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.
Combined with the fact that the number of foreclosures was down for Jan 09 compared to Dec 08. We’re at the bottom of this cycle without any government intervention, but O will get credit when the number of foreclosures continues to lessen as it would naturally.
god that man has great timing. I have to give him credit for that.
“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?”
If your rate is higher than current rates for which you could qualify, yes, you'll be able to refinance at a lower rate. If your rate is already at or near the bottom of currently-offered rates, then no.
But if you have sufficient equity in your home, you didn't this program to refinance.
What this does is permit folks to refinance who, for whatever reason, don't have or no longer have sufficient equity in their homes to do so.
sitetest
Yep, you’ll be punished for being responsible and bustin’ your hump to get back on your feet.
This is a giant nothingburger.
It appears that the only people who qualify are:
1) Those NOT in a jumbo loan - i.e., people who didn’t buy McMansions.
2) Anyone who is NOT more than 5% underwater on a non-jumbo loan.
3) Anyone who meets #1 and #2, AND their loan is held by Fannie/Freddie
The catches are this:
1) The main vehicle here is re-financing and lower interest rates, but it seems to be based not on some fixed target (say 4.5%), but on current market conditions, PLUS, whatever points are required by the lender.
2) Principle reduction MIGHT be a method that the lender MAY employ to lower payments. i.e., not gonna happen.
3) If your loan is not held by Fannie/Freddie, pray that your lender chooses to help you. i.e., they won’t, and if they do, they’re not reducing your principle, which devalues their own REO portfolio.
4) It’s the government. It will fail outright, badly.
In sum, this is just a magic show. All this really does is give people who are less than 5% underwater on sub-jumbo loans the right to re-finance with Freddie/Fannie held loans, to the prevailing market rate. It will help no one, save those who are on the cusp of being underwater and are paying exorbitant rates on ARM resets. The problem is, this is just much too late in the game. The amount of property devaluation in the last twelve months almost guarantees that anyone who had to take out an ARM to afford a house payment, overpaid by a lot, and that property is likely more than 5% underwater.
No.
“The President’s strategy for economic recovery is a stool...”
I have to agree with that assessment.
BTW, my brain stem appears to be well attached at the moment.
To pay for everyone else!
Why has Arizona been particularly “hard hit?” Has it anything to do with homes sold to illegals, or with speculators purchasing several homes and then not paying due to the market decline? Remarkable how often the MSM fails to include reasons for its stated “facts.”
I just re hired two part time employees that I had to let go in November. These people need the extra income. Their pay comes directly from my pocket. My small business doesn't warrant their re hire. I did it because DAMMIT....I am responsible!!!
Subsidize something and you get more of it. This will start a new cottage industry.
Most of their examples are unrealistic. The situations that I know about are much worse and not as clean as their examples. We sold one property for 295k. The new owner has a 290k mortgage. The property is now worth maybe 189k.
The current owner could just afford the original loan..that status hasn’t changed. Will the bank let them off the hook?
Clarified...
“have a hundred thousand left on my mortgage...” Don’t worry about your mortgage, worry instead about that 100,000 laying around. The bank in which it is deposited could close. Are you depending upon the FDIC to actually bail you out? How about the day Hussein says all bank deposits are now worth only 50 cents on the dollar. The government needs the money. All must share in the pain. Yadda, yadda. Or the CDs in which the money is invested become property of the Hussein state. Or the stocks you own no longer exist one morning. Etc, etc. Buy some silver, some gold, some guns and a whole bunch of ammo. Then worry about which mattress to stuff with some of the rest.
zkbeta51 wrote:Maybe. It depends on a lot of things.
So...the way I read this is, if I pay my mortgage on time and have no trouble paying my mortgage that is fixed at 6%, then I can pretty much refinance at 5% with no closing costs? Is this correct?
Since you say you're current and have no trouble playing, it looks like you are looking for "access to refinancing."
From this whitehouse.gov web page, you're in the section under the heading, "Borrowers Who Are Current on Their Mortgage Are Asking." And the question there, "How do I know if I am eligible?", the answer ends with: "The program is limited to loans held or securitized by Fannie Mae or Freddie Mac."
So if your loan isn't held by or securitized by Fannie Mae or Freddie Mac, this plan doesn't apply to you.
If you do have a Fannie or Freddie loan, then you'd have to meet the relaxed standards outlined in this program. For example, your principle balance needs to be less than 105% of your home's appraised value, and so on.
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.
The plan is unworkable like the other 39 plans they rolled out, 105% of appraised value and be credit worthy to qualify...duh those people would be out of their ARMS already. Lenders are already doing modifications. I had a 5 year ARM with Countrywide, not due to reset till 2012, but they sent me some papers in December offering me 4.625 30 years fixed. I took it. But that was the free market and even though I was never late they were mitigating what they thought maybe a problem later on.
What Obama really wants, what everyone is missing the Trojan Horse in this plan. The bankruptcy cramdown of primary residence mortgages. All this refi stuff is crap, when you can declare Chpt 13 and the judge will modify the terms to whatever he wants and the bank will have to by law to comply. I guarantee if a person had to choose a bankruptcy and a foreclosure, guess what they will pick. Besides creditors don’t look for good or bad at bankruptcies the way they did 30 years ago. You can get car credit in 2 years and credit cards almost right away and new mortgage in 2. The stigma is gone But all this prodigal son whining (But I paid my mortgage on time..waaaaaaa)is useless for conservatives. The world isn’t fair, you are not rewarded for doing something you should anyway. The liberals don’t play by your rules of chivalry and fairness, time we stopped also. Work for barter with your neighbors, avoid legally all taxes, don’t patronize left wing tied businesses. But please quit the carping. Time we kind of got that. All due respect to Glenn Beck, our 1950’s values vanished in the 60’s and 70’s in a tidal wave of sex, greed, sloth and divorce never to return. Welcome to post modern America.
Thousands of foreclosures can be halted instantly. Why ____ ?
Because lenders have lost or destroyed the original notes and other critical legal documents !
Home Owners' Rallying Cry: Produce The Freaking Note !
Excerpt:
ZEPHYRHILLS, Fla. - Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.
Like I said before here on FR: Lenders have also forged thousands of legal documents. Before they they sliced and diced them into mortgage securities.
That may have been the reason mortgages were sliced and diced into worthless securities. Some of the really exotic securities were even based on algorithms designed by math experts. Can you imagine that? Selling toxic securities based on nonexistent debt paper and theoretical numbers.
Are you getting the picture yet ___________ ?
Wall Street bankers ought to be getting prison sentences. Not millions in bonuses and Golden Parachutes and $$$ Billions in bailouts . . .
There have always been a few responsible folks that for simple bad luck had problems in the past. The world didn't end. They either renegotiated or ended up losing their homes and moving into something smaller and starting over, Why should it be the resposibility of every taxpayer to share the misforturn of the truly unfortunate (and far more often share the consequences of poor judgement of the truly irresponsible)? Trickle up poverty - the new Obama economic theory.
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