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.
