The Making Home Affordable Program

The Treasury has revealed their plans as promised which address helping responsible home owners with higher loan-to-values refinance and home owners who are facing financial distress (and may not qualify for a refinance) modify their existing loan.

It appears that the High Balance Conforming Loan Limits will apply to “high cost areas” such as Seattle and Bellevue.   This morning, I’m seeing that banks and lenders are now implementing the new higher loan balance of $567,500 (vs $506,000) which was announced two weeks ago (I’ve received one notice this morning stating this will take place effective March 6, 2009).  Update 4/23/2009:  It looks like banks/wholesale lenders may not adopt the revised 2009 High Balance limits until closer to May 1, 2009 when Fannie will officially begin to purchase these loans.  The few banks who did step up to the revised limit early on, either never did or quickly retracted back to the $506,000 loan amount.

From FHFA Director James B. Lockhart:

Fannie Mae and Freddie Mac will also undertake Home Affordable Refinance, a program that is designed to reduce mortgage rates for 4 to 5 million people whose loans are owned or guaranteed by Fannie Mae or Freddie Mac. The refinance option will allow borrowers that currently owe between 80 and 105 percent of the value of their home to refinance their mortgages.

With the refinance program, it appears to be along the lines of a streamline refi where an appraisal may not be required.  This is not uncommon for “well qualified” borrowers to have an appraisal “waived”.  They have disappeared in recent times…it looks like the waiver is back.    The Home Affordable Refinance program ends on June 2010.

I’m especially pleased with the Home Affordable Modification program which I’m hoping will put an end to unsavory loan mods that were predatory.   This program is geared towards home owners who are at “imminent risk of default” and are in “financial hardship”.   It only applies towards owner occupied residences and this is a “full doc” process where the home owner will have to provide two most recent paystubs, most recent tax returns and sign a 4506T.   Second liens holders will receive compensation when they extinguish their lien rights (mortgage).

Loans to be modified must have been originated on or before January 1, 2009 and this program will run until December 31, 2012.

What now?

Home owners in financial distress should contact their mortgage servicer (where the mortgage payment is sent to) right away.

Home owners looking to refinance should gather their income documents and contact their preferred mortgage originator…and please be patient.   Refinances are taking longer to process and close.  Every aspect of the real estate industry has reduced staff.   Hopefully these programs will recreate a some jobs in the real estate lending industry.

Treasury has doubled it’s buying of Preferred Stock in Fannie and Freddie to $200 billion each in an attempt to keep mortgage rates low.   What needs to happen is to have some of the price hits (LLPA) removed or modified so that these efforts will work “in concert”.

About Rhonda Porter

Rhonda Porter is an NMLS Licensed Mortgage Originator MLO121324 for homes located in Washington state. Her blog, The Mortgage Porter, is nationally recognized for sharing relevant information to consumers about mortgages.

She has been originating mortgages since 2000 at Mortgage Master Service Corporation #40445 Consumer NMLS Website: http://www.nmlsconsumeraccess.org/TuringTestPage.aspx?ReturnUrl=/EntityDetails.aspx/COMPANY/40445
NMLS ID 40445. Equal Housing Opportunity.

You can follow Rhonda on @mortgageporter, Facebook and/or Google+

Comments

  1. Question says:

    Is the Home Affordable Refinance program available to people with FHA loans?

  2. What about mortgage insurance? Have the MI companies signed on to this yet? Seems like they are going in the opposite direction….I haven’t heard a single thing about how MI is going to be provided on loans with LTVs above 80%.

  3. Interesting to see what the MI impact will be. I am at 6% blended rate, 5.75 first. Looks like I will need to see a decent drop in rate, if I leave the second in place to avoid mi will banks really have the nerve to not subordinate with this rolled out program?

  4. Russ, it’s my understanding that with the refi program, private mortgage insurance won’t be included.

    But what I’m wondering is if there will be private mortgage insurance paid for by the lender instead of the borrower.

    With the loan mod program, the Fact Sheet states that “the major mortgage insurance firms have agreed to develop a mechanism by which they will make partial claims on modified loans where appropriate in order to help prevent avoidable foreclosures”.

