Mortgage Rescue Scheme

A £285m package of measures designed to prevent some of the most vulnerable families losing their homes and experiencing the trauma of repossession. This scheme is aimed at those who would be eligible for homelessness assistance and is subject to a range of eligibility criteria.

Our mortgage rescue package has two elements:

• Shared equity

This is designed to help householders who have experienced payment shocks and need some help in paying their mortgage.


• Government Mortgage to Rent

This is designed to help the most vulnerable households on low incomes with little chance of sustaining a mortgage.

Why are we doing it?

The international market turbulence is creating a challenging environment in the housing market, interest rates have risen and the government is determined to take action to help those facing repossession. These measures build on our existing work, which includes £10 million for debt advice and an expanded network of court desks to provide legal advice for households at risk of repossession.

How will it work?

Mortgage Rescue operates by bringing together local authorities, Registered Social Landlords (RSL), lenders and debt advice agencies. The two elements work in the following ways:

• Shared equity
- RSL provides an equity loan enabling the householders' mortgage repayments to be reduced.


• Government Mortgage to Rent
- RSL clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford.

The level of grant to a RSL will be determined using the Homes and Communities Agency's value for money assessment criteria after a Money Adviser has advised on the most appropriate route after establishing a household's affordable housing costs.

For more information : http://www.communities.gov.uk/housing/buyingselling/mortgagerescuemeasures/

Be Alert to Scams

Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:

The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.

Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.

The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.

The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

Reverse mortgage

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan.

Down Payments and Private Mortgage Insurance

Some lenders require 20 percent of the home’s purchase price as a down payment. However, many lenders now offer loans that require less than 20 percent down--sometimes as little as 5 percent on conventional loans. If a 20 percent down payment is not made, lenders usually require the home buyer to purchase private mortgage insurance (PMI) to protect the lender in case the home buyer fails to pay. When government-assisted programs such as FHA (Federal Housing Administration), VA (Veterans Administration), or Rural Development Services are available, the down payment requirements may be substantially smaller.

• Ask about the lender’s requirements for a down payment, including what you need to do to verify that funds for your down payment are available.


• Ask your lender about special programs it may offer.


If PMI is required for your loan,


• Ask what the total cost of the insurance will be.


• Ask how much your monthly payment will be when including the PMI premium.


• Ask how long you will be required to carry PMI.

OCC and OTS Release Mortgage Metrics Report for Fourth Quarter 2008

WASHINGTON — The Office of the Comptroller of the Currency and the Office of Thrift Supervision today jointly released their quarterly report on first lien mortgage performance for the fourth quarter of 2008. The report covers mortgages serviced by nine large banks and four thrifts, constituting approximately two-thirds of all outstanding mortgages in the United States.

The report showed that credit quality continued to decline in the fourth quarter of 2008. At the end of the year, just under 90 percent of mortgages were performing, compared with 93 percent at the end of September 2008. This decline in credit quality was evident in all loan risk categories, with subprime mortgages showing the highest level of serious delinquencies. However, the biggest percentage jump was in prime mortgages, the lowest loan risk category and one that accounts for nearly two-thirds of all mortgages serviced by the reporting institutions. At the end of the fourth quarter, 2.4 percent of prime mortgages were seriously delinquent, more than double the 1.1 percent recorded at the end of March 2008.

Home retention actions—loan modifications and payment plans—increased by more than 11 percent in the fourth quarter. Although the number of modifications increased in the fourth quarter, they declined as a percentage of all new home retention actions, from 52 percent in the second quarter, to 43 percent in the third quarter and 40 percent in the fourth quarter. This declining percentage may have resulted from the growing prevalence of “trial” modifications reported as payment plans.

Consistent with last quarter’s findings, the report also showed that re-default rates on modified mortgages were both high and rising during the first three quarters of 2008, with loans modified in the third quarter showing the highest re-default rates. For example, the percentage of modified loans that were seriously delinquent (60 or more days past due) after eight months was 41 percent for loans modified in the first quarter and 46 percent for loans modified in the second quarter. The trend appeared to continue for loans modified during the third quarter.

Flexible mortgage

A flexible mortgage gives you some scope to change your monthly payments to suit your ability to pay. It's also useful if you want to pay off your loan more quickly. Several flexible features are becoming common and they aren't limited to mortgages with 'flexible' in their name. Here are some flexible features:

• Overpayments – you can pay more than your normal monthly mortgage payment or pay off a lump sum, or both.

• Underpayments and payment holidays – you pay less than the normal monthly payment for a limited period (say six or twelve months). You may even be able to stop making payments altogether (a payment holiday). This could be useful if, say, you lose your job or take time off to care for a child.

• Borrow extra (loan drawdown) – you can borrow extra without further approval from your lender, provided the total loan does not go above an overall limit. Alternatively you may be able to 'borrow back' against earlier overpayments.

Is a flexible mortgage right for you?

Possibly, yes, if you are likely to use these features, for example if you're self-employed and have a variable income.

Possibly not, if you are unlikely to use these features. A less flexible mortgage may be cheaper or more suitable for you.

Getting help from a mortgage broker

When visiting a mortgage broker there are a few things you'll need to consider, for example:

• Some brokers offer products from a limited number of lenders and some brokers may offer products from the whole of the market. Make sure you are clear about what the broker can and cannot offer to you. Consider carefully the range of lenders and products that a firm is offering. This will be set out in the about our mortgage services document.


• Some lenders provide products direct to consumers via their own branches, websites and call centres – so there may be products available that your broker is not in a position to offer. Shop around to see what else is out there.


• Mortgage advice is not normally free and the way that you pay for a broker's services can vary enormously. Some brokers are paid commission - a set fee paid to the broker by a lender for selling one of their products. An 'independent' broker has access to mortgages from the whole market and will give you the option of paying a fee for his services to avoid any risk of product bias. Details of any fee you will have to pay or whether the broker will be paid by commission will be set out in the about our mortgage services.


• Will you need advice on other products, such as an investment product? There is a difference between advising on mortgages and advising on investments. For example, in an interest-only mortgage, advice on an investment or savings plan to pay off the loan at the end of the term is investment advice. Paying two sets of advisers can be expensive.

If a firm provides you with information or advice on other products in addition to mortgages, you will get a combined about our services document setting out the level of service, fees and other information that you can expect in relation to each.