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President Bush and Secretary of the Treasury Hank Paulson unveiled the government’s ARM freeze proposal today; a measure which could help up to 1.2 million families at risk of foreclosure. Unfortunately, some private groups have set the number of families that qualify at 145,000 due to overly-restrictive qualification guidelines. The plan calls for a 5 year freeze on adjustable rate mortgage and is available for people who:
- Have an adjustable rate mortgage that is set to adjust between January 1, 2008 and July 31, 2010. ARM loans set to adjust before or after that time period are ineligible.
- Have made all of their payments at the low “teaser” rate in a timely manner.
- Have the ARM loan on their primary residence.
- Have a 660 FICO score or below (higher-score ARM-holders are still eligible but will be second priority)
- You hold a 2-year fixed ARM (2/28) or a 3-year fixed ARM (3/27)
For more on the ARM freeze read the great posts on it by thetruthaboutmortgage.com and housingwire.com; news coverage here and here.
It doesn’t seem fair to me that the people who overextended themselves trying to make a quick buck are now getting bailed out. The full extent of this bailout is so small it won’t really have much of an effect on the market anyways, so why even move forward with it? Just my 2 cents. Although my website, http://www.localmortgagequest.com doesn’t help the overextended, it certainly made it easier for them to get and ARM. Oh well…
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