  5. Russ, it’s my understanding that with the refi program, private mortgage insurance won’t be included.

    But what I’m wondering is if there will be private mortgage insurance paid for by the lender instead of the borrower.

    With the loan mod program, the Fact Sheet states that “the major mortgage insurance firms have agreed to develop a mechanism by which they will make partial claims on modified loans where appropriate in order to help prevent avoidable foreclosures”.

  6. For the refi program, they need to figure that out because if the MI companies won’t provide insurance coverage, this program isn’t worth the press releases it is written on. My guess is that there is going to be some kind of govt back stop on the insurance, but I haven’t seen anything as to how it is supposed to work. They also don’t mention handling subordinations, but do mention getting rid o second liens for the loan mod program.

  7. As a taxpayer funding this program, I would find it a little more palatable if the homeowners would be not allowed to take the $250,000 Cap Gains exclusion when they sell.

  8. Is this in place for the duration of 2009? For those with good rates how long do we have to see if rates come down more like they should. I want 4.5% for all!!! But hey I will take 4.75 on the first. They need to hurry because at the rate seattle is dropping the 105% can be surpassed quick.

    Btw this does zilch for CA where most are underwater by more than 5% of the original loan value

  9. Is this in place for the duration of 2009? For those with good rates how long do we have to see if rates come down more like they should. I want 4.5% for all!!! But hey I will take 4.75 on the first. They need to hurry because at the rate seattle is dropping the 105% can be surpassed quick.

    Btw this does zilch for CA where most are underwater by more than 5% of the original loan value

  10. I read Keith Harney’s article below and it appears fannie/freddie are saying that MI isn’t required. However, I am curious if someone is already paying MI can they refinance again and drop the MI altogether.

  11. Question, I this appears to apply towards conventional loans. The Treasury did state that FHA will be vamped up too.

    Currently, FHA offers a streamline refinanced where “no appraisal” is all ready an option.

  12. Question, I this appears to apply towards conventional loans. The Treasury did state that FHA will be vamped up too.

    Currently, FHA offers a streamline refinanced where “no appraisal” is all ready an option.

  13. ((TT)) banks are being very difficult with second mortgages. They should be processing subordinations (and approving) much quicker…especially if the home owner is reducing their mortgage payments–they’ll be in a better position (less likely to go into foreclosure) with a refi. And if you opt to pay off the second with a refi, and you did not obtain it when you purchased your home, you’re probably going to have a higher rate since it’s treated as a “cash out” refi.

  14. Fort Worth, this applies to Fannie/Freddie loans where the home is owner occupied. A land contract is not going to fly.

  15. Russ, regarding comment 9; that’s what it sounds like to me but the bottom line is that we still need more details about how this plan is going to work.

  16. ((TT)) the refi plan ends on June 2010. Good luck chasing that 4.5%…rates are creeping up higher today.

    Unless Fannie/Freddie modify or get rid of their significant price hits (LLPA); it’s going to be difficult for most to obtain that type of rate. I have 1 very well qualified client who’s locked in at 4.5% and we’re dealing with losing to the lock due to trying to subordinate a second mortgage. :(

  17. ((TT)) the refi plan ends on June 2010. Good luck chasing that 4.5%…rates are creeping up higher today.

    Unless Fannie/Freddie modify or get rid of their significant price hits (LLPA); it’s going to be difficult for most to obtain that type of rate. I have 1 very well qualified client who’s locked in at 4.5% and we’re dealing with losing to the lock due to trying to subordinate a second mortgage. :(

  18. From Holden Lewis, author of Mortgage Matters at Bankrate on Twitter:

    @HoldenL Freddie spokesman: Hey, we don’t know many details, either.

  19. Another Twitter update from Holden Lewis:

    @HoldenL Fannie says brokers and bankers will be able to process refis through Desktop Underwriter beginning in April…

    I’m amazed how much news I get from http://www.twitter.com

  20. This is hilarious. I just did a TV interview on this and the reporter didn’t believe me at first when I said no one really knows what the hell is going on…

  21. Rhonda,

    I think by “land contract” she means she bought the house from the owner and is making payments to the owner, as in owner financing. I think she might be able to get an FHA loan, if she qualifies, and convert from the “land contract” with the new loan. Not necessarily a refinance, but a possible similar solution. We don’t use “land contracts” here very often. It’s basically an installment sale.

