Help for homeowners from the White House

[jrolfedrev]

Help for homeowners

The President’s strategy for economic recovery is a stool with several legs, as he’s said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," he said yesterday as he signed the American Recovery and Reinvestment Act into law.

Though communities across the country have been affected by the crisis, Arizona has been hit particularly hard -- in 2008, only two states had more foreclosures.

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:

• What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

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.

• I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

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.

• How do I know if I am eligible?

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.

• I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

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.

• Will refinancing lower my payments?

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.

• What are the interest rate and other terms of this refinance offer?

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.

• Will refinancing reduce the amount that I owe on my loan?

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.

• How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

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.

• When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

• What should I do in the meantime?

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:

• • information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

• What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

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.

• Do I need to be behind on my mortgage payments to be eligible for a modification?

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.

• How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

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.

• I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

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.

• I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

• I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

• I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

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.

• I heard the government was providing a financial incentive to borrowers. Is that true?

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.

• How much will a modification cost me?

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.

• Is my lender required to modify my loan?

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.

• I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

• How do I apply for a modification 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.

• What should I do in the meantime?

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

• • information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month, and
  • payments on other loans such as student loans and car loans.
• My loan is scheduled for foreclosure soon. What should I do?

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.


The White House - Blog Post - Help for homeowners

KEY WORD: Still depends on the investor.

[teenut]

Doesnt sound very hopeful to me.

[1gringo1]

So those of us that have VA loans are out of luck. I'm getting ready to do a chapter 13-he stated that judges will be able to modify the loans. I bet these VA loans are not included again. If they can't then i'm out of here. I'll stay rent free for another 3-4 months then leave. That's discrimination against those with VA loans. All the loans they are going to approve must be the ones that no proof of income needed to be shown.

[dthom]

We are working with NACA to get a restructure, which includes principal reduction and interest reduction, almost at the 30 day mark with them. Our investor is Freddie Mac. Should we be in a better position to get the restructure now? Should we contact NACA about the new program or will they automatically negotiate based on these new guidelines. We appear to qualify for the Homeowner Affordibility and Stablility Plan. Home underwater, high interest subprime fixed rate loan, major reduction in income due to main breadwinner losing job. Need a principal reduction along with interest reduction in order to be able to afford the home now, still making payments even though it is taking over 50 per cent of household income now.

[dthom]

We are working with NACA to get a restructure, which includes principal reduction and interest reduction, almost at the 30 day mark with them. Our investor is Freddie Mac. Should we be in a better position to get the restructure now? Should we contact NACA about the new program or will they automatically negotiate based on these new guidelines. We appear to qualify for the Homeowner Affordibility and Stablility Plan. Home underwater, high interest subprime fixed rate loan, major reduction in income due to main breadwinner losing job. Need a principal reduction along with interest reduction in order to be able to afford the home now, still making payments even though it is taking over 50 per cent of household income now.

[1gringo1]

I did find this in a recent web research that i just did. If anyone can tell me what this may or may not mean let me know "-Bolster FHA and VA Authority to Protect Investors and Ensure Loan Modifications Occur: Legislation will provide the FHA and VA with the authority they need to provide partial claims in the event of bankruptcy or voluntary modification so that holders of loans guaranteed by the FHA and VA are not disadvantaged.". Again this was input stated from a source that can't be verified.

[1gringo1]

One footnote to my above posting-"The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture". I t appears there may be something coming down the pipeline but my conscience is telling me to wait and see. I just had a talk with wf and they were extremely rude telling me that i would have to accept whatever was offered

[Feelingtrapped]

105% LTV, No principle reductions??

Yup, another political "feel good, do nothing plan" Who are these 9 million people this is supposed to help? What a waste of time.

This is my final year making the negative am payment and then I live rent free until foreclosure. My lender is going to lose about 450k on my non-recourse California loan. I hope they enjoy it!

FT

[Woodland Hills Worrier]

I tend to agree with Feelingtrapped. I had high hopes that Obama was going to bring about change, but I am afraid he is surrounded by advisors who feel Wall Street is more important than Wall Street. He is playing political football with the hopes and dreams of a lot of Americans. Wall Street lured us in with home improvement loans and then got suckered in themselves by a lot of technical mumbo-jumbo which now means that they are so over-leveraged that even a small number of defaults by those who were given loans with no financial ability to pay now put their creditworthiness at risk. Of course they are too big to fall but individual Americans are not. So let the victims of the predators get eaten up. A band-aid here and there makes it appear that Obama cares, but in analysis it seems like much ado about nothing. The restrictions are such that few will be able to meet them. Perhaps this is a ploy to get the bankruptcy judge "haircut" power back into the law, but the Republicans will fight that tooth and nail, but Obama can say at least he tried. Truth is, modifying loans and principal reduction may be too much to keep the house of cards standing.

[kathismom]

Not going to help me. Current with my mortgage, no lates, but I've been getting help, which is going to stop in May. Can't refinance even though my credit score is up in the 700's (from 425 last year), no lates. Stuck in an ARM with AHMSI and last year I paid $39600+ in interest. HUD lowered the amount you can refinance, after raising it to an amount I could have qualified for had my credit score been good then. Stuck. I just want a nice 30 year fixed interest and principle.

[PMJeff]

Please tell me the 105% is a misprint. If I am reading correctly you can only be upside down 5% or less to qualify? If this is the case how is anyone going to be qualified ?

[PMJeff]

Can someone clarify below. My house is worth 160K I owe 240K. I am interpreting this as not qualifying. Is there something I am missing?

• I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

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.

[Dizzle831]

I was thinking the EXACT same thing. I'm upside down over 60%. I had a gut feeling i should have saved my money this month.

