Friday, July 28, 2006

Consumer Advocate Releases ‘Homeownership Crystal Ball’

Cutting edge, default prevention software to help homeowners with suicide loans

RISMEDIA, July 28, 2006—“We have a catastrophe about to hit millions of American homeowners. This financial software is like a crystal ball that predicts if you will keep your home, or lose it," forewarns International Mortgage Reduction Expert and Consumer Advocate, Harj Gill.

Exotic mortgages were originally intended for financially astute, high- income borrowers. However in the frenzy of the housing boom, they have been mass marketed to home buyers in high-cost, high-priced, metropolitan markets.

Take for example piggyback loans. These are a combination of two loans packaged together, and closed simultaneously. The first lien mortgage is kept at or below the 80% loan to value ratio to avoid mortgage insurance. This has made these loans a favorite among borrowers with little or no down payment.

According to SMR Research, by the first half of 2005, the proportion of borrowers using piggyback mortgages was 48.2%. The default rates on these loans, according to ratings agency Standard & Poors, is a staggering 43% and shoots up to 50% for borrowers with FICO scores of less than 660.

These statistics should give nightmares to every homeowner with this type of loan. However most borrowers have a false sense of security because they don't know when things will go wrong.

Consumer Advocate Gill contends that, "If you had a crystal ball that told you precisely what month you would lose your home and your family out on the street, you would do something about it."

A crystal ball for mortgages is exactly what his Financial Software Program is akin to. Users enter their mortgage details as well as their income, regular expenses and any current debts they have, such as credit cards and car loans.

Once this is done, in the case of piggyback loans, users are able to forecast the exact month (and year) they will go into default as interest rates rise and their cash flow is insufficient to meet the increased payments.

What is revolutionary is that borrowers can then manipulate their finances to create any number of "what-if" scenarios to find one that will help them avoid going into default. "

Before we started using this software we knew, with rising interest rates, that we would soon be in trouble," said Peter & Shari W., a young couple with a piggyback mortgage from Bellevue, Washington, which has one of the highest concentrations of these loans in the country (51%). "

At first we were scared because we didn't know what we would see with the results. But what we actually discovered was tremendous relief," they said.

This feedback is quite common, as homeowners have been using this software for over 10 years.

"With our current lifestyle, we calculated at exactly what interest rate we would start to go backward on our mortgage payments. But the kicker is that we will never go into default because we worked out all the different things that could go wrong and now have contingency plans. I cannot tell you how great that feels," they added.

Gill says the seriousness of this crisis cannot be overemphasized and has prepared a Critical Report available on the Consumer Information Center at

He is also giving away subscriptions to his Software to assist every American household with a mortgage, at no charge.

He is particularly calling to action every mortgage broker, loan officer, banker, lender, real estate broker and agent and urging them to get bulk software subscriptions to give to their clients.

"You have absolutely no excuse not to do this," he stressed. In addition, he is urging every media, community and industry group to do the same for their constituents. "

I don't care if you're a Church Leader, or the CEO of CNN. I don't care if you're Oprah Winfrey or Nancy the neighbor. We are talking about a $1.8 trillion industry that has been driving our entire economy. If we sit back and do nothing, this crisis will force the country into a recession. If we let that happen, shame on us because it's going to devastate the lives of countless families that aren't even homeowners," warns Gill.

Submitted by Gayle Mitchell

1 comment:

Bluesangel921 said...

Unfortunately in my neighborhood we're already seeing the effects of rising interest rates and creative financing. Many homes that were purchased in the last 2 to 3 years have been put on the market again because the ARMs that were used to finance the homes have come to the end of the introductory rate and house payments have increased accordingly. Now the once proud new property owners can no longer afford the payments. At least the homes have appreciated in value so hopefully they will be able to walk away with something. What a valuable tool the software the article talked about is!