Owners Fight to Make Adjustable-Rate Florida Mortgage Payments
The state’s Florida mortgage crisis hasn’t hit bottom yet - but many homeowners have.
They may be delinquent, in foreclosure or scrambling to deal with adjustable Florida mortgage rates that will soon spike, putting their monthly payments out of reach.
But as the credit crunch takes a toll on individuals, a growing number are seeking help. And getting it.
Local mortgage counseling agencies say their phones are ringing constantly, while their clientele growing exponentially these days.
“We see clients across every age, income level and household status,” said Richard Schram, projects director for Consumer Credit Counseling Service of Central Florida in Orlando. “And the increase in clients this year has been dramatic.”
The caseload at ACORN Housing Inc. in Orlando has also skyrocketed, said Laura Johns, director of the unit, which has low- and moderate-income clients.
“I’d say that at a minimum, we’ve tripled what we did last year at this time,” she said.
Among its clients, Ada and Santos Cruz worried they couldn’t keep their Orlando home much longer. Both in their early 60s, the Cruzes were battling the rising cost of an adjustable-rate Florida mortgage they took out in the 1990s. The rate had grown from 6.44 percent to 8 percent last year and was headed up again.
She earned a modest salary as a juvenile-detention officer; he was on disability income. With their ARM rate topping 9 percent, compounded by other debts, they knew something had to be done.
Early this year, with the help of an ACORN housing counselor, they tapped into a program for moderate-income borrowers, ditched the old loan and locked in a new fixed-rate loan at 6.1 percent, buoyed by their good credit rating.
“From the beginning, it wasn’t our choice to take that adjustable mortgage,” Ada Cruz said. “At the time, they just bombarded us with paperwork telling us that was all that was available to us. But now, we feel like this is smooth sailing. We’re not in trouble anymore.”
ARM ’sticker shock’ kicks in
Millions of homeowners have experienced mortgage “sticker shock” as their adjustable rates have kicked in. More than $1 trillion in mortgage debt is expected to adjust higher in 2007 alone, triple the amount last year, according to First American Loan Performance, a research firm based in San Francisco.
Lured by often artificially low teaser rates, many borrowers used ARMs to buy homes beyond their means during the housing boom. As those introductory rates expire, some people have seen their monthly Florida mortgage payments almost double.
Credit counselors can help them get back on track. As soon as there are signs of trouble, cash-strapped homeowners should call their mortgage lender, the counselors say. A call to the lender, or mortgage servicer (if the loan has been sold), may yield surprising results.
SOURCE: The Sun-Sentinel