  22. Could be, Ardell. It still wouldn’t be included in this program. However you bring up a good point, people who qualify for a refinance now will most likely not benefit for the programs being offered in the Making Home Affordable programs…they should proceed with their refinance.

  23. I just received an announcement from Fannie Mae that they will be ready to take delivery of the Home Affordable Refinance starting April 1, 2009. Taking delivery on that date means the loans are ready to be sold at that point…I’ll bet lenders are working overtime to get this program up and running.

  24. Rhonda,

    I know people who are struggling, who have their house up for sale, who think they can use this to reduce their payemnt BUT continue to try to sell the house.

    Usually you can’t do a refinance if the house is for sale. Is that the case with this program? If they take the blue pill :) and get relief under this program, do they have to pull the house off market and stay in it for x years?

  25. WE have to find out how the banks plan to implement this, AND how much profit they will take from it. Waaaay to early to predict the rates!

    I plan to read thru everything I can find, (there’s a decent FAQ)

    http://www.financialstability.gov/makinghomeaffordable/

    and come back here to find out more.

    Thanks Rhonda!

  26. Many lenders will require that the home not be listed for a certain period of time. I know of a few who say the may make exceptions but it’s case by case…and saying “well our home didn’t sell so we’re going to stay” probably isn’t going to fly.

    What the lender is looking for is counting on a certain amount of payments from the borrower with a refi (this is partly why we saw just a the situation w/lack of rebate pricing ie no points/no closing cost transactions went away…banks don’t want to be burned like they were during the last refi boom).

    Lenders may start to lean back towards being more forgiving of homes that were just listed in light of all the changes that are going on.

  27. Roger, thanks for the link… I went thru the steps to refi and noticed on part that’s not correct…it directs home owners to call the mortgage company they make their payments to when actually any mortgage broker or banker can help with the new refinance.

  28. Roger, thanks for the link… I went thru the steps to refi and noticed on part that’s not correct…it directs home owners to call the mortgage company they make their payments to when actually any mortgage broker or banker can help with the new refinance.

  29. Re: Comment 19
    “people who qualify for a refinance now will most likely not benefit for the programs being offered in the Making Home Affordable programs…they should proceed with their refinance.”

    I disagree with this comment.

    In my case, I’ve been watching/waiting for rates to drop a bit more to do a refinance (currently, I’m at 5.75% fixed 30Y). After reading through the program, it appears I qualify for the modification program. I am not underwater, never missed a payment, and I’m really not totally at-risk for forclosure. But, if I didn’t have great credit, I would probably start to get into trouble within a year or so. I most likely could qualify for a refinance to a better rate… but why pay refinance fees when Obama/Treasury is giving me a bailout (free refi) through the modification program?

    My Front-End PITIA is currently about 35.2% and based on some quick calculations to reduce this to 31%, the rate from my modification would be reduced to around 4.125% for 5 years… then move up (and be capped) at ~5.125% based on the “Freddie Mac Primary Mortgage Market Survey rate for 30-year fixed rate conforming mortgage loans, rounded to the nearest 0.125%”.

    Based on what I’ve read, the treasury and mortgage co take care of the refinance fees, and I can get up to $5000 reduction in principal over 5 years… and all I need to do is make some phone calls and do some paperwork.

    Am I missing anything here? Also, would there be any hit to credit scores with a modification vs. a traditional refi?

    re: comment 24 – for modification program, I would have to go through my current mortgage co, correct? I’d rather drop them off a steep cliff after they royally messed up my escrow in 2007…

  30. brian_sun says:

    Rhonda, I have a question about the Home Affordable Modification program. My dad recently retired. He did a refi before Jan 1, 2009 to take advantage of the lower interest rates and dropped his mortgage rate down to 5.25%. But due to the loss of income from retiring this year, his monthly mortgage payment is about 50% of his monthly income now. With this program, does that mean he could lower his monthly mortgage payment lower to either 38% or 31% of his income for 5 years before it goes back to the normal 5% mortgage rate? Thanks!

