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Secretary of State

Securities Division > News Archive  > 2007 Press Releases > For Immediate Release: July 3, 2007 Secretary of State and Department of Financial Institutions Issue Consumer Alert on Mortgage Payment Increases

Contact: Jen Fanger
Troy Pogue


Indiana Secretary of State Todd Rokita and Department of Financial Institutions Director Judith Ripley today are issuing this joint statement urging homeowners with adjustable rate mortgages –- especially those with nontraditional mortgages – to plan now for the scheduled "recasts" or "resets" of interest rates in the year ahead.

Borrowers are advised to:

· Seek information on the characteristics of your mortgage

· Budget accordingly

· Contact your servicer for assistance, if needed

· Inquire about the terms of any prepayment penalty

· Ask about possible solutions if payments are past due

Nontraditional mortgage loans and many subprime loans frequently feature a recast (or reset) with a significant payment increase.

This joint statement follows the issuance of an industry letter by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators that encourages mortgage servicers and providers to reach out to consumers to provide information on their loans and to work with consumers to avoid foreclosure.

"Servicers should provide information on when the recast will occur and how much the monthly payment will adjust," said Rokita.

"As soon as borrowers communicate concerns regarding their repayment ability, servicers should consider workout arrangements to prevent foreclosures," added Ripley.

Director Ripley noted efforts by the NeighborWorks organization, which has established a hotline (888-995-HOPE) to reach struggling homeowners with strategic solutions.