An announcement from HUD Secretary Shaun Donovan raised the HARP Program’s LTV from 105% to 125% allowing homeowners who are current on their mortgage but underwater to participate in the Making Homes Affordable Plan. “This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market,” said Treasury Secretary Tim Geithner. “By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It’s a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”
The old plan only qualified homeowners who where no more than 105% upside down on their mortgage. This means if you owed $210,000 but your house was only worth $200,000 you could qualify for the refi. This barely helped out anyone here in AZ. Now you can owe $250,000 and have your home only worth $200,000 and get help.
This jump in LTV shows that the original plan is not curtailing foreclosures like they originally thought it would and more drastic measures are needed. We believe another expansion will come in the future!
Even though the loan modification experts at adjustMYLOAN.com only focus on the loan mod side of the Making Homes Affordable Plan, we are happy to hear there is a broadening solution for homeowners who are upside down, want to stay in their homes, and want to stay current on their mortgage payments. “We get hundreds of calls each month from Arizona homeowners who are current on their payments, but drastically upside down” says Cody Sperber owner of AML. “This is a step in the right direction, but it is still not enough for homeowners in states hit hardest by depreciation! We need a loan modification plan that guarantee’s to reduce principal on homes that don’t qualify for HARP. We need a refinance plan that allows homeowners to participate with homes as much as 150% underwater for it to be effective in states like Arizona, Nevada, California, and Florida.”
Below is the press release fr0m HUD that announces the expanded eligibility:
HUD SECRETARY DONOVAN ANNOUNCES EXPANDED ELIGIBILITY FOR MAKING HOME AFFORDABLE REFINANCING
WASHINGTON - U.S. Housing and Urban Development Secretary Shaun Donovan today announced an expansion of the Obama Administration’s Home Affordable Refinance Program to include participation by borrowers who are current but up to 125 percent underwater on their mortgage. Under authorization provided by the Federal Housing Finance Agency, borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will now be allowed to refinance those loans according to the terms of the Home Affordable Refinance program established earlier this year.
Secretary Donovan made the announcement while touring a neighborhood in Las Vegas with Senate Majority Leader Harry Reid (D-NV) and Congresswoman Dina Titus. Las Vegas leads the nation in foreclosures and approximately 67 percent of the current mortgage holders have mortgages that are higher than the worth of their homes.
“I am here in Las Vegas because it is ground zero of the foreclosure crisis,” Secretary Donovan said. “I am pleased to join Senator Reid and Congresswoman Titus to make this announcement today, which I believe will make a critical difference in our ability to help many more Americans, particularly those here in Nevada, to stay in their homes. The president’s Making Home Affordable plan is already helping far more families than any previous foreclosure initiative and with today’s announcement we will extend its reach still further.”
“I am pleased Secretary Donovan accepted my invitation to come to Nevada and see firsthand the challenges homeowners here are facing,” Senator Reid said. “His announcement that the loan-to-value requirement for the Administration’s refinance program has been raised to 125 percent is good news for Nevadans fighting to stay in their homes. The neighborhood we visited today represents the hardships caused by the housing crisis and the hope that is being restored through the neighborhood stabilization program and the Home Affordable Refinance Program.”
“I am pleased to welcome Secretary Donovan to Las Vegas and thank him for coming. This is an opportunity to show him firsthand the magnitude of the foreclosure crisis in Southern Nevada,” Congresswoman Titus said. “His announcement that the Making Home Affordable program will be expanded to help those further underwater, something I have advocated for, is welcome news that will help thousands of Nevadans stay in their home. I will continue working with Senator Reid, Secretary Donovan, and the rest of the Administration to find more ways to help the hardest hit areas like Southern Nevada, as every new foreclosure prolongs the housing crisis and hampers our country’s ability to move out of the current recession.”
“This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market,” said Treasury Secretary Tim Geithner. “By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It’s a crucial step in our broader efforts to get America’s housing market and economy on the path to recovery.”
Currently, only those borrowers whose first mortgage does not exceed 105 percent of the current market value of the property are eligible for the Obama Administration’s Home Affordable Refinance Program. For example if the property is worth $200,000, the borrower must owe $210,000 or less. Today’s announcement will allow more homeowners to become eligible for the program, by increasing the eligibility to 125 percent.
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. In just a few months, more than 200,000 borrowers have received offers for trial loan modifications, tens of thousands of refinances and trial modifications are under way, and informational mailings about the program have been sent to more than one million borrowers who may be eligible.