  31. brian_sun your Dad needs to contact where he makes his mortgage payment to (the mortgage servicer) to see if he qualifies.

    If your Dad is 62 years young or older, he may qualify for a reverse mortgage where no mortgage payments are required…he can do this through any qualifed reverse mortgage loan originator (hopefully local).

  32. Doug, I suggest that you try going through a local mortgage professional who is FHA approved (in case you need to go FHA vs conventional) 1st and then try doing a loan mod through who you currently make mortgage payments to.

  33. Making Home Affordable program has been conducted for quite awhile now through Wells Fargo to owner occupied homes and investors on their rentals. I know many that have gotten their term extended to 40 years, int rate reduced to 4.25%, and 2nds chopped in half. **FOR FREE** no appraisal nothing. Their credit takes a serious hit for being delinquent 90 days but the payment drops.

    Heres the dirty little secret though……….Its documented nearly 1/2 of the loans return to the Lender even after the Loan Mod. Why is this???

    **People will not stay in their home when they are upside down 20-60%. They can drop the payment all they want but in the end the masses will walk. Its not a matter of if…its when. Sure some will stay and be happy for many years to come but we are in a mobile society and at some point they will move, or get fed up and the property will again be a short sale or foreclosure…

    Being from Nevada I have seen this in play for nearly 2.5 years. The answer is principle reduction but alas that will cause anarchy….So in the end they will all come back. BANK ON IT!

  34. brian_sun says:

    Rhonda, Thanks! I don’t think my dad wants to go the reverse mortgage route. The rising debt, falling equity characteristic of reverse mortgage just isn’t something he’s interested in.

    Doug: How did you calculate your modification rate to be 4.125% for 5 years from your front end PITIA? Is there a formula?

  35. Ray, I’ve heard of many banks cherry picking homeowners to modify their mortgage…the bank approaches the borrower–the home owner doesn’t ask and may not need the mod but who wouldn’t take it? Banks want first dibs on retaining clients they want….it doesn’t take the borrower being late.

  36. Rhonda on a daily basis the stock market is reflecting what we both already know. Over the next decade people will be walking from their homes in titanic waves. Nothing has been proposed that will keep people in their homes. I suggest locally you will be seeing the collapse of BANR, COLB, RPFG, and many more local banks. The write downs will continue relentlessly and the PNW has just entered this cycle.

    I pound the table when I say people will NOT stay in their upside down home. They can handle 10% max but will move at the 1st sign of a better opportunity anyway and thus you will have a foreclosure/short sale delayed for maybe 3-5 years. Principle reduction is the only answer but the ramifications of this on our society will be heard daily in the newspapers, Tv, and radio. It will NOT be tolerated.

    The homes must go back and quickly (deed in lieu). The Fed must step in and the masses become renters for the present time from the Fed. Stabilization and SWIFT action is my proposal. Your thoughts?

  37. Rhonda on a daily basis the stock market is reflecting what we both already know. Over the next decade people will be walking from their homes in titanic waves. Nothing has been proposed that will keep people in their homes. I suggest locally you will be seeing the collapse of BANR, COLB, RPFG, and many more local banks. The write downs will continue relentlessly and the PNW has just entered this cycle.

    I pound the table when I say people will NOT stay in their upside down home. They can handle 10% max but will move at the 1st sign of a better opportunity anyway and thus you will have a foreclosure/short sale delayed for maybe 3-5 years. Principle reduction is the only answer but the ramifications of this on our society will be heard daily in the newspapers, Tv, and radio. It will NOT be tolerated.

    The homes must go back and quickly (deed in lieu). The Fed must step in and the masses become renters for the present time from the Fed. Stabilization and SWIFT action is my proposal. Your thoughts?

  38. brain_sun, I used a PITI financial calculator, entered the original mortgage values and the current tax/insurance values… then stepped down the interest rate until I reached 31%.

    I may have needed to use my current mortgage value (not sure)… then my rate would drop to 4.375%.

