Posted on 02/18/2009 7:01:38 AM PST by cc2k
And President Obama is there today, in Phoenix, to unveil his "Homeowner Affordability and Stability Plan," which will help bring relief to homeowners and bring some order to the housing market.
The President will talk more about his plan a little later today. In the meantime, we’re sure you have a lot of questions, like, Am I eligible for assistance? Might I be able to modify my loan? When do I apply? We've put together an example sheet that will show you what options might be available to you, depending on the circumstances of your mortgage, as well as answers to some common questions (below).
Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan
Borrowers Who Are Current on Their Mortgage Are Asking:
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.
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.
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.
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.
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.
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.
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.
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.
Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.
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:
Borrowers Who Are at Risk of Foreclosure Are Asking:
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.
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.
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.
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.
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.
Only the first mortgage is eligible for a modification.
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.
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 can have up to $5,000 applied to reduce their debt by the end of that period.
There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.
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.
Ask your lender or counselor to be considered 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 a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.
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
Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.
Silly me, my house is paid for. What do I get?
You get to pay for everyone else.
My mortgage is paid off, too. In fact, I purchased less of a home than I could afford, because I wanted to sleep at night.
Help for deadbeats - There changed it to the commonly accepted meanings.
Second mortgages???
WHERE'S MY CUT OF THE PIE?!?!?!? I WANT MINE! MINE MINE MINE!!!!!!!!
“The President’s strategy for economic recovery is a stool”
Yep..a steaming pile of excrement!
We have already had a ‘stool sample’ from the Zero Administration last week!
This is the worst part of the whole scheme.
My gosh...when will this end? Someone has to put a stop to these CRIMINALS!
I have a good income and credit and am able to make my payments. I saved and made a down payment and purchased a home I could realistically afford. I would like to reduce my rate by about a percentage point to make my payments more affordable. Can I get on the big gubment teat also?
Redistribution of income/wealth. The 200 million households who rent or are current on their mortgage pay for the deadbeats.
Next up. We get to pay for the deadbeats credit cards, auto loans, student loans, and medical bills.
10.5% (INCLUDING FINANCE CHARGES!). That leaves about 5.5% of current market value. What that means is if you bought a house for $200,000 and financed $180,000, your house must appraise for $189,900. Which is what you probably currently owe on the house.
If you’re in a market where the values plummeted you’re in the same boat you’re in right now. You’ll have to take a check to closing.
And, the biggie - YOU MUST BE CREDIT WORTHY.
This is nothing but smoke and mirrors. But the media will start reporting how much this helped the people and they’ll never again mention the word “foreclosure”. The messiah has acted and all is well!
The lenders may be offered incentives but they won’t do it. This will give the government an excuse to take over all the banks by guaranteeing the loans.
This is supposedly for conforming loans only. That’s only about 50% of the mortgage market. Jumbos and private label, as well as seconds — not covered.
We can be assured that something like this is going to go through. What conservatives should campaign for is that people who take this plan should have it reflected on their credit report for as long as a bankruptcy. This is, in effect, a government pre-packaged bankruptcy crammed down upon the lender.
Again, there’s no question that something like this is going to pass. Rather than try to stop it, which will be nigh on impossible, we need to make sure that we make everyone who takes the deal gets the “scarlet I” on their forehead - ‘I’ for irresponsible.
It looks as if they'll consider covering second mortgages if you're current on your payments, but not if you're delinquent.
Of course, that's today. The "plan" seems to change hourly.
We are so screwed in so many ways.
I have 100k left on my mortgage. I can afford to pay it off. Should I? Or should I let it ride. I've got a pretty good fixed rate.
Eventually, everyone will be gored by these power grabbers. At that point the excrement will hit the proverbial twirling blade.
You’re right — it is nothing but a huge hand wave. But some form of this is going to pass.
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