and connected with the Neighborhood Assistance Corporation of America, a nonprofit community advocacy group. “They are helping us save our home due to the type of loan it was,” Antonett says.
Countrywide has agreed to take partial payments. The Joneses borrowed $4,000 from a friend, and a tax refund of $4,000 will go toward meeting the rest of the obligation. Now they’re working on restructuring the loan into a standard 30-year, fixed-rate mortgage. “We’re still not out of the woods,” Antonett says. “But we’re getting close.”
Here are some steps to take if you find yourself in a similar bind:
Negotiate: Remember lenders are hurting too, and they’re more willing to listen now. “There’s a lot of regulatory pressure on lenders not to put people out on the street,” says Guy Cecala, publisher of Inside Mortgage Finance in Bethesda, Maryland.
Restructure: When they modify a loan, lenders will usually tack on missed payments to the end of the loan and extend its life. Ask for more, advises Cecala. “Borrowers should be pressing for a reduction in interest rate and a reduction in the loan balance to reflect the current market price,” he says. “Lenders would never have made such reductions two years ago.”
Face the Music: The sooner you address your inability to pay the mortgage, the better. “If you get beyond 120 days, there are very few options,” notes the Rev. Anthony Evans, president of the National Black Church Initiative in Washington, D.C. At that point, lenders will start foreclosure proceedings.
For more tips from the NBCI and the Mortgage Bankers Association, download the free Foreclosure Prevention Guide from the NBCI Website, www.naltblack church.com. Even if you’re not facing foreclosure, your mortgage payments may be about to balloon if you took an interest-only loan. Loans from 2005 and 2006 will readjust soon after the initial three-year interest period ends. Look into refinancing for a more conventional loan now. (See “Time to Refinance?” Moneywise, this issue.)
Yet, for some, there is a silver lining to the depressed housing market. “It’s not a bad time to buy a home,” says Ed Yardeni, chief investment strategist of Yardeni Research Inc., a provider of investment strategy research in Great Neck, New York. “Interest rates are down and so are prices.”
Karl and Tonya Douglass, both 39, of Columbus, Georgia, took advantage of lower prices to land the home of their dreams.
For close to two years, the couple had their eye on a new loft condo development downtown, a converted cotton mill on the banks of the Chattahoochee River. They planned to spend $800,000, but after numerous construction delays, the Douglasses lost patience and began looking for an alternative.
Then in January, Karl spotted a 5,200-square-foot house with a detached eight-car garage. When he called the real estate agent, he learned that the price had just been lowered to $680,000 from the initial $799,000 price tag. After four months on the market, the owner was eager to sell. “The house was fine, but it was the garage that really drew me in,”