Today, home loans usually have adjustable rates of interest and this means, the initial interest rate can change or increase at any time within the loan’s term.

A borrower may be attracted to accept a loan offer because of the incredibly low interest rate. However, the same borrower may find that the low rate he/she signed up for has now become a burden only a few months after signing up for the loan. This can put a borrower in a risky situation. Halfway through the repayment term, he/she can already be facing foreclosure.

What is a rate freeze?

In December 2007, interest rate freeze was introduced in the market. This provision was made to help home loan borrowers avoid the risk of foreclosure. By freezing the loan’s interest rate, continuous increase can be avoided. Yes, through the interest rate freeze, consumers can be protected especially those who have acquired subprime mortgage loans or loans for people with bad credit.

Who Qualifies

Who is qualified to enjoy a mortgage rate freeze? This provision was primarily created for bad credit home loan borrowers yet not everyone with a subprime mortgage qualifies. Under the bill, only residential home borrowers are eligible. The mortgage must have been obtained from the period of Jan 1,2005 to July 31,2007. Add to this, it is important that the borrower was consistent with repayment while the low interest rate still applies.

Below are other conditions to avail of the rate freeze:

• The borrower has a FICO score below 660;
• the borrower was unable keep up with the repayment due to the increase of the rate;
• is not more than 60 days past due of his payments within the last 12 months;
• is not more than 30 days past due after the interest rate has been adjusted;

If you are a currently within a subprime loan, you can call HOPE via their toll free number, call 1-888-995-HOPE. This nonprofit group is composed of representatives from various, lenders, credit counseling agencies, investors, and other financial organizations and is in charge of reviewing applicants for the freeze rate.

Yet, what can you do if you’re not qualified for a mortgage interest rate freeze? You can still get help and support from HOPE or from a credit counseling agency accredited by the government. If you’re not eligible to avail of the rate freeze, arrangements can be made to help you keep up with your repayment.