HomeSaver May Save Your Home

Not everyone who is having problems making their mortgage payments has loan with lousy terms. Sometimes circumstances occur - illness, temporary job loss, etc. - that cause a borrower to get behind in their monthly home loan payments. If only they could find the money to get current, they could continue to make their regular monthly payments as before and keep their home.

Now there is HomeSaver, developed by Fannie Mae, one of the largest purchasers of home mortgages. Starting April 15, Fannie Mae will authorizes the companies who service their loans (servicers are the folks to whom you write your monthly check) to offer an unsecured personal loan to homeowners who need that one-time help to get current on their loan. The funds can be used to pay past due balances of principal, interest, taxes, insurance, and up to six months (in some cases twelve months) of home owner association fees.

The borrower signs a promissory note for the funds, payable over 15 years at a fixed interest rate of 5 percent. Homeowners can borrow the lesser of $15,000 or 15 percent of the original unpaid loan balance. No payments are required for the first six months nor does interest accrue during that period so the advance is amortized over 14.5 years. There is $600 workout fee. The money is applied directly to pay back the amount in arrears, so the borrower never actually gets the money. These are much better rates and terms than one could get in the “normal” personal loan marketplace.

Mike Quinn, Senior Vice President for Single-Family Credit Risk Management, said "HomeSaver Advance will help Fannie Mae streamline its loss mitigation efforts and offer loan servicers a new way to cope with a delinquent loan. Our research shows that most borrowers become delinquent because of a temporary life event or hardship. This loan can offer these borrowers another alternative, and help prevent a temporary setback from becoming a foreclosure."

So if you need some help getting your home loan payments back on track, contact your lender to see if they offer HomeSaver. It just might save your home!