Donovan toured a neighborhood that has experienced several foreclosures in recent years, negatively impacting the property values of surrounding homes. The neighborhood has been targeted for Clark County’s Neighborhood Stabilization Program, which will use funds to purchase and rehab foreclosed homes, provide downpayment and closing cost assistance to those purchasing foreclosed homes, and provide housing counseling to potential buyers.
Donovan also announced his plans to deploy HUD Foreclosure Rapid Response Teams to assess the areas hardest hit by foreclosure, starting in Las Vegas. The Las Vegas team will consist of two senior-level HUD Field staff with experience in Single Family Housing and in community outreach. Their task in the next two weeks will be to determine the needs in Nevada and in surrounding areas based on delinquency rate data at the zip code level, as well as listening sessions with local stakeholders such as housing counseling agencies, lenders, and members of the public. Based on the Foreclosure Rapid Response Team’s assessment, HUD will commit two full-time employees to implement their recommendations. Additionally, HUD plans to deploy two Fair Housing equal opportunity specialists to the Las Vegas HUD office, which will provide the opportunity to conduct outreach and education locally, receive discrimination complaints and more readily conduct full investigations.
HUD receives about 100 complaints of housing discrimination every year from residents of Nevada, well over double what was received as recently as 2005. With a local presence, HUD’s Fair Housing & Equal Opportunity office should make it easier for Nevada residents to obtain justice and relief, to educate housing consumers about predatory lending, and to conduct program compliance and monitoring in the over 3000 public housing units and over 8500 Section 8 vouchers.
If you don’t qualify for the refinance part of the Making Homes Affordable Plan then you should contact the loan modification experts at adjustMYLOAN.com. We offer a no obligation FREE consultation to see if you qualify for a loan modification. Contact the experts you know and trust! If you need us, call:
Obama Expands Foreclosure Plan To Include Short Sale Subsidies
Hooray for Arizona! Finally, someone is making sense and creating a solution for those of us whose house values have declined so dramatically it makes it impossible for us to sell our homes! Announced by Treasury Secretary Timothy Geithner, the Obama administration is expanding its 75 billion dollar Making Homes Affordable plan to include additional financial incentives to lenders willing to help homeowners unload their properties at a loss when they owe much more than the present-day value of their homes. The plan focuses on short sales and deed-in-lieu transactions as a way for homeowners to get rid of their homes due to the fact that they don’t qualify for the loan modification or refinance part of the Making Homes Affordable plan. The loan modification experts at AdjustMYLOAN.com think this is fantastic seeing how almost 40% of homeowners in Arizona are underwater and have no way of getting out of their properties. Cody Sperber, a manager at www.adjustMYLOAN.com has been negotiating short sales for four years now and has completed hundreds and hundreds of short sales over his career. “One of the biggest problems a Realtor experiences when negotiating a short sale is the fact that it takes so long. It is extremely frustrating to spend 40-50 hours negotiating only to have your buyers back out due to the fact that they found a better deal during the 4-6 months it took to get an answer from the lender(s)” says Sperber. This plan seems to address this exact problem and hopefully many lenders will participate in the program and speed things up! Below is the Arizona Republics article about the plans expansion:
Relief expanded for struggling homeowners
New U.S. programs to help those too far underwater to sell
Kevin G. Hall - May. 15, 2009 12:00 AM McClatchy Newspapers
WASHINGTON - The Obama administration unveiled new programs Thursday designed to make it easier for homeowners who owe far more than their houses are now worth to sell those homes at a loss and have their remaining debt forgiven.
The programs, announced by Treasury Secretary Timothy Geithner, are the latest additions to Making Home Affordable, an evolving $75 billion plan that tries to break the national housing crisis into separate pieces, attacking the problem on several fronts.
The first two legs of the program sought to help borrowers refinance into today’s low mortgage rates, or if they’re behind on payments, to seek loan modificationsto avoid foreclosure.
President Barack Obama described these steps at a town-hall meeting in Albuquerque on Thursday: “The bank has to lose a little bit of money on what they were expecting on principal and interest. On the other hand, the homeowner, if they make this agreement with the bank, they’ve got to agree that when prices start going up again, they give up a little bit of equity to repay the bank. But either way, everybody is better off, including the community, if people stay in their homes.”
