Falling interest rates have unleashed a flood of homeowners rushing to refinance their loans to more favorable terms. There's been a 92 percent increase in refinances since the beginning of November. Unfortunately, with banks feeling the sting of the subprime lending mess, many are being turned away. ABC News reports those with poor credit, loans greater than $417,000 and those who owe more than their homes are now worth are being denied refinancing options. The Federal Reserve found that four in five banks had tightened their lending standards.
Despite this, distressed homeowners are urged to contact their current lender at the first sign of trouble. According to the Hope Now alliance, hundreds of thousands go into foreclosure without even contacting their loan provider to discuss their options. Distressed borrowers are encouraged to look over our post on how to prevent foreclosure for help.