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Slide 1: The subprime mortgage rescue plan A plan to help stressed homeowners. If you have a mortgage set to readjust soon, help may be on the way. Last Thursday, President Bush announced a new plan to help subprime borrowers, just hours after the Mortgage Bankers Association reported the largest number of mortgage delinquencies since 1986.1 Which homeowners would benefit? In a nutshell, homeowners with subprime loans and acceptable credit who can prove that they can’t afford their homes at higher mortgage rates. Some of these borrowers could qualify for “fast-track” loan modification and a five-year interest rate “freeze” – their adjustable-rate mortgages would remain at the low “teaser” interest rate for another five years. Who would qualify for a freeze? Not everyone. In addition to demonstrating your inability to shoulder higher mortgage payments in the future, other conditions will have to be met. The home must be your primary residence (this plan is not designed to bail out real estate investors). You cannot have missed any mortgage payments so far under the introductory interest rate. Your mortgage must have originated between January 1, 2005 and July 30, 2007, and it must be scheduled to reset between January 1, 2008 and July 31, 2010. If you don’t qualify for a freeze, you might have the option of refinancing into a new private mortgage or getting an FHA-backed loan.2 While President Bush stated Thursday that the assistance could potentially aid 1.2 million subprime borrowers, respected economist Mark Zandi of Moody's Economy.com thinks that “it will probably help at best about 250,000 homeowners." 3 Who isn’t pleased? Although the Dow Jones Industrial Average gained 174 points Thursday, some Wall Street analysts are unsatisfied. Standard & Poor’s has warned that it will diminish the value of mortgage-backed securities and trigger lawsuits from MBS investors. Democratic presidential candidates John Edwards and Hillary Rodham Clinton had proposed stronger measures. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, felt the plan made a “grave error” with “a cutoff at a 660 FICO score,” reducing eligibility for those with good credit histories. 4 Maybe it’s time to learn more. If you find yourself in need of refinancing help, talk to a qualified mortgage specialist or financial advisor today to see how this announced plan and other financial options may help you. You may have more choices available to you than you think, and with the insight of a professional, you can explore them. Indices are unmanaged and cannot be invested indirectly. Past performance is not a guarantee of future results. Ishan Goraydiya is passionate writer and loves writing about Retirement and Financial Planning. These days he is writing on Hewitt Resources.