Thursday’s announcements address situations in which borrowers can’t qualify for either of those programs and are at risk of losing their homes. The administration will now provide additional financial incentives to lenders willing to help homeowners unload their properties at a loss when they owe much more than the present-day value of their homes.
The incentives apply to lenders who agree to allow homeowners to conduct short sales or deed-in-lieu transactions instead of going into foreclosure and dragging down prices for neighbors and adding to the already large national inventory of empty homes.
In a short sale, borrowers sell their home at current market value and all proceeds go to the lender. The homeowner is then no longer responsible for the difference between what is owed and the home’s sale price. There’s still a hit to a borrower’s credit rating but not as damaging as it would be in a foreclosure.
When there are no buyers, lenders sometimes accept a deal in which the borrower transfers ownership of the property to the loan servicer, who acts as a bill collector for investors who own pools of U.S. mortgages. This sort of deal is shorthanded as a deed-in-lieu of foreclosure, or deed-in-lieu.
Under the new plan, servicers will receive compensation of up to $1,000 per short saleor deed-in-lieu transfer accepted. As an incentive to avoid foreclosure, borrowers could be paid up to $1,500 in relocation expenses. Because many homes have second mortgages, the Treasury will pay lenders up to $1,000 to accept the deals instead of going to foreclosure.
Borrowers will get 90 days to achieve a short sale and must list it with a licensed real-estate agent. Borrowers in areas of severe market downturn - such as Arizona, California, Nevada and Florida - will get up to a year to reach a short sale. After that, deed-in-lieu transfers occur.
To discourage borrowers from simply unloading their homes, they must first be deemed unable to get a loan modification. The program is voluntary for most lenders but mandatory for banks that received taxpayer-bailout money.
For homeowners in states where home prices have fallen sharply, the administration also rolled out Thursday a complex insurance program that will protect lenders from further home-price declines when they are willing to modify loans. That program is capped at $10 billion.
The cost of all these new programs will be paid from a $50 billion pool of taxpayer bailout money set aside to address the housing crisis.
Experts welcomed Thursday’s initiative.
“We have heard from Realtors that the extensive delay in the short-sale process had caused many buyers to go elsewhere and have left many would-be sellers with no option but foreclosure,” Charles McMillan, a Dallas Realtor and president of the National Association of Realtors, said in a statement. “We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home.”
Rick Sharga, senior vice president of RealtyTrac, a foreclosure-research firm in Irvine, Calif., said the effort will face hurdles, however.
“A lot of the investor-owned loans have (private mortgage) insurance. From the investors’ perspective, they’re going to be better off foreclosing, collecting the insurance, then disposing of the property,” he said. “Short sales, unfortunately, are a 20th-century solution to a 21st-century problem.”
RealtyTrac publishes widely cited foreclosure statistics. Its latest findings, as of April, showed more than 1 million property owners currently in foreclosure proceedings.
“It’s actually a fraction of what’s out there, and that doesn’t even get to the seriously delinquent loans that aren’t in foreclosure,” Sharga said.
The deed-in-lieu may prove more successful, he said, because some areas with severe home-price drops have many homeowners who owe significantly more than their homes are worth.
If you are interested in seeing if you qualify for any of the Making Homes Affordable options, give our loss mitigation experts a call at 1-800-557-7573 and get a FREE CONSULTATION today!
Things are really moving now that SUPERBAMA is in control! That’s right…the Making Homes Affordableloan modificationplan is already being expanded to include second mortgages and to push homeowners who are really upside down towards the newly revamped Hope For Homeowners program. One of the biggest roadblocks the Making Homes Affordable modification plan had was the fact that first lien holders were hesitant to modify their mortgage when the second lien holder got to leave their loans intact. Now second lien holders are incentivized to modify their mortgages down to 1% and in some cases wipe them out completely. The loan modification experts at AdjustMyLoan.com have been modifying both first and second mortgages long before the government subsidies have been around, but we believe this will only make things better for homeowners in the long run. From the first mention of a government assisted modification program our main concern was for those homeowners whose house values have declined dramatically (like those in Arizona). An interest rate drop or term extension only postpones any immediate threats of missing payments or foreclosure and does nothing for those that want or need to sell their homes in the near future. With the program now including second lien holders, there is a chance for a real solution to America’s housing problem! Below is an article from CNNMoney.com about the loan modification plan extension.
