California Loan Modifications Increase As Mortgage Index Rises

Recent rises in the Mortgage Index has seen more property owners turning to California Loan Modifications to save their homes from foreclosure.

During the last decade, a large number of borrowers acquired interest only or adjustable rate mortgages so they couls afford payments on their home purchases. As they have learned, when these mortgages adjust, it is typically up, thereby increasing their home payments. For some mortgages, the maximum interest rate could be 9% or more. For the borrowers that were just getting by on the old payment, the adjustment may create a financial crisis for the borrower and cause the mortgage to suddenly become unaffordable.

If the mortgage is unaffordable the homeowner has limited options, including a short sale, simply handing over the keys, foreclosure or a California Home Loan Modification.

Recently, the Wall Street Journal reported that on New Year's Eve, the Cofi (11th District Monthly Weighted Average Cost of Funds Index) on which many California mortgages are based, was raised nearly a percent from 1.259% to 2.094% by the Federal Home Loan Bank of San Francisco, which oversees the index. Until fairly recently, Cofi was frequently touted as stable and slow to adjust thereby making it a supposed "safe" index for use in an adjustable mortgage. While the Bank gave no reason for the jump, it is speculated that the jump is related to the recent wave of bank mergers. In real terms the increase means that a payment on a $250,000 mortgage will increase by $100, not a small amount in this economy.

Also, for many borrowers, the issue may not be unstable rates, but just the fact that after 3, 5 or 7 years their mortgages will adjust up from an artificially low interest rate to market rates. While this might have made sense in a climate of increasing real estate values and growing incomes, in today's economy with reduced family incomes, the adjustment might be a shock and could make the mortgage unaffordable. It is therefore important for borrowers to review their mortgages and determine when adjustments will occur so they can prepare for them.

If you expect your mortgage to adjust soon or if it already has and you are concerned about how to stay in your home, a California Home Loan Modification may be the solution

For more information contact the Law Offices of Edwards & Gerlt, skilled in providing California Home Loan Modifications at 877-701-6637 or go to http://www.aboutcalifornialoanmodification.com

They offer free consultation. You can discuss your options and your entire credit situation to determine whether it would make sense to seek a loan modification, credit card settlements or other actions that will help reduce the financial pressures you may be experiencing.

The content of this article is for information purposes and not intended as legal advice.




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