  39. Listed below are the differences when qualifying for a Making Home Affordable Modification, and a Non Regulated Loan Modifications

    Government Loan Modification

    • You are current on your mortgage payment.
    • Government Plan is fixed for 5 years, then adjusts higher
    • What you owe is equal to or less than the fair market value.
    • Your loan must be owned/controlled by FNMA or Freddie Mac
    • Property must be owner occupied.
    • Unpaid loan balance must be equal to or less than $729,750
    • Mortgage payment must not exceed 31% of your income

    Non Regulated Loan Modification

    • Doesn’t matter how late your are on your mortgage payment.
    • Plan is fixed rate for the life of the loan (Rates are low)
    • Doesn’t matter how Upside-down you are with your loan
    • Loan on your home is owned or controlled by ANY lender
    • Property can be Commercial, Investor, Rental, etc
    • Unpaid loan balance less or GREATER less than $729,750
    • After monthly expenses are paid at least $1.00 Income

    I hope this helps.

  40. Listed below are the differences when qualifying for a Making Home Affordable Modification, and a Non Regulated Loan Modifications

    Government Loan Modification

    • You are current on your mortgage payment.
    • Government Plan is fixed for 5 years, then adjusts higher
    • What you owe is equal to or less than the fair market value.
    • Your loan must be owned/controlled by FNMA or Freddie Mac
    • Property must be owner occupied.
    • Unpaid loan balance must be equal to or less than $729,750
    • Mortgage payment must not exceed 31% of your income

    Non Regulated Loan Modification

    • Doesn’t matter how late your are on your mortgage payment.
    • Plan is fixed rate for the life of the loan (Rates are low)
    • Doesn’t matter how Upside-down you are with your loan
    • Loan on your home is owned or controlled by ANY lender
    • Property can be Commercial, Investor, Rental, etc
    • Unpaid loan balance less or GREATER less than $729,750
    • After monthly expenses are paid at least $1.00 Income

    I hope this helps.

  41. Confused about something with the new Home Affordable modification program…

    To qualify for modification, you must provide an affidavid of financial hardship. One of those hardships can be significant loss of income. I recently lost my job and my only income at the present time is unemployment insurance. How does the program work in my scenario? Will my loan be modified to 2%, extended to 40 years and principal forbeared to get my payment down to 31% of my unemployment income (which would reduce my payment from $3000/mo to about $300/mo)? To me, this seems extreme; how is this situation handled?

    Thanks in advance for any insights!

  42. Confused about something with the new Home Affordable modification program…

    To qualify for modification, you must provide an affidavid of financial hardship. One of those hardships can be significant loss of income. I recently lost my job and my only income at the present time is unemployment insurance. How does the program work in my scenario? Will my loan be modified to 2%, extended to 40 years and principal forbeared to get my payment down to 31% of my unemployment income (which would reduce my payment from $3000/mo to about $300/mo)? To me, this seems extreme; how is this situation handled?

    Thanks in advance for any insights!

  43. Rich, you need to contact who you make your mortgage payment to to see if you qualify for the loan modification program.

  44. Thanks Rhonda. I just wanted to see if my scenario was covered under the guidelines so that I could be fully informed when I call.

  45. I’m Rich–I can’t answer your question or I would. It is up to your loan servicer whether or not they will modify your mortgage.

    From what I’m reading they will want to verify your income which includes unemployment benefits (click on the Home Modification Link above in the post).

    This also states that borrowers will be screened for financial hardship. “This screen must ascertain whether the borrower has had a change in circumstances that causes financial hardship or is facing a recent…increase in the payment that is likely to create…hardship.

    If the servicer determines the borrower…is in Imminent Default and will be unable to make the mortgage payment…they must apply the NPV test.

    The NPV test determines the net present value “of cash flows expected in the absence of modification.” This test will determine if the servicer is going to proceed with the modification and how they may do it (interest rate and/or principal reduction). It also is to how an indicator to the loan server will proceed… “If the NPV Test result is negative and a HAModification is not pursued, the lender/investor” must seek other foreclosure prevention alternatives, including alternate modification programs, deed-in-lieu and short sale programs.”

    Rich, I encourage you to click the link I’ve provided in the post and read up. Do contact your servicer or HOPE NOW if you cannot make your mortgage payments and want to take advantage of this program.

  46. I’m Rich–I can’t answer your question or I would. It is up to your loan servicer whether or not they will modify your mortgage.