Obama expands foreclosure fix
Two steps: Second liens now covered by modification program; servicers must offer eligible borrowers principal reduction under Hope for Homeowners.
NEW YORK (CNNMoney.com) — The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program.
Announced with great fanfare in mid-February, the president’s $75 billion program has gotten off to a slow start. Loan servicers only recently started taking applications and many delinquent borrowers have complained about being left in the cold because their home values have dropped or they’ve lost their jobs.
The administration is seeking to address some of the concerns by tweaking the original modification plan, which calls for adjusting eligible borrowers’ loans so monthly payments are no more than 31% of pre-tax income.
Servicers covering 75% of the nation’s mortgages are now participating in the program, which also allows some homeowners with little or no equity to refinance their mortgages, a senior administration official said Tuesday. Together, the plans are expected to help up to 9 million avoid foreclosure.
Second mortgage roadblock
During the housing frenzy, many borrowers obtained second mortgages to allow them to put little or nothing down when buying a home. Up to half of at-risk borrowers have second liens, according to the administration.
These loans have complicated the modification process. For one thing, they add to troubled homeowners’ debt levels. Also, mortgage investors have balked at reducing payments on first mortgages when the second loan was left intact.
Under the administration’s new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor.
Servicers will be paid $500 for each modification and an additional $250 annually for three years if the borrower stays current. Borrowers can receive up to $250 per year for five years to pay down their first mortgage.
Investors can also receive a payment in exchange for extinguishing the second lien. They would receive 3 cents on the dollar for loans more than 180 days delinquent and between 4 cents and 12 cents for less delinquent loans, depending on the borrowers’ debt levels.
Servicers who join the new program must modify secondloans when a borrower’s first mortgage is adjusted. It will likely take a month to implement, but it should not slow down the modifications of primary mortgages, the administration said.
“By bringing both the first lien and second lien program together, we can reduce monthly payments for borrowers and make it much more likely that they can stay in their homes,” a senior administration official said.
Hope for Homeowners option
Also Tuesday, the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.
Expanding Hope for Homeowners would address one of the major holes in the original Obama foreclosure prevention plan. It helps homeowners whose homes are now worth far less than their mortgages.
Servicers had balked at participating in the Hope program because it required they reduce the mortgage principal balance to 90% of a home’s current value.
Hope for Homeowners, which began in October, is being revamped in Congress. Servicers would have to reduce the principal to 93% of the home’s value. The change would also reduce the program’s high fees, which turned off many troubled borrowers.
As an incentive to participate, servicers will be paid $2,500 for each refinancing, while lenders who originate the new loans will receive up to $1,000 a year for three years, as long as the loan remains current.
Separately, however, another pillar of the president’s plan appears to be headed for defeat this week. The Senate is not expected to pass legislation allowing bankruptcy judges to modify mortgages. The administration had sought this change to pressure servicers to modify loans before borrowers declare bankruptcy.
If your interested in a home loan modification, visit www.AdjustMyLoan.com today and get a FREE CONSULTATION.
WITH ALL THE LOAN MODIFICATION SCAMS OUT THERE, IS THERE SUCH A THING AS A REPUTABLE, HONEST LOAN MODIFICATION COMPANY?
We have all heard the news lately…”loan modification scam takes advantage of another homeowner”, or “call the lender yourself and don’t pay a third party to help you with your modification”. The news loves a bad story and makes one wonder if there are any good, honest loan modification companies out there?
THE POLITICALLY CORRECT THING TO SAY
Now, at www.adjustMYLOAN.com we absolutely think it is a good idea to be proactive when you are a homeowner facing a financial hardship and you believe you cannot make your upcoming mortgage payments. It seems like the natural thing to do (and the politically correct thing to say) and call your lender right away when you are experiencing problems paying your mortgage. The problem is that many homeowners who are not educated in the real estate / mortgage / loss mitigation world do not know what division to call, what to say, and most importantly, what financial information to disclose during those phone calls. What happens is many homeowners fall into three categories when they try and do a home loan modification themselves…”the disconnect”, the “sorry you don’t qualify”, or the worst one of them all the “here’s your crappy modification agreement”.
The “disconnect” is where you call and get transferred over and over, wait on hold forever, and eventually get disconnected. Do this a few times and the frustration is overwhelming. People already have a fear of confrontation and hate waiting on hold forever so many times this is enough to get them to quit.
