WHOA!!! Is this right?? - Loan Modification Forum

River_Brat · 09-18-2008, 05:50 PM

Am I reading this correctly??? This is taken directly from the .pdf of the housing bill that was just passed.

Section 1402 (page 152 & 153 of 260)

‘‘(k) EQUITY AND APPRECIATION.—
‘‘(1) FIVE-YEAR PHASE-IN FOR EQUITY AS A RESULT OF SALE
OR REFINANCING.—For each eligible mortgage insured under
this section, the Secretary and the mortgagor of such mortgage
shall, upon any sale or disposition of the property to which
such mortgage relates, or upon the subsequent refinancing
of such mortgage, be entitled to the following with respect
to any equity created as a direct result of such sale or refinancing:
‘‘(A) If such sale or refinancing occurs during the period
that begins on the date that such mortgage is insured
and ends 1 year after such date of insurance, the Secretary
shall be entitled to 100 percent of such equity.
‘‘(B) If such sale or refinancing occurs during the period
that begins 1 year after such date of insurance and ends
2 years after such date of insurance, the Secretary shall
be entitled to 90 percent of such equity and the mortgagor
shall be entitled to 10 percent of such equity.
‘‘(C) If such sale or refinancing occurs during the period
that begins 2 years after such date of insurance and ends
3 years after such date of insurance, the Secretary shall
be entitled to 80 percent of such equity and the mortgagor
shall be entitled to 20 percent of such equity.
‘‘(D) If such sale or refinancing occurs during the period
that begins 3 years after such date of insurance and ends 4 years after such date of insurance, the Secretary shall be entitled to 70 percent of such equity and the mortgagor shall be entitled to 30 percent of such equity.
‘‘(E) If such sale or refinancing occurs during the period
that begins 4 years after such date of insurance and ends
5 years after such date of insurance, the Secretary shall
be entitled to 60 percent of such equity and the mortgagor
shall be entitled to 40 percent of such equity.
‘‘(F) If such sale or refinancing occurs during any period
that begins 5 years after such date of insurance, the Secretary
shall be entitled to 50 percent of such equity and
the mortgagor shall be entitled to 50 percent of such equity.
‘‘(2) APPRECIATION IN VALUE.—For each eligible mortgage
insured under this section, the Secretary and the mortgagor
of such mortgage shall, upon any sale or disposition of the
property to which such mortgage relates, each be entitled to
50 percent of any appreciation in value of the appraised value
of such property that has occurred since the date that such
mortgage was insured under this section.

So, if you do qualify for this new housing bill that starts 10-1-08, you could be paying lower monthly mortgage payments, but you forfeit ALL equity in your house forever? So, in essence,you're renting your own house, but paying for all maintenance, property taxes and insurance????

This is in contrast to all of the information that I've gathered from the FHA website and others which says only the equity gained within the first 5 years after the re-writing of the loan was subjected to forfeiture.

925girl · 09-18-2008, 08:30 PM

Someone here called it "the loan of last resort".....

myhomesaviour · 09-18-2008, 08:49 PM

It is my understanding that you are correct and that there is a 50% of equity after 5 years. I think that loan maybe be worthwhile for people who are upside down in their loans. If you're current mortgage is say $100,000 more than the value of your property which is say 400,000, by doing this refi you would have instant equity of 10% in the first year or $40,000 (your mortgage would be reduced from 500,000 to360,000) and the right to 10% of the 40,000 in year 1, 20% in year 2 etc. So in essence you are chopping of $140,000 of your mortgage. Considering the length of time it would take for your property to get back to the breakeven point of $500,000 and then past that (to equal the 10, 20, 30, 40, and 50 % of the current equity ) it is a good deal if your property is substantially upside down.

AmericanNightmare · 09-19-2008, 11:07 AM

Thanks for the post. Yes you will be taking a hit on your equity, but what is the alternative; walk-away or short-sale.

pattona · 09-19-2008, 11:37 AM

Yes, it's a decent program if the loan is very upside down and you want to stay in your house. The structuring is done in order to discourage flippers.