    From what I’m reading they will want to verify your income which includes unemployment benefits (click on the Home Modification Link above in the post).

    This also states that borrowers will be screened for financial hardship. “This screen must ascertain whether the borrower has had a change in circumstances that causes financial hardship or is facing a recent…increase in the payment that is likely to create…hardship.

    If the servicer determines the borrower…is in Imminent Default and will be unable to make the mortgage payment…they must apply the NPV test.

    The NPV test determines the net present value “of cash flows expected in the absence of modification.” This test will determine if the servicer is going to proceed with the modification and how they may do it (interest rate and/or principal reduction). It also is to how an indicator to the loan server will proceed… “If the NPV Test result is negative and a HAModification is not pursued, the lender/investor” must seek other foreclosure prevention alternatives, including alternate modification programs, deed-in-lieu and short sale programs.”

    Rich, I encourage you to click the link I’ve provided in the post and read up. Do contact your servicer or HOPE NOW if you cannot make your mortgage payments and want to take advantage of this program.

  47. Chip–thanks! :) Rich–please see Chips comment #34….looks like it was just approved (I believe first time comments often go into moderation before they’re posted).

    For the record, I don’t do loan mods…it’s not a part of my mortgage business.

  48. Rhonda,

    The “self assessment tools” in Roger’s Comment #22 link:

    http://www.financialstability.gov/makinghomeaffordable/

    are amazing and amazingly simple, and will answer most people’s questions. Maybe you can add an UPDATE “self assesment tools” link in the post up near the top.

  49. Ardell, the assesment tool IS great but there’s a small flaw–it states that if the consumer qualifies for the refi, they should contact who they make their mortgage payments to for a refi… when in fact, they can go through any loan originator (including mortgage brokers, correspondent lenders or bankers) with Fannie Mae owned loans. I received this email this morning from FNMA:

    “These additional flexibilities will help expand refinance options for Fannie Mae borrowers through any lender using DU (Fannie Mae) for underwriting.”

    So if a consumer is unhappy with their current lender, they have the freedom to go elsewhere. It looks like if the loan is owned by Freddie Mac, they may have to go to their servicer. Fannie owns far more loans than Freddie…and I can’t recall the last time I did a Freddie loan…I’ve always leaned towards DU vs LP (Freddie). Fannie seems to have better rates than Freddie more often than not. Consumers can start with their preferred loan originator first and they can help determine whether or not the loan is Fannie or Freddie. If it’s Fannie–it’s a green light for all…if it’s Freddie, the loan originator can let the consumer know they’ll need to through their mortgage servicer…. I’m wondering if Freddie will change this to be more like Fannie…it wouldn’t surprise me.

  50. re: 34, This post has a ton of misinformation…

    • You are current on your mortgage payment.
    - Not a requirement… see the financialstability faq.

    • Government Plan is fixed for 5 years, then adjusts higher
    - The adjustment is capped at the Freddie Mac Survey rate rounded to the nearest .125% (As of 02/26, this would be 5.07 rounded up to 5.125%). Thats a pretty good rate right now for a 0 point refinance and historically very low.

    • What you owe is equal to or less than the fair market value.
    - Not a requirement for the Modification program. This is for the refinance program.

    • Your loan must be owned/controlled by FNMA or Freddie Mac
    - Not a requirement for the Modification program. This is for the refinance program.

    • Property must be owner occupied.
    - True. Also, it must be the primary residence.

    • Unpaid loan balance must be equal to or less than $729,750
    - True for first mortgage only.

    • Mortgage payment must not exceed 31% of your income
    - The Mortgage co is responsible for bringing the payment down to 31% of your income… The way this was written, it appears that you wouldn’t qualify unless your payment was already under 31%.

    There is also the hardship clause which wasn’t mentioned.

    There is also incentives to the borrower (and lender) if the modification is successful.

  51. re: 34, This post has a ton of misinformation…

    • You are current on your mortgage payment.
    - Not a requirement… see the financialstability faq.