The “sorry you don’t qualify”is when an uneducated homeowner calls their lender out of desperation and doesn’t understand that the lender is going to ask them for their financial information…sometimes right then and there over the phone. The poor homeowner discloses financials on-the-fly and ends up de-qualifying themselves because they don’t know what loan-to-value / debt-to-income ratio’s the banks are looking for. Again..the frustration is overwhelming because no matter if they qualify or not the fact remains they can’t afford their current payment. The loss mitigation departments at most major lenders are extremely slow and it takes the average consumer a couple of months to get any answers and by this time it might be too late! Lastly, the call centers at these banks are sometimes overseas and we all know how frustrating it can be when you get someone that barely speaks English telling you (without any feeling of empathy) that there is nothing they can do for you!
The “here’s your crappy modification agreement” is so common and it makes us nauseous. Many homeowners don’t have the time to educate themselves on the in’s and out’s of loss mitigation before attempting to modify their own home loan. They don’t understand the processes, how to get to the decision makers, or the fact that you can counter-offer and get better terms. Most wear out after talking to a un-empathetic loss mitigation negotiator at the bank and end up accepting whatever terms they can just to be done with it. Remember, the banks want to mitigate their loss…that’s why its called loss mitigation! They definitely don’t have your best interest in mind otherwise they would make it super easy to complete this process. If you don’t have a real estate / mortgage background, or you don’t have the time going back and forth with your lender(s) for months and months, contract the work out to a trained expert in loan modification negotiating.
THIS ONE IS OUR FAVORITE
How about this one…“call a HUD certified counselor and get a FREE modification”. While this advice sounds good, we all can agree that nothing good is cheap and seldom anything cheap is good! Free help from a counselor is just that…FREE help (not them actually doing it for you). Anyone can gather the necessary paperwork and submit it to the lender…what a homeowner needs is an aggressive person (or team of people) to fight for the best loan terms possible and not just a paperwork submission helper. Every “financial expert” on the news is telling homeowners to avoid paying up-front fee’s to modification companies and go to a HUD certified counselor for free help. These same people are so far removed from any financial struggles that they don’t feel the severity of the situation. It’s easy to give advice when you are not the one struggling financially, or fighting with your spouse everyday over finances. HUD counselors do not have the time to spend 40-50-60 hours fighting to get you better mortgage terms. In most cases they help you gather the necessary documents and submit them to the lender. Then whatever modification (if any) the lender gives after months and months of waiting is what you will have to accept. NOT AT ADJUSTMYLOAN.COM. We spend all the time necessary to aggressively fight to get you the best loan terms available.
NOTE: HUD Counselors do help you submit the correct financials so in that instance they are a good resource if you do insist on doing this yourself just don’t expect them to do the actual negotiations for you!
THE LOAN MODIFICATION MERRY-GO-ROUND
There was a news story about a congresswoman who tried and negotiate her own loan modification only to get the run-a-round and give up frustrated. CLICK HERE to watch the video. Yes, it is possible to get your own modification, but statistics prove that almost 40% of homeowners who achieve their own loan modification re-default within 6 months because the lender(s) put them into a half ass modification that was in the banks best interest…not the homeowners. DON’T BE A STATISTIC. There are loan modification companies out there who actually do the work they are promising to do and all it takes is some research to find the right one.
OUR SUGGESTIONS TO FINDING THE RIGHT LOAN MOD COMPANY
MAKE SURE THE PERSON YOU ARE DEALING WITH HAS A PHYSICAL BUSINESS ADDRESS AND BUSINESS PHONE NUMBER.