Alternatively you could pay off the whole debt so you can keep all the appreciation.

River_Brat · 09-19-2008, 03:49 PM

My mistake. I thought the word "mortgagor" was the lender, not the borrower. I couldn't believe the homeowner would be excluded from the full 100% of the equity after the five year period.

I stand corrected, thank you.

susan spencer · 09-21-2008, 06:06 PM

Pattona,
If you go with FHA program, are property taxes re-assessed based on new appraisal and loan? How is the money paid on your current loan to P & I utilized in the new loan? Are you at some loss? Thank you for explaining if you know! Greatly appreciated.

pattona · 09-22-2008, 07:23 AM

Susan,

With property taxes you will need to go to your county assessor and have them re-assess; the mortgage company won't have anything to do with that, although I would ask for a copy of the appraisal to support your request. You can also pull comps using Zillow; just don't use the Z estimate-too inaccurate in my opinion.

As to your other question, I'm not really sure what you mean. Do you mean is the new loan credited by your prior payments? I don't know; I would think not. My guess is that once you have the new loan, it's reamortized and you start a new series of payments.

Willie · 09-22-2008, 07:43 PM

Thank you for the information.
Can you post the section as to who qualifies for the loan?
Specifically, do you know if it will cover second homes or investment proeprties?

Moe Bedard · 09-22-2008, 11:55 PM

Willie,

Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?

A: No. It is narrowly tailored to keep families in their homes. For example:

Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.
In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.
Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

rperry101 · 10-01-2008, 09:29 AM

The alternative for most people who qualify for this loan guarantee is to be foreclosed out of their property and try to find an affordable rental. In many states they'll end up owing a large deficiency balance to the mortgage company. Faced with that alternative I'll gladly partner up with FHA and take a hit on my equity.

fehrll · 10-01-2008, 09:45 AM

One of the qualification for this is that you cannot have a second loan on your home, if I have heard right?

If you are that upside down on your home that you would even consider this program, then you probably purchased it during the whole mortgage scam mess that got us all into this in the 1st place. Like us, 3 1/2 years ago, no money down and now we are upside down on our loan by about $260K.

Since we did a no money down we are 80/20 1st with IndyMac & 2nd with National City. That disqualifies us from applying for this program. I think most people are in almost the same situation with 2 lenders.

This probably disqualifies most people from this program who actually need it.

So, who is this really helping??

Moe Bedard · 10-01-2008, 02:18 PM

Just to clarify what the extinguishment of the other liens on the property means...................I know it is very confusing.........what it means is that when you go to apply for the new FHA loan to refinance your existing loans, if you have more than one lien...............the first thing that needs to happen is that the current lender would have to agree to accept the short payoff if the new appraisal shows that there would be one..............second.........the subordinating liens would have to agree to take nothing and remove their lien...........which again, is something that would need to be negotiated with the holder of the second liens as well most likely through the first lien........

Here is the exact verbage from the bill...............hope this helps to clarify some of the misconceptions.........I guess we will have to see from members personal experiences going through the FHA refinance if the lenders are accepting this...................

EXTINGUISHMENT OF SUBORDINATE LIENS- `(A) REQUIRED AGREEMENT- All holders of outstanding mortgage liens on the property to which the eligible mortgage relates shall agree to accept the proceeds of the insured loan as payment in full of all indebtedness under the eligible mortgage, and all encumbrances related to such eligible mortgage shall be removed. The Secretary may take such actions, subject to standards established by the Board under subparagraph (B), as may be necessary and appropriate to facilitate coordination and agreement between the holders of the existing senior mortgage and any existing subordinate mortgages, taking into consideration the subordinate lien status of such subordinate mortgages.

dwdrag · 10-01-2008, 05:55 PM

I know in some short sales the second lien holder has accepted as little as $1500 to sign off. Of course the alternative in most cases is that if they foreclose they get nothing anyway.

What remains to be seen is whether the lenders voluntarily write down or if the govt insists they write down and extinguish the subordinate liens.

