Treasury to Join FHFA, GSEs, HOPE NOW to Announce Streamlined Modification Program

[Maia7]

There will be a press conference today announcing hopefully some new initiatives by the government involving loan modifications. No info is available just yet but this is something for us to watch today.

HP-1263: Treasury to Join FHFA, GSEs, HOPE NOW to Announce Streamlined Modification Program

[Maia7]

Ok, so they've had the conference and here is what has been announced:



November 11, 2008
HP-1264
HP-1264: Treasury Interim Assistant Secretary for Financial Stability Neel Kashkari Remarks on GSE, HOPE NOW Streamlined Loan Modification Program

Treasury Interim Assistant Secretary for Financial Stability Neel Kashkari Remarks on GSE, HOPE NOW Streamlined Loan Modification Program

Washington- Stabilizing our financial system will require not only strengthening our financial institutions so they are able to lend to our communities, but also helping homeowners avoid preventable foreclosures. As Secretary Paulson has repeatedly said, there is no silver bullet to address the housing downturn. We are experiencing a necessary correction and the sooner we work through it, the sooner housing can again contribute to our economic growth. We must explore all tools to help homeowners and increase the availability of mortgage finance.

Since last year, Treasury has worked with leading housing counselors, mortgage servicers and investors through the HOPE NOW Alliance to reach and help homeowners who both want to keep their homes and have the basic financial wherewithal to do so. In that time, industry and government have developed several new tools to help homeowners. The industry is now helping over 200,000 homeowners a month avoid foreclosure with a loan workout.

Today's announcement by FHFA, the GSEs, and HOPE NOW is an important step forward to make sure the system has capacity to help all qualifying homeowners who are reaching out for help. We commend FDIC Chairman Sheila Bair for her leadership in developing a systematic loan modification protocol at IndyMac Bank. FHFA, the GSEs and HOPE NOW relied heavily on the IndyMac model in developing this new protocol. With such broad adoption, this new protocol will be a standard for the industry to quickly move homeowners into long-term sustainable mortgages.

The adoption of this streamlined modification framework is an additional tool that servicers will now have to help avoid preventable foreclosures. This framework will not only help those homeowners who receive a streamlined modification, it will also further address servicer capacity concerns by freeing up resources, helping ensure that borrowers do not fall through the *****s because servicers aren't able to get to them.

We commend Director Lockhart and FHFA along with Fannie Mae and Freddie Mac for taking the lead in developing and adopting this streamlined approach to loan modifications and helping establish these important new industry standards. We also commend Hope Now for their continued leadership in bringing the industry together for a common solution. It is important to note the powerful example large lenders are providing by applying this protocol to their own mortgage portfolios.

The Treasury Department is committed to continuing to take strong action to stabilize our financial system and we welcome this important announcement to help homeowners avoid preventable foreclosures.

[Maia7]

Looks like a lot of self-congratulation but I'm still unclear as to what exactly they are doing. This article seems to spell it out a little more clearly, details are still unfolding but it looks to primarily benefit those loans backed by fannie and freddie. McClatchy Washington Bureau | 11/11/2008 | Feds to modify mortgages held by Fannie and Freddie

It also looks as if it is another one of those "reaching out" efforts where the lender reviews the loans and contacts borrowers with a streamline mod proposal. We've started to see this in the Option One section of Loan Safe where borrowers are receiving unsolicited loan mods. These unsolicited loans are sort of crappy in my opinion as they seem to just be rate freezes for five years. I really am not thrilled with anything less than elimination of these poorly thought out sub-prime loans.

I hate the thought of people having their sub-prime ticking time bombs blowing up in five years. I don't think home values are going to go up, I don't think people's credit is going to get better, and I don't think people are going to be in a place to refinance in five years when these rate freezes expire. We are going to be in the same horrible place.