GET COPIES OF RECENTLY NEGOTIATED LOAN MODIFICATION AGREEMENTS TO PROVE THEY CAN DO THE JOB
DO NOT PAY A LARGE UPFRONT FEE…A SMALL FEE IS OKAY BUT IT SHOULD COME WITH A MONEY-BACK GUARANTEE IF THE MOD IS NOT SUCCESSFUL
MAKE SURE THE COMPANY YOU ARE USING HAS AN ONLINE TRACKING SYSTEM SO YOU CAN SEE THE PROGRESS OF YOUR LOAN MODIFICATION AT ALL TIMES
MAKE SURE YOU MEET THE COMPANY AT THEIR OFFICE AND SEE THAT THEY ARE CONDUCTING BUSINESS (GET TO KNOW THE COMPANY)
GET REFERRALS AND TESTIMONIALS TO VERIFY COMPANIES HISTORY
GET COPIES OF ALL PAPERWORK THAT OUTLINES THE BUSINESS RELATIONSHIP
WHAT MAKES ADJUSTMYLOAN.COM DIFFERENT
First and most importantly, we are a full-service (brick and mortar) loan modification company that has been negotiating loan modifications and short sales in Phoenix, Arizona for over 5 years. Our parent company is a member of the Better Business Bureau with zero complaints and can show you completed loan modification agreements between us and almost ever major lender. We are fully transparent and do not hide behind a corporate slogan…we invite you to get to know us in person or through our many videos on our website www.AdjustMyLoan.com. Our website, back-office tracking system, and negotiating processes are unique to us and designed to keep you educated and informed of your loan modifications progress from start to finish. NO OTHER LOAN MODIFICATION COMPANY HAS THE EXPERIENCE, INTEGRITY, AND PROCESSES WE HAVE HERE AT ADJUST MY LOAN. We invite you to get to know us and our professional Loan Modification staff. Lastly, we DO NOT CHARGE any expensive upfront fees for our loan mod service and always offer free consultations to see if you qualify!
Foreclosures Rise First Quarter 2009: Loan Modification Is A Solution!
Below is an article talking about how the foreclosure rate has surged in the first quarter of 2009. The temporary foreclosure halt of most major lenders, as well as Fannie and Freddie Mac at the end of last year is now over. More and more foreclosures are being filed and every homeowner in trouble of paying their mortgage payment is wanting to know whether or not the Obama “Making Homes Affordable” plan is going to help save their home! The stressful situation they are in is not uncommon and even though the government preaches to call the lender and work out a modification yourself sounds like the politically correct thing to say, it is not that easy to navigate the maze of automated phone systems and outsourced customer service centers that your lenders utilize. Getting professional help is a great option that way you can focus on making more money and spending time with your family and not worrying about negotiating with your lender(s)!
The Loan Modification Experts at adjustmyloan.com have negotiated hundreds of loan modifications and short sales for homeowners over the last few years. We are highly educated, loss mitigation specialists that have the training, systems, and energy to go after your lenders to get you the best loan terms possible. Trust, integrity, and honor are the core beliefs of our company and every one of our employees puts the customer’s needs first which is easy to see from the first conversation you have with our experts. We invite you to call us at 1-800-557-7573 and get a FREE LOAN MODIFICATION CONSULTATION from one of our loan mod consultants today.
The Following Article Was Taken From MSNBC.MSN.COM
Foreclosure actions surge in the first quarter
Upcoming big unknown: Will Obama mortgage relief help reverse trend?
WASHINGTON - The number of American households threatened with losing their homes grew 24 percent in the first three months of this year and is poised to rise further as major lenders restart foreclosures after a temporary break, according to data released Thursday.
The big unknown for the coming months, however, is President Barack Obama’s plan to help up to 9 million borrowers avoid foreclosure through refinanced mortgages or modified loans. The Obama administration expects its plans to make a big dent in the foreclosure crisis. But it remains to be seen whether the lending industry will fully embrace it, despite $75 billion in incentive payments.
The faltering economy is causing the housing crisis to spread. Nationwide, nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, according to RealtyTrac Inc., a foreclosure listing firm.
In March, more than 340,000 properties were affected, up 17 percent from February and 46 percent from a year earlier.
Foreclosures “came back with a vengeance” last month and are likely to keep rising, said Rick Sharga, RealtyTrac’s senior vice president for marketing.
Nearly 191,000 properties completed the foreclosure process and were repossessed by banks in the quarter. While the number was down 13 percent from the fourth quarter of last year, it is expected to rise through the summer and then possibly taper off.
Fannie Mae and Freddie Mac, the big mortgage finance companies, together with many banks had temporarily halted foreclosures in advance of Obama’s plan. Now armed with the details about which borrowers can qualify, the mortgage industry has begun foreclosing on ineligible borrowers.
The Treasury Department has signed contracts with six big loan servicing companies - including Citgroup, Wells Fargo and JPMorgan Chase. Many have already started processing loans as part of the government’s “Making Home Affordable” plan.
“We need to get the long-term solutions for these folks,” Shaun Donovan, Obama’s housing secretary, said in an interview.