Once again our great congress has built in so much bs, you cant tell what really is going to happen.

Here is a best explaination and information I have seen yet.

HOPE for Homeowners - HUD

AmericanNightmare · 10-01-2008, 06:44 PM

dwdrag,

Thanks for the info link. This actually makes sense, but I would prefer the lender to act alone to write-down the mortgages without the funding of the taxpayers. I really don't see any substantial alternatives out there besides this Govt. program.

dwdrag · 10-01-2008, 07:18 PM

Agreed, the answer should be easy for the banks. Write it down and still make the interest off the loan, or do nothing and lose the money through foreclosure.

This bailout is bs for the homeowner, more corporate cover up.

The act uses too many loose words, "reasonable", "try" etc all non-commital!!

fingersrunning · 10-02-2008, 08:26 AM

We are currently in loss mit with ASC. Have a negotiator and she says she is presenting to an investor possibly today.
Should we still look into an FHA? We are upside down.
We are also receiving MANY calls from people saying they can help us with modifying etc. I am avoiding them. Should I be?
Thank you everyone on this site!!!
Susan

pmbva · 10-06-2008, 06:48 PM

I wish the housing bill program would have taken into account those of us in high cost areas. I have an option arm paid 870,000 for the house with 10% down and my loan is now at 924,000 and climbing. Home is valued at 680,000 today based on the local comps. Our market is stalled nothing is selling over 700,000 and when the FHA increased loan limits drop back down on Jan 09 it will get even worse. Our income has dropped 60% of what we have made annually for the past 12 years and we are working hard eveyday trying to stay afloat.

As I understand the new bill
to be considered on the FHA program the loan written at 90% of assesed value can not exceed 550,000 which puts is 62,000 over. Just my luck!!!

We were Alt-A paper , self employed over 20 years and used documentation of income to get our loan, no late payments in 10 years just alot of credit in our name due to running a business. Fast foward 2.5 years in this mess, my staff is gone, sold everything we could, cashed in 401k ( stupid but was trying to do the right thing and pay the bank) and now we have filed and discharged on Chapter 7 and are trying to keep the house. We are hopeful we can hold on. It is not pretty and credit is ruined but I am so much more than my credit score!

I think Moe is right recall the mortgages and rewrite the ones who can qualify. Look at their score prior to this mess. Good people who did nothing wrong are now starting to default. If banks could cancel the resets and pre-payment penalties many of us would have a chance. The losses will be big but not nearly what the option arm defaults will cause if someone does not figure out a way to help. I am all for sharing my equity if that is what it takes. Something is better than nothing! Sadly when the banks sold thes mortgages to Wall Street the instruments that many of these mortgages were bundled have no provision for such a situation and no one person to speak to. It is going to take Congress handing down a mandatory ruling to handle this mess for sure. I pray I can hang on......still lossed and scared!

dwdrag · 10-07-2008, 03:02 PM

What the real shame is the banks, get to dispose of these mortgages and are complaining about getting the funds released. Yet, struggling homeowners are stuck, the banks get bailed out and are telling homeowners tough luck...

JoJoJodyJo · 10-07-2008, 06:45 PM

Quote:

Originally Posted by myhomesaviour

It is my understanding that you are correct and that there is a 50% of equity after 5 years. I think that loan maybe be worthwhile for people who are upside down in their loans. If you're current mortgage is say $100,000 more than the value of your property which is say 400,000, by doing this refi you would have instant equity of 10% in the first year or $40,000 (your mortgage would be reduced from 500,000 to360,000) and the right to 10% of the 40,000 in year 1, 20% in year 2 etc. So in essence you are chopping of $140,000 of your mortgage. Considering the length of time it would take for your property to get back to the breakeven point of $500,000 and then past that (to equal the 10, 20, 30, 40, and 50 % of the current equity ) it is a good deal if your property is substantially upside down.

Actually, that's not true. You don't have instant equity of anything because the deficiency balance is called a Shared Equity Mortgage (SEM) and attached as a second trust deed against your property behind the new H4H first trust deed.

