors who are targeting borrowers with various schemes. We advise you to only discuss information with your mortgage servicer or a reputable mortgage counselor. For information on approved mortgage counselors, or to do discuss your specific mortgage situation with an approved counselor, you can contact HOPE NOW hotline at 1.888.995.HOPE.

Question: "I am a 32 year old single mother of two boys, 4 and 5 years of age. In my 2005 divorce settlement, I got the title to our 5 bedroom home in New Boston, NH which was purchased in 2001 for $199,00.00. The current outstanding debt is $260,000.00, $30,000.00 of which is a home equity loan. I put the house on the market in April of 2007 for $295,000.00 at my realtor's suggestion. With the co-signatures of my parents, I was able to purchase in August of 2007 another home in Manchester, NH where I am a 2nd grade teacher. The house in New Boston has not sold and I am facing forclosure or an extremely short sale to an "investor". In October I accepted an offer of $255,000.00 which, because it was a short sale required the approval of my mortgage company. I did not hear from the mortgage company in a timely manner and the buyers backed out. The property was in mint condition and unfortunately this past week my propane heating system did not turn on and the pipes froze and burst. There is significant water damage to the house. My insurance company is not sure that I will be covered, although I have kept the house up. I am at a loss as to what to do and heard about your "kitchen table" segment and offer of help/advice. What is best for me — a short sale (in the $200,000.00 range or less) or foreclosure? Should I get an attorney? Should I sell "as is" or try to get reimbursement from the insurance company and do the repairs? My contract with my real estate agent has run out. Thank you in advance for any help you can give me. I truly am at a loss."

Elisabeth in New Hampshire

Floyd Robinson: Many homeowners across America are facing issues affecting their ability to make their mortgage payments. The most important thing you can do is to contact your loan servicer as soon as possible and provide detailed information about your financial situation. The loan servicer is a lender or company that is responsible for handling your loan payments. A short sale occurs when the lender will accept less than the full amount due on a mortgage when a property is sold. Sometimes, the lender will accept the short sale to avoid the time and expense of a foreclosure. While short sales can be a cumbersome process and require patience, they are often preferable to foreclosures.

Question: "My question is I refinance my home in 2005. The interest is 6.8 Adjustable rate that will be going up this Oct 2008. I need to know what should I do? My credit report is not good. So I don't know how to get out of this adjustable rate. If you have any suggesting please to advise me."

Naomi in Hawaii

Floyd Robinson: The recent decreases in mortgage rates are providing opportunities for homeowners looking to refinance. Available rates may be dependent on the loan type, loan term and your credit history. You may want to consult a professional mortgage advisor about the opportunities to refinance into a different mortgage program, which would suit your long-term needs and provide greater security. When comparing rates, make sure to look at the APR. The APR, or Annual Percentage Rate, includes the cost of the interest rate as well as other loan closing costs so that you can see the true cost of credit and compare apples to apples when you shop for a refinance loan.

Question: "Hi I have a house in New Mexico and have to change to a fixed rate mortgage. I live in New Jersey. How do I chose a reputable mortgage company and do I have to pay to refinance. I almost lost the house to forclosure but saved it. I only have a few more months before they raise my mortgage. Help. I am on disabilty payments and don't know what to do. Please help me."

Nancy in New Jersey

Floyd Robinson: Choosing a mortgage company that you can trust is certainly the best first step to evaluating your alternatives regarding a possible refinance of your mortgage. As in any mortgage situation, it is important to carefully evaluate the reputation and service expertise of your mortgage servicer. Organizations such as Freddie Mac publish lists of servicers who have been recognized for their excellence in serving their customers.

Question: "I am 35 and in the process of building a home at a cost of approximately $180,000. I have a fixed rate at 9.25%. It was 100% financing with $3000 down. Will this arrangement cause me problems in the future and when should I refinance for a lower rate?"

Ann in Louisiana

Floyd Robinson: In today's market the options for 100 percent financing are limited. Many lenders have tightened credit and reduced the amounts they lend due to declining property values. You may want to consider an FHA or VA loan, or contact a neighborhood housing organization that works with various lenders, to consider loan programs that may provide full financing.

Question: "I am a married mother of a 2 1/2 year old girl. We live in a 1 family home in a modest part of CT. After purchasing my home, we ran into financial difficulties, I had a baby, & my husband was out of work for some time. We went through all of our savings and I refinanced my home when the market was good to repay some debts I had. Now I am stuck in a mortgage that I cannot pay, the house is now worth less than what I owe. I have been in contact with my mortgage company and filled out a hardship package. It has been 3 weeks and I have not heard from them. I asked if they would be able to lower my interest rate from the 10.3% I am paying now or waive the pre-payment penalty so I can refinance at a lower rate with a strong co-signer. I was told about the pre payment penalty at the closing not before, and when I questioned it they told me it was the only way I can obtain a loan. Well here it is, havent heard anything, I am being forced to file bankrupcy, I needed the credit cards to buy food, clothing and medical care for my family, because every bit of money went towards the mortgage first. My husband is currently working in which I am grateful for, but it is not enough to live on. I work from home part time, and have actively looking for full time employment, but there are no jobs, and what is out there is not enough for me to actually make a profit after sending my daughter to day care. I am literally sick to my stomach. I am running out of options and am so nervous, I cannot eat or sleep. I just wonder how are we going to make it next month. It is a horrible way to live when you have to cut down on buying food, having trouble paying for an oil delivery,etc.etc.etc. That is my story, and I was really happy to see that lovely family get the help they deserve. Thank you."

Alyse in Conn.Floyd Robinson: Contacting your mortgage servicer as soon as you believe you may have difficulty making future payments is the quickest avenue to providing some relief. If you do not believe your mortgage service company is adequately responding to your needs, I encourage to you to be persistent and insist on escalating the matter to executive management at your servicer. Remember, no one wins in a foreclosure situation. Make a detailed list of all your expenses and income so your servicer understands the complete situation. It is in the best interest of your servicer to resolve your mortgage issue with an appropriate solution.