In the coming months, Donovan said, there are still likely to be increased foreclosures, especially from vacant houses, second homes and those owned by speculators. None of those properties will qualify for a loan modification. However, he remained optimistic that overall foreclosures could start to decrease this summer.
But even industry executives who emphatically support the plan emphasize that it’s success isn’t guaranteed.
“The effectiveness of the plan overall obviously is going to depend on the level of industry participation,” said Paul Koches, general counsel of Ocwen Financial, which collects loan payments on subprime loans.
Many borrowers and consumer groups claim the modifications offered by the lending industry don’t do enough to help cash-strapped homeowners, despite more than a year of public prodding from regulators. Fewer than half of loan modifications made at the end of last year actually reduced borrowers’ payments by more than 10 percent, data released last month show.
Plus, the lending industry has been swamped by the unprecedented wave of calls from distressed borrowers. “You can’t wave a magic wand and make the loans suddenly modified,” Sharga said. “They’re all individual transactions.”
In RealtyTrac’s report, Nevada, Arizona, California and Florida had the nation’s top foreclosure rates. In Nevada, one in every 27 homes received a foreclosure filing, while the number was one in every 54 in Arizona. Rounding out the top 10 were Illinois, Michigan, Georgia, Idaho, Utah and Oregon.
Details of President Obama’s stop foreclosure plan “Making Homes Affordable” was released yesterday (March 4th, 2009) and so begins the journey of Government Assisted Loan Modifications! At www.AdjustMyLoan.com we have always been a fan of the Government subsidizing lenders, servicers, and investors for completing loan modifications and think this is a step in the right direction but is it enough? Below we outline some facts of the new plan as well as give you a quick video to watch. About 7-9 million struggling homeowners should qualify for help according to the plan but in won’t help many in states like Arizona, Florida, and California where home prices have declined so much that homeowners are underwater over and above the plans 105% qualifying mark. Also, one noticeable missing piece is a subsidized “Principal Balance Reduction” measure that would reset home values to current market rates! Maybe the future bankruptcy “Cram down” legislation that is trying to get passed right now will force lenders to enact voluntary programs to write down negative equity!
HOMEOWNERS BEWARE…even though this plan is subsidized by the Federal Government it is not a forced program. Lenders can choose to work within the guidelines of the plan or not so remember that your bank still has their best interest at heart and not yours. They could still put you into a loan modification program that does not necessarily have the best loan terms available. By educating yourself on your options or getting professional representation you could walk away with a much better Loan Modification than if you just call your lender directly without first devising a plan.
Now let’s talk about loan modifications:
How Will The Modification Part Of The Plan Work?
In summary, participating servicers will (in order):
•Determine that a loan meets the minimum eligibility criteria (owner occupied, originated before January 1, 2009, UPB equal to or less than $729,750). If yes:
•Obtain sufficient income information to determine if the borrower has a front-end debt-to-income (DTI) ratio of 31%or greater (verbal income may be accepted for initial evaluation subject to verification prior to final approval). If yes:
•Capitalize (add to the loan amount) accrued interest, past due taxes and insurance, delinquency charges paid to third parties (e.g., for inspecting the property), and escrow advances by the servicer - but not late fees or other default fees charged by the servicer;
•Determine how much of an interest rate reduction is required to get the borrower’s mortgage payment to 31% DTI, and if the DTI still exceeds 31% at the rate floor of 2%, modify the loan in other respects specified in the Guidelines;
•Apply a Net Present Value (NPV) test to determine if modification (including the incentive payments) provides the investor with a better financial outcome than foreclosure. If yes:
•Put the borrower on a trial modification at the new interest rate and payment for three months.
•If the borrower is current at the end of the trial modification period, the servicer will execute a modification agreement that includes escrows for taxes and insurance even if the prior loan was not escrowed.
At AdjustMyLoan.com it is business as usual. We are helping more and more homeowners negotiate a reasonable loan modification with their lenders and continue the fight to save as many homes as possible from foreclosure. Many homeowners have questions about this new plan but only time will tell if it really works or not. At the end of the day, it still is a voluntary plan that only affects mainly Fannie and Freddie loans and has strict qualifying measures that could bog down the program. If you are a homeowner trying to navigate your way towards a loan modification, please call our Loan Modification Expertsat 1-800-557-7573 and recieve a FREE LOAN MODIFICATION CONSULTATION.
Borrowers Who Are Current on Their Mortgage Are Asking:
1. What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?
Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.