The Shared Appreciation Mortgage (SAM) is attached as a third trust deed against your property and entitles FHA to 50% of your net equity from five years until forever on your home (after you've already paid back the initial money you were upside down on your home - the SEM).

You also pay a higher up front mip of 3% and a monthly mip of 1.5% compared to 1.75% and .55% for regular FHA loans, so this program isn't helping the homeowners. It's burying them deeper in the hole.

dwdrag · 10-07-2008, 06:51 PM

If these 2nd and 3rd leins are true, where did you find out all of this information? If this is true, then its financially smart, almost better to let the house foreclose and move on..This H4H is bullcrap like every govt sponsored program.

JoJoJodyJo · 10-07-2008, 06:55 PM

This information came straight from the horse's mouth. Mortgagee Letters - HUD

Read Mortgagee Letters 08-30 and 08-29 plus all the attachments in the zip files. It's all there plain as day.

You are right - it is more government bs - same as we've been getting for years.

dwdrag · 10-07-2008, 07:13 PM

I might be wrong, but I reviewed and reread that and I dont believe your scenero is correct. The initial equity (10%) which is the difference between the appraised value at origination of the H4H and the actual loan value (90%) this initial equity is essentially the second lien called the SEM and the SAM is as you outlayed which the equity splitting over five years.

Example; leaving out the percentages for insurance, house appraised 300,000, the first would lien would be for 270,000 and the SEM would be the second for 30,000. If in 6 years you sold the house for $350,000 and the 1st liens balance is $265,000, the $30,000 would be satisfied leaving the balance of $55,000 split 50/50.

JoJoJodyJo · 10-07-2008, 07:36 PM

Dwdrag - we're actually saying the same thing. In your scenario, the borrower pays back the $30,000 SEM plus 1/2 of $55,000 net equity is $27,500. So the borrower is paying FHA a total of $57,500 for that initial $30,000.

09-18-2008, 05:50 PM	#1 (permalink)
River_Brat Member Join Date: Sep 2008 Posts: 6 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	WHOA!!! Is this right?? Am I reading this correctly??? This is taken directly from the .pdf of the housing bill that was just passed. Section 1402 (page 152 & 153 of 260) ‘‘(k) EQUITY AND APPRECIATION.— ‘‘(1) FIVE-YEAR PHASE-IN FOR EQUITY AS A RESULT OF SALE OR REFINANCING.—For each eligible mortgage insured under this section, the Secretary and the mortgagor of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, or upon the subsequent refinancing of such mortgage, be entitled to the following with respect to any equity created as a direct result of such sale or refinancing: ‘‘(A) If such sale or refinancing occurs during the period that begins on the date that such mortgage is insured and ends 1 year after such date of insurance, the Secretary shall be entitled to 100 percent of such equity. ‘‘(B) If such sale or refinancing occurs during the period that begins 1 year after such date of insurance and ends 2 years after such date of insurance, the Secretary shall be entitled to 90 percent of such equity and the mortgagor shall be entitled to 10 percent of such equity. ‘‘(C) If such sale or refinancing occurs during the period that begins 2 years after such date of insurance and ends 3 years after such date of insurance, the Secretary shall be entitled to 80 percent of such equity and the mortgagor shall be entitled to 20 percent of such equity. ‘‘(D) If such sale or refinancing occurs during the period that begins 3 years after such date of insurance and ends 4 years after such date of insurance, the Secretary shall be entitled to 70 percent of such equity and the mortgagor shall be entitled to 30 percent of such equity. ‘‘(E) If such sale or refinancing occurs during the period that begins 4 years after such date of insurance and ends 5 years after such date of insurance, the Secretary shall be entitled to 60 percent of such equity and the mortgagor shall be entitled to 40 percent of such equity. ‘‘(F) If such sale or refinancing occurs during any period that begins 5 years after such date of insurance, the Secretary shall be entitled to 50 percent of such equity and the mortgagor shall be entitled to 50 percent of such equity. ‘‘(2) APPRECIATION IN VALUE.—For each eligible mortgage insured under this section, the Secretary and the mortgagor of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, each be entitled to 50 percent of any appreciation in value of the appraised value of such property that has occurred since the date that such mortgage was insured under this section. So, if you do qualify for this new housing bill that starts 10-1-08, you could be paying lower monthly mortgage payments, but you forfeit ALL equity in your house forever? So, in essence,you're renting your own house, but paying for all maintenance, property taxes and insurance???? This is in contrast to all of the information that I've gathered from the FHA website and others which says only the equity gained within the first 5 years after the re-writing of the loan was subjected to forfeiture.

