Are the Foreclosure Vultures beginning to gather around your house?

I was talking to a mortgage broker on Saturday who told me that phone activity is up. Unfortunately the people calling are in trouble, their ARM mortgage is getting ready to reset and they need to refinance.

Sadly, they have waited too long to address the situation. A year ago, their income, FICO score, and debt were pretty much the same as they are today. However, the value of their home has dropped and credit guidelines have tightened even more.

Don, the mortgage broker, told me that 18 months ago he could have financed 95 out of 100 loans that came into his office. Now the numbers are reversed – 5 out of a hundred because the other 95 are desperate refi deals.

Is there any hope for people in this situation? We read articles in the paper and online about how the big lenders are pitching in to help but situations like this one and this one show that what is actually happening is not in line with the corporate press releases.

I read a post this morning that suggested homeowners in trouble consider renting out a room to generate additional cash flow to help with the increased mortgage payment until home values begin to rise again.

Others are suggesting having family and friends help with short-term bridge loans or loans that involve future equity appreciation.

As Don said, one scenario that is probably not going to manifest is a homeowner in trouble that has $50K to $100K cash in the bank to refinance a home that has lost that much in value.

The overall consensus that we read on the governments assistance programs is – too little, too late for too few.

A new program – The HomeOwner Rescue Alliance – hopes to help homeowners by interceding on their behalf with the lending institutions. As I understand it, the idea is that one entity, the HRA, will be able to broker more effectively with the banks because they will walk in with a collection of situations and not just one. Check out the HRA and the dates of their upcoming public workshops here.