2. I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.
3. How do I know if I am eligible?
Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.
4. I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.
5. Will refinancing lower my payments?
The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in
their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.
6. What are the interest rate and other terms of this refinance offer?
The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.
7. Will refinancing reduce the amount that I owe on my loan?
No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.
8. How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?
To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.
9. When can I apply?
Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.
10.What should I do in the meantime?
You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:
· information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
· your most recent income tax return
· information about any second mortgage on the house
· payments on each of your credit cards if you are carrying balances from month to month, and
· payments on other loans such as student loans and car loans.
Borrowers Who Are at Risk of Foreclosure Are Asking:
1. What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?
The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.
2. Do I need to be behind on my mortgage payments to be eligible for a loan modification?
No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.
3. How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?
In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.
4. I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?
No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.
5. I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.
6. I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?
Only the first mortgage is eligible for a modification.
7. I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?
The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.
8. I heard the government was providing a financial incentive to borrowers. Is that true?
Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years an have up to $5,000 applied to reduce their debt by the end of that period.
9. How much will a modification cost me?
There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from www.AdjustMyLoan.com visit their website or call their toll free number 1-800-557-7573. They do not charge upfront fee’s for their loan modification program.
10. Is my lender required to modify my loan?
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.
11. I’m already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?
Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.
12. How do I apply for a modification under the Homeowner Affordability and Stability Plan?
You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks.
If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or www.AdjustMyLoan.com to see if you can participate in the program. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.
13.What should I do in the meantime?
You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes
· information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other
sources
· your most recent income tax return
· information about any second mortgage on the house
· payments on each of your credit cards if you are carrying balances from month to month, and
· payments on other loans such as student loans and car loans.
14.My loan is scheduled for foreclosure soon. What should I do?
President Obama In Mesa, Arizona To Unveil His Administrations Foreclosure Plan
President Obama was in Mesa, Arizona on Wednesday to discuss an aggressive “Stop Foreclosure Plan” his administration plans to put in place over the next few weeks. The plan essentially was broken down into two major parts with the finer details to be disclosed within two weeks.
The first program is to help 4-5 million struggling home owners with loans owned or guaranteed by Fannie Mae or Freddie Mac to help them refinance. AdjustMyLoan.com interpreted this as a way for upside down homeowners why were “playing by the rules” as Obama mentioned to get a guaranteed refinance to a set interest rate.
Does this mean homeowners who qualify for this solution will not need an appraisal? Are they going to refinance these homeowners to todays values or just reset the interest rate? Also, who is to set the interest rate? A government agency?
The second program is a Loan Modification Plan with government subsidies to lenders to reduce their monthly interest payments. Finally someone is speaking our language! Below are some bullet point how the plan will work:
Lenders who participate will be responsible for bringing down interest rates or doing principal balance reductions so the monthly mortgage payment is no more than 38% of pre-tax income.
After that the government would match the amount reduced by the lender to bring the payments down to 31% of their pre-tax income.
$1000 incentive for servicing agents (who collect fees for refinanced or delinquent mortgages) to work with qualified borrowers to modify loans. They will get $1000 for each loan they modify plus another $1000 per year for each year that homeowner remains current on their modified loan!
Homeowners who recieve this Loan Modification will recieve $1000 a year for five years off of the principal amount owed as long as they stay current! (HUGE)
Government money will be used to help homeowners avoid default all together by giving a $500 incentive to lenders and $1500 incentive to homeowners if a loan gets modified before the homeowner goes into default.
The final part of the plan would allow bankruptcy judges to “Cram Down” primary residences and complete forced loan modifications if a homeowners qualifies for bankruptcy protection. This would allow judges to lower interest rates, extend out the length of the loan, and reduce the principal amount owed (cram down) on the mortgage! (HUGE)
Currently homeowners who owe more than 80% of their homes worth have a difficulty refinancing or selling in today’s market. This plan should help about 9 million homeowners nationwide and cost about $75 billion dollars but will be well worth it if implemented correctly.
AdjustMyLoan.com is a national Loan Modification Company based out of Phoenix, Arizona that specializes in loan modifications and forbearance agreements. Our loan modification experts audit, package, propose, and negotiate loan modifications on our clients behalf. We offer FREE LOAN MODIFICATION CONSULTATIONS and never charge an upfront fee for our service! Call the loan modification experts at AdjustMyLoan.com today and get the professional help you deserve.