09-18-2008, 08:30 PM	#2 (permalink)
925girl Senior Member Join Date: May 2008 Location: Antioch, California Posts: 208 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Someone here called it "the loan of last resort".....

09-18-2008, 08:49 PM	#3 (permalink)
myhomesaviour Junior Member Join Date: Aug 2008 Posts: 2 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? It is my understanding that you are correct and that there is a 50% of equity after 5 years. I think that loan maybe be worthwhile for people who are upside down in their loans. If you're current mortgage is say $100,000 more than the value of your property which is say 400,000, by doing this refi you would have instant equity of 10% in the first year or $40,000 (your mortgage would be reduced from 500,000 to360,000) and the right to 10% of the 40,000 in year 1, 20% in year 2 etc. So in essence you are chopping of $140,000 of your mortgage. Considering the length of time it would take for your property to get back to the breakeven point of $500,000 and then past that (to equal the 10, 20, 30, 40, and 50 % of the current equity ) it is a good deal if your property is substantially upside down.

09-19-2008, 11:07 AM	#4 (permalink)
AmericanNightmare Member Join Date: Jul 2008 Location: Menifee, CA Posts: 28 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Thanks for the post. Yes you will be taking a hit on your equity, but what is the alternative; walk-away or short-sale.

09-19-2008, 11:37 AM	#5 (permalink)
pattona Senior Member Join Date: Sep 2008 Posts: 92 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Yes, it's a decent program if the loan is very upside down and you want to stay in your house. The structuring is done in order to discourage flippers. Alternatively you could pay off the whole debt so you can keep all the appreciation.

09-19-2008, 03:49 PM	#6 (permalink)
River_Brat Member Join Date: Sep 2008 Posts: 6 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? My mistake. I thought the word "mortgagor" was the lender, not the borrower. I couldn't believe the homeowner would be excluded from the full 100% of the equity after the five year period. I stand corrected, thank you.

09-21-2008, 06:06 PM	#7 (permalink)
susan spencer Senior Member Join Date: Sep 2008 Posts: 66 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Pattona, If you go with FHA program, are property taxes re-assessed based on new appraisal and loan? How is the money paid on your current loan to P & I utilized in the new loan? Are you at some loss? Thank you for explaining if you know! Greatly appreciated. Last edited by susan spencer; 09-21-2008 at 06:07 PM.. Reason: typo

09-22-2008, 07:23 AM	#8 (permalink)
pattona Senior Member Join Date: Sep 2008 Posts: 92 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Susan, With property taxes you will need to go to your county assessor and have them re-assess; the mortgage company won't have anything to do with that, although I would ask for a copy of the appraisal to support your request. You can also pull comps using Zillow; just don't use the Z estimate-too inaccurate in my opinion. As to your other question, I'm not really sure what you mean. Do you mean is the new loan credited by your prior payments? I don't know; I would think not. My guess is that once you have the new loan, it's reamortized and you start a new series of payments.

09-22-2008, 07:43 PM	#9 (permalink)
Willie Junior Member Join Date: Sep 2008 Posts: 1 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Thank you for the information. Can you post the section as to who qualifies for the loan? Specifically, do you know if it will cover second homes or investment proeprties?