    • Government Plan is fixed for 5 years, then adjusts higher
    - The adjustment is capped at the Freddie Mac Survey rate rounded to the nearest .125% (As of 02/26, this would be 5.07 rounded up to 5.125%). Thats a pretty good rate right now for a 0 point refinance and historically very low.

    • What you owe is equal to or less than the fair market value.
    - Not a requirement for the Modification program. This is for the refinance program.

    • Your loan must be owned/controlled by FNMA or Freddie Mac
    - Not a requirement for the Modification program. This is for the refinance program.

    • Property must be owner occupied.
    - True. Also, it must be the primary residence.

    • Unpaid loan balance must be equal to or less than $729,750
    - True for first mortgage only.

    • Mortgage payment must not exceed 31% of your income
    - The Mortgage co is responsible for bringing the payment down to 31% of your income… The way this was written, it appears that you wouldn’t qualify unless your payment was already under 31%.

    There is also the hardship clause which wasn’t mentioned.

    There is also incentives to the borrower (and lender) if the modification is successful.

  52. Thanks, Doug. Like I said, I’m no expert with loan mods and homeowners facing trouble making their mortgage payments on time should start with who they make their mortgage payments to first.

    Home owners who are interested in refinancing and do not qualify for the loan mod (no financial hardship, have income, etc) should start with their prefered mortgage professional first.

  53. Rhonda:

    I don’t think this is too far off topic, but this story of
    a lawsuit between a mortgage servicer and a hedge fund is most educational regarding the difficulty servicers are having managing loan modifications, short sales and foreclosures.

    Specifically, when the servicers sold the underlying investment to investors and hedge funds, they made certain agreeements protecting the investors, and agreeing to act in their best interests.

    http://tinyurl.com/chqeq3

    Enjoy the story, it’s an eye-opener as to why this has been such a difficult problem to solve with government action.

    Hey Doug, thanks for correcting the mis-info in #34…I count on the folks that write and comment here to be knowledgable and as accurate as possible. It makes this site so much more useful and relevant.

  54. Rhonda:

    I don’t think this is too far off topic, but this story of
    a lawsuit between a mortgage servicer and a hedge fund is most educational regarding the difficulty servicers are having managing loan modifications, short sales and foreclosures.

    Specifically, when the servicers sold the underlying investment to investors and hedge funds, they made certain agreeements protecting the investors, and agreeing to act in their best interests.

    http://tinyurl.com/chqeq3

    Enjoy the story, it’s an eye-opener as to why this has been such a difficult problem to solve with government action.

    Hey Doug, thanks for correcting the mis-info in #34…I count on the folks that write and comment here to be knowledgable and as accurate as possible. It makes this site so much more useful and relevant.

  55. Katherine says:

    Am looking for clarification and appreciate any adivice. Have a Fannie Mae loan, am probably around 80 – 85% value (including a second), but our business income tanked last year…left with lots of business related debt service and a 30% reduction in income. Plan to call mortgage broker on Monday, but seems like hubby and I wouldn’t qualify for the Refi option on basis of DTI – if you have a Fannie Mae loan, can you go straight to Loan Modification option? On paper, at least, we may qualify. (Never missed or late on a mortgage payment, though we’ve had to borrow money to make bills a couple times.)

    BTW, THANK YOU Doug for correcting info from post 34. I’ve seen that same post on several boards. Even with my limited lay-knowledge and cursory reading of financialstability.org, I spotted tons of (intentional?) misinformation.

  56. Katherine, I recommend that you start with your mortgage broker on Monday. If he cannot help you, he should be able to direct you to the next step.

    It’s hard to provide clarification when all the information has not been provided to us yet. Fannie Mae has issued some guidelines and we need to hear from the various lenders we work with too.

    The actual Fannie Mae program will not be available until early April (that’s when DU – Fannie Mae’s underwriting system) will be updated for the DU Plus refi’s.

    If you’re a loan mod candidate, you don’t need to wait for the DU Plus. With a loss of income, I’m thinking you could be in the loan mod category; in which case you may be dealing directly with who you make your payments to (your loan servicer).

    The refi program is directed towards those who’s incomes have not changed, but are impacted by declining property value.

    The loan mod program is for those who’s income has changed and are facing possible foreclosure if action is not taken.

    Good luck!