[urgent]

for my curiosity .. i have heard many times in this forum regards to " fannie " " freddie " insured loans .. how can one tell which loans are insured by these two .. ie .. if someone has a loan thru countrywide, wells fargo .. chase .. or bank of america .. is there any indication which loan is insured by " fannie " and " freddie " .. thanks.

[jrolfedrev]

My investor was Bank of New York, does it mean my loan is not Fannie Mae?

[Moe Bedard]

If you know the investor is Bank of NY............then FannieMae can't be the investor on your loan.

[PBROOKELKLND]

I asked Wells Fargo yesterday and they told me I had a conventional loan and this new program is for FHA loans.-

[Moe Bedard]

This announcement that just came out is for FannieMae/FreddieMac owned loans and those are conventional loans........the criteria however is only reaching those that are 90+ days behind on their loans.

[chooch]

***, have you heard anything more about this Fannie/Freddie program? I called Countrywide today and they said they haven't received any guidance yet, probably because the program doesn't start until 12/12.

[Moe Bedard]

Not yet..............but as soon as I do I will post the updates here.....

[Lisa in MN]

I called HOPE today and had to leave a message for someone to call me within 24-48 hrs due to call volume. (My story is under the Our WAMU Story thread.) This seems to be Fannie and Freddie backed mortgages. I copied this from the HOPE website link.
Lisa

HOPE NOW: Streamlined Modification Program Fact Sheet

Start Date:

December 15, 2008.

Goal of SMP:

Help the most at-risk borrowers stay in their homes through a streamlined
process to establish an affordable monthly housing payment. The goal is to
reach a monthly housing payment (which includes capitalized past due
payments, principal, interest, taxes, insurance and HOA/condo fees) that is
no more than 38% of the borrower’s monthly gross household income.

How SMP Works:

Participating servicers work with eligible qualified borrowers to reach a
more affordable mortgage payment through extending the term of the
loan, lowering the interest rate, and/or forbearing principal. All
outstanding late fees are waived.

Eligible Borrowers:

90 days or more past due on mortgage, can be in foreclosure, must not be
in bankruptcy, owns and occupies the property, and the property is a single
family residence.

90% or Higher LTV:

Borrower’s current loan-to-value ratio must be 90% or higher. The
property value will be determined by the servicer, Fannie Mae or Freddie
Mac, depending on ownership of the loan.

Mandatory Escrow:

Escrows for real estate taxes and homeowners’ insurance must be set up
under this program if they are not currently escrowed.

Required Documentation:

A hardship statement, verification of monthly gross household income,
and a signed modification agreement. The homeowner must make the first
payment at the modified terms when he or she submits these documents.

3 Months of Payments:

For modification to be complete, borrower must make 3 payments within
90 days at the new modified payment level and be current at day 90.

Counseling Encouraged:

Participating servicers and investors encourage borrowers to seek housing
counseling at HUD-approved housing counseling agencies. They can
receive free counseling by calling the Homeowner’s HOPE Hotline™,
888-995-HOPE or visit www.hud.gov to find a counselor.

Participating Investors:

Fannie Mae, Freddie Mac, and majority of HOPE NOW portfolio
lenders/servicers.

Reaching Borrowers:

Participating servicers will send letters to eligible borrowers. Borrowers
may also call their servicer to see if they qualify.

Reaching Servicers:

Servicers are encouraged to dedicate separate toll-free numbers and faxes
for borrowers interested in SMP. When established, those numbers will be
publicized by HOPE NOW and participating investors and servicers.

Reporting:

Participating servicers are required to report on implementation and
success of SMP. HOPE NOW will release data on this program on an
ongoing basis.

Additional Tool:

SMP is an additional tool to assist homeowners avoid foreclosure. It is
compatible with and does not replace other on-going efforts by servicers
and investors. If a borrower does not qualify for SMP, they are eligible for
a case-by-case review.

November 11,

[jennscrzy]

this still doesnt help those of us that our mortgage companies are not participating in these programs, correct? I mean, what about those of us that have contacted HOPENOW from the beginning, and their mortgage companies are just not participating..we are still left hanging.