09-22-2008, 11:55 PM	#10 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,887 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Willie, Q: Will this law be a bailout for speculators, homeowners, investors, and lenders? A: No. It is narrowly tailored to keep families in their homes. For example: Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced. Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum. In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans. Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

10-01-2008, 09:29 AM	#11 (permalink)
rperry101 Member Join Date: Sep 2008 Posts: 7 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? The alternative for most people who qualify for this loan guarantee is to be foreclosed out of their property and try to find an affordable rental. In many states they'll end up owing a large deficiency balance to the mortgage company. Faced with that alternative I'll gladly partner up with FHA and take a hit on my equity. Last edited by rperry101; 10-01-2008 at 09:31 AM.. Reason: insert word

10-01-2008, 09:45 AM	#12 (permalink)
fehrll Senior Member Join Date: Sep 2008 Posts: 70 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? One of the qualification for this is that you cannot have a second loan on your home, if I have heard right? If you are that upside down on your home that you would even consider this program, then you probably purchased it during the whole mortgage scam mess that got us all into this in the 1st place. Like us, 3 1/2 years ago, no money down and now we are upside down on our loan by about $260K. Since we did a no money down we are 80/20 1st with IndyMac & 2nd with National City. That disqualifies us from applying for this program. I think most people are in almost the same situation with 2 lenders. This probably disqualifies most people from this program who actually need it. So, who is this really helping??

10-01-2008, 02:18 PM	#13 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,887 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Just to clarify what the extinguishment of the other liens on the property means...................I know it is very confusing.........what it means is that when you go to apply for the new FHA loan to refinance your existing loans, if you have more than one lien...............the first thing that needs to happen is that the current lender would have to agree to accept the short payoff if the new appraisal shows that there would be one..............second.........the subordinating liens would have to agree to take nothing and remove their lien...........which again, is something that would need to be negotiated with the holder of the second liens as well most likely through the first lien........ Here is the exact verbage from the bill...............hope this helps to clarify some of the misconceptions.........I guess we will have to see from members personal experiences going through the FHA refinance if the lenders are accepting this................... EXTINGUISHMENT OF SUBORDINATE LIENS- `(A) REQUIRED AGREEMENT- All holders of outstanding mortgage liens on the property to which the eligible mortgage relates shall agree to accept the proceeds of the insured loan as payment in full of all indebtedness under the eligible mortgage, and all encumbrances related to such eligible mortgage shall be removed. The Secretary may take such actions, subject to standards established by the Board under subparagraph (B), as may be necessary and appropriate to facilitate coordination and agreement between the holders of the existing senior mortgage and any existing subordinate mortgages, taking into consideration the subordinate lien status of such subordinate mortgages. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

10-01-2008, 05:55 PM	#14 (permalink)
dwdrag Member Join Date: Jan 2008 Posts: 16 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? I know in some short sales the second lien holder has accepted as little as $1500 to sign off. Of course the alternative in most cases is that if they foreclose they get nothing anyway. What remains to be seen is whether the lenders voluntarily write down or if the govt insists they write down and extinguish the subordinate liens. Once again our great congress has built in so much bs, you cant tell what really is going to happen. Here is a best explaination and information I have seen yet. HOPE for Homeowners - HUD

10-01-2008, 06:44 PM	#15 (permalink)
AmericanNightmare Member Join Date: Jul 2008 Location: Menifee, CA Posts: 28 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? dwdrag, Thanks for the info link. This actually makes sense, but I would prefer the lender to act alone to write-down the mortgages without the funding of the taxpayers. I really don't see any substantial alternatives out there besides this Govt. program.

10-01-2008, 07:18 PM	#16 (permalink)
dwdrag Member Join Date: Jan 2008 Posts: 16 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Agreed, the answer should be easy for the banks. Write it down and still make the interest off the loan, or do nothing and lose the money through foreclosure. This bailout is bs for the homeowner, more corporate cover up. The act uses too many loose words, "reasonable", "try" etc all non-commital!!

