How To Stop Foreclosure On a Variable Rate Mortgage

Many loans were, and still are, written using a variable interest rate mortgage. This is a mortgage that remains fixed for a few years, and then adjusts (usually higher) based on a certain financial market. Many of these mortgages can adjust up to 2% every year! These loans start at a lower interest rate, but once they begin to adjust, they become unaffordable very quickly. Mortgage brokers and agent have tricked homeowners into these mortgages by saying they will refinance them as soon as the mortgage starts to adjust.

In theory, this concept works, but the problem is, when the real estate market takes a turn for the worse, it eliminates the equity needed for many people to refinance. The borrowers credit may also prohibit them from refinancing at a later point. Because these lenders prey on borrowers with sub par credit scores, their chances of improving their credit and qualifying for a better loan are very small This causes these borrowers to be stuck in a loan that continues to increase and the payments become impossible to make.

Unscrupulous lenders also use their own appraisers, who add to this problem with inflated appraisals. Appraisers almost always get the majority of their business from loan brokers and real estate agents, and like any service oriented company, they feel the need to keep their clients happy. In a refinance, a higher value means a better loan for the borrower. Many brokers need the appraisal to come back at a certain amount in order to be approved, and the more LTV (Loan To Value) a property has, the better the terms of the loan will be. This causes the mortgage brokers to demand the highest possible appraisal from their appraisal company. If the company can't provide the best appraisal, they they will find one that will return the values they need. This, coupled with a soft real estate market, is causing millions of homeowners to be completely upside down in their houses, and when a home has negative equity, it can't be refinanced.

When a home owner is in a mortgage that can't be refinanced, and an interest rate that increases on a regular basis, a foreclosure is almost inevitable.

Homeowners caught in this type of situation can fight back. If you feel your lender has misled you, or if your appraisal was higher than the property was worth, then it's time to fight back!

Here are a few key reasons you may have to fight against your lender:

Appraisal seemed too high for the property
Loan agent said one thing, but made you sign something different
Documents were not properly explained or you were rushed through the closing
Loan agent promised to refinance if the rate increased
You felt pressured into a loan you didn't fully understand
You were asked to falsify statements or documents to prove your income

If you feel like you are a victim of your lender, then you need to get help immediately. We see many cases like this every year and lenders can be forced to provide a new affordable mortgage. Even if the foreclosure process has already started, help is available. A local attorney who specializes in mortgages would be a good choice if you want to work with someone face to face, or companies like ours, who specialize in foreclosure assistance with the lenders can provide help nationwide. No matter what you do, make sure you get help immediately before you lose your home because of a wrongful foreclosure.