  57. Katherine, I recommend that you start with your mortgage broker on Monday. If he cannot help you, he should be able to direct you to the next step.

    It’s hard to provide clarification when all the information has not been provided to us yet. Fannie Mae has issued some guidelines and we need to hear from the various lenders we work with too.

    The actual Fannie Mae program will not be available until early April (that’s when DU – Fannie Mae’s underwriting system) will be updated for the DU Plus refi’s.

    If you’re a loan mod candidate, you don’t need to wait for the DU Plus. With a loss of income, I’m thinking you could be in the loan mod category; in which case you may be dealing directly with who you make your payments to (your loan servicer).

    The refi program is directed towards those who’s incomes have not changed, but are impacted by declining property value.

    The loan mod program is for those who’s income has changed and are facing possible foreclosure if action is not taken.

    Good luck!

  58. i read your post and am very excited. i am a novice when it comes to mortgage so please help me understand this.

    I bought my house 4 years ago and the values have dropped. i have two mortgages 80% and 20% with the same lender. My mortagages together are at more or less 100% of the current value. i am currently paying around 42% of my gross income.

    My Understanding is that only first mortgage will be lowered down ? will it lower down to the combined payment at 31% or just the 80% loan would be at 31% ?

    My both mortgages are with same lender …Chase…i will call them Monday but need to hear from you as i trust your opinion more. What will happen to my other 20% loan its at 7%….

    Please help

    Sincerely

    Waqas Rehman

  59. i read your post and am very excited. i am a novice when it comes to mortgage so please help me understand this.

    I bought my house 4 years ago and the values have dropped. i have two mortgages 80% and 20% with the same lender. My mortagages together are at more or less 100% of the current value. i am currently paying around 42% of my gross income.

    My Understanding is that only first mortgage will be lowered down ? will it lower down to the combined payment at 31% or just the 80% loan would be at 31% ?

    My both mortgages are with same lender …Chase…i will call them Monday but need to hear from you as i trust your opinion more. What will happen to my other 20% loan its at 7%….

    Please help

    Sincerely

    Waqas Rehman

  60. Waqas, it’s my understanding that the loan mods are available now and that the refi program will not be available until early April.

    There are no guarantees that anything will change with your (or any) mortgages. Since you have a first and second with Chase, you might want to contact them directly. Good luck!

  61. Waqas, it’s my understanding that the loan mods are available now and that the refi program will not be available until early April.

    There are no guarantees that anything will change with your (or any) mortgages. Since you have a first and second with Chase, you might want to contact them directly. Good luck!

  62. I have heard (and you know how it is with “they said”) that the stimulus plan will keep homeowners from deducting their interest on their homes from their income tax. Can you enlighten me? Thanks!

  63. Hi Diane, that’s actually not part of the “Making Home Affordable” plans…it’s my understanding that this is in Obama’s budget for those with incomes over a certain amount….this still needs to be passed by Congress…so it’s not a done deal.

  64. Hello, can I refinance a second home under “Making home affordable refi program”? My father i law lives in it and we are paying for everything. He lives on a minimal social security. Thanks

  65. Renata:

    First find out if it is Fannie or Freddie.

    Pretty easy, here are the links.

    http://loanlookup.fanniemae.com/loanlookup/

    https://ww3.freddiemac.com/corporate/index.html

    If it is neither, you do not qualify.

    If it is Fannie, then any good mortgage professional can help.

    If it’s Freddie, it’s less likely that you have your choice of mortgage professionals, and will probably have to deal with the bank.

    2nd homes are not disqualified from the program, though there may be adjustments to the rate/price.

  66. Renata, I suggest that you contact a qualified local mortgage professional to help you determine what your options are. The guidelines to the Making Home Affordable refi’s are changing constantly.

    Gee Roger…are you camping out? LOL

  67. What is “camping out?”

    I do hang around RCG more than what is probably good for my sanity, and certainly more than what is good for the bottom line.

    I was one of those kids in class waving my hand to answer the teacher’s question…

    There’s no changing a nerd….

  68. Please sign this online petition calling for transparency and accountability on these programs: http://www.petitiononline.com/afford.

    Let’s make our voices heard!

Leave a Reply