10-02-2008, 08:26 AM	#17 (permalink)
fingersrunning Member Join Date: Jul 2008 Posts: 10 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? We are currently in loss mit with ASC. Have a negotiator and she says she is presenting to an investor possibly today. Should we still look into an FHA? We are upside down. We are also receiving MANY calls from people saying they can help us with modifying etc. I am avoiding them. Should I be? Thank you everyone on this site!!! Susan

10-06-2008, 06:48 PM	#18 (permalink)
pmbva Member Join Date: Jun 2008 Posts: 17 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? I wish the housing bill program would have taken into account those of us in high cost areas. I have an option arm paid 870,000 for the house with 10% down and my loan is now at 924,000 and climbing. Home is valued at 680,000 today based on the local comps. Our market is stalled nothing is selling over 700,000 and when the FHA increased loan limits drop back down on Jan 09 it will get even worse. Our income has dropped 60% of what we have made annually for the past 12 years and we are working hard eveyday trying to stay afloat. As I understand the new bill to be considered on the FHA program the loan written at 90% of assesed value can not exceed 550,000 which puts is 62,000 over. Just my luck!!! We were Alt-A paper , self employed over 20 years and used documentation of income to get our loan, no late payments in 10 years just alot of credit in our name due to running a business. Fast foward 2.5 years in this mess, my staff is gone, sold everything we could, cashed in 401k ( stupid but was trying to do the right thing and pay the bank) and now we have filed and discharged on Chapter 7 and are trying to keep the house. We are hopeful we can hold on. It is not pretty and credit is ruined but I am so much more than my credit score! I think Moe is right recall the mortgages and rewrite the ones who can qualify. Look at their score prior to this mess. Good people who did nothing wrong are now starting to default. If banks could cancel the resets and pre-payment penalties many of us would have a chance. The losses will be big but not nearly what the option arm defaults will cause if someone does not figure out a way to help. I am all for sharing my equity if that is what it takes. Something is better than nothing! Sadly when the banks sold thes mortgages to Wall Street the instruments that many of these mortgages were bundled have no provision for such a situation and no one person to speak to. It is going to take Congress handing down a mandatory ruling to handle this mess for sure. I pray I can hang on......still lossed and scared!

10-07-2008, 03:02 PM	#19 (permalink)
dwdrag Member Join Date: Jan 2008 Posts: 16 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? What the real shame is the banks, get to dispose of these mortgages and are complaining about getting the funds released. Yet, struggling homeowners are stuck, the banks get bailed out and are telling homeowners tough luck...

10-07-2008, 06:51 PM	#21 (permalink)
dwdrag Member Join Date: Jan 2008 Posts: 16 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? If these 2nd and 3rd leins are true, where did you find out all of this information? If this is true, then its financially smart, almost better to let the house foreclose and move on..This H4H is bullcrap like every govt sponsored program.

10-07-2008, 06:55 PM	#22 (permalink)
JoJoJodyJo Member Join Date: Sep 2008 Posts: 24 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? This information came straight from the horse's mouth. Mortgagee Letters - HUD Read Mortgagee Letters 08-30 and 08-29 plus all the attachments in the zip files. It's all there plain as day. You are right - it is more government bs - same as we've been getting for years.

10-07-2008, 07:13 PM	#23 (permalink)
dwdrag Member Join Date: Jan 2008 Posts: 16 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? I might be wrong, but I reviewed and reread that and I dont believe your scenero is correct. The initial equity (10%) which is the difference between the appraised value at origination of the H4H and the actual loan value (90%) this initial equity is essentially the second lien called the SEM and the SAM is as you outlayed which the equity splitting over five years. Example; leaving out the percentages for insurance, house appraised 300,000, the first would lien would be for 270,000 and the SEM would be the second for 30,000. If in 6 years you sold the house for $350,000 and the 1st liens balance is $265,000, the $30,000 would be satisfied leaving the balance of $55,000 split 50/50.

10-07-2008, 07:36 PM	#24 (permalink)
JoJoJodyJo Member Join Date: Sep 2008 Posts: 24 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: WHOA!!! Is this right?? Dwdrag - we're actually saying the same thing. In your scenario, the borrower pays back the $30,000 SEM plus 1/2 of $55,000 net equity is $27,500. So the borrower is paying FHA a total of $57,500 for that initial $30,000.

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode