How To Bail Out Of Subprime Loan Mess
As more and more homes are getting into the risk of foreclosure, it becomes even more important to know about strategies to get out of the subprime mess. For the purpose of helping borrowers who had defaulted on their subprime loan payments, there are several programs offered. One such plan called Lifeline was launched by Maryland last year.
According to it, any borrower who has taken an adjustable rate mortgage subprime loan can get his loan refinanced into a fixed rate mortgage loan before the interest rate is reset. Hence, the interest rate on the loan remains fixed at a lower rate for the remaining term of the loan. For this the borrower can approach any of the approved lenders listed on the website of Maryland’s Department of Housing and Community Development.
But, Lifeline is restricted to only certain type of borrowers. To be eligible under this program, the borrower must have a household income not exceeding $126,420 and his loan amount must not exceed $525,000. The interest rate on a 30 year loan under this program is fixed at 6.5 percent and on a 40 year term, the rate is fixed at 6.25 percent.
According to Thomas Perez, who is the secretary for Maryland Department of Labor, Licensing and Regulation, various stringent measures are being implemented to prevent any irresponsible or predatory lending practices so that such crisis can be avoided in future. According to him, there would be tracking procedure to locate mortgage lenders with increased percentage of foreclosure origins. Any such mortgage lender having a disproportionate foreclosure rate would be suspended or his license would be cancelled.
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