Basically all that talk in AZ, the worst hit area for foreclosure will get no help. This plan is to help the LEAST impacted areas. Come on 5%! Garbage.

Originally Posted by PMJeff

Please tell me the 105% is a misprint. If I am reading correctly you can only be upside down 5% or less to qualify? If this is the case how is anyone going to be qualified ?

[AZ Meltdown]

Sorry but this plan is simply polished up version of the earlier Help for Homeowners plan passed late last year by congress.

That plan was billed to help 400,000 homeowners, so far 25, yes TWENTY FIVE have been helped.

Another total failure rolled out with much hoopala and fanfare that will accomplish nothing.
Without principle reductions no plan will attract borrowers in any quanity, or they will continue to default 4-6 months after the latest mod.

Obama spent more on the motorcade, venue, fanfare and security to announce this "plan" than will be spent helping homeowners.

At 4 weeks Obama is looking like Bush III.

[Ledeen]

Once again, the government program doesnt allow most of us in high cost cities any relief. - In Los Angeles and OC most loans that would really benefit the most from a Loan Modification are more than 417,000 (the current conforming loan limits) Why didnt they at least EXTEND the conforming loan limit increases??????? geez I have paid so much in taxes, yet I have NEVER , ever in my life gotten any direct assistance from any government program..... usually dont want it, but I need a loan mod, and would be a great candidate I beleive since I have a great , steady job, make more than when I was sold this Option Arm Loan, yet can barely pay the interest only payment, and this is only due to the interest rates dropping. But in about 6 months when I cant make the property tax payment, My loan will reset to the full rate, its already 65% of my income, it will then be 75-80% of my income, and I will loose the house.

Have spoken with lawyers and yes have a case, and a good loan mod candidate, BUT I dont have the retainer fee up front..... only if I dont pay a mortgage payment, so I am between a rock and a hard place, and this new Obama plan DOES NOTHING for me.

[Ledeen]

Also, I already am familiar with NACA but they sound so much like ACORN, I just ahve such a hard time joining their group to get assistance from them. But i may be forced to.

[Dizzle831]

If you want to stay and your neighborhood hasn't deteriorated then go for it. I'm surrounded by For Sale signs and boarded up homes and crime is rampant. I'm ready to walk, but ACORN (2 years ago) did extend my loan to 40yrs and got me a better interest rate. It dropped my payment by a few hundred bucks but i'm upside down and inside out. It aint worth it for me.

Originally Posted by Ledeen

Also, I already am familiar with NACA but they sound so much like ACORN, I just ahve such a hard time joining their group to get assistance from them. But i may be forced to.

[dajets68]

Not to rain on anyone's parade here - but I think this actually may help me. The only thing I'm not sure of is if I can add my wife for income purposes since I will need her income as I was laid off. She has no credit though. My credit score is still good - but I have no job. I do have a Fannie Mae loan though and qualify otherwise. Any other update info about this?

[AZ Meltdown]

Originally Posted by dajets68

Not to rain on anyone's parade here - but I think this actually may help me. The only thing I'm not sure of is if I can add my wife for income purposes since I will need her income as I was laid off. She has no credit though. My credit score is still good - but I have no job. I do have a Fannie Mae loan though and qualify otherwise. Any other update info about this?

Could you post your particulars about your situation?
Location, when you purchased, 1st, 2nd, income etc.

I am interested is how you manage to fit through the restrictions.

Thanks and good luck!

[dajets68]

Originally Posted by AZ Meltdown

Could you post your particulars about your situation?
Location, when you purchased, 1st, 2nd, income etc.

I am interested is how you manage to fit through the restrictions.

Thanks and good luck!

Again, I'm not 100% sure I will fit all of the criteria as they have not released all of the details yet. But thus far it looks like I might.


I purchased a foreclosure in the spring of 2006 for 246k. I just had an appraisal done on Monday and I belive the current value will come in around 260k-280k. Zillow lists my house at 269k although a week ago it was 280k. I owe 220k. I have not been late on any payments and my rate is currently 7.75%. Here is what I'm not sure about though. I'm currently the only one on the mortgage - but I lost my job in August of 2008 and have not found work yet. My wife is a nurse and makes approx 80k a year and has been at her job about 5 years. My wife is on the title right now. Just not the mortgage. Also she has no credit. All she has is some collections accounts on there. My credit is good with a score of about 700. They make no mention of credit score in their plan either though.


So I think I qualify for the refi under the plan where you can't be late. Again I think the only catches are if my wife's income can be added which I think I heard something about this plan considering total household income, and her credit issue.

Hope this helps!

[ManicMangaManiac]

I'm very much afraid that this newest governmental program isn't going to help me a whit. OOMC/AHMSI, along with the help of an unscrupulous broker, suckered me into a loan that ate up nearly 100% (YES, almost one hundred percent!) of my take-home pay. I fell behind after running out of the cash out that I got from the refinance and was served with foreclosure papers last spring.

In the meantime, I just lost my job Jan. 15th, and with so many other people in my home state (Kansas) out of work, my prospects of getting anything even remotely good are very, very bleak. I have a judicial hearing the end of this month. The only thing I can do is exercise the "produce the note!" strategy to buy time as my lawyer is next to useless.

I don't see how Obama's plan is going to help me at all. I like the man and I know his heart is in the right place, but heaven help us all, he's going about it the wrong way!

Sally

[AZ Meltdown]

Originally Posted by dajets68

Again, I'm not 100% sure I will fit all of the criteria as they have not released all of the details yet. But thus far it looks like I might.


I purchased a foreclosure in the spring of 2006 for 246k. I just had an appraisal done on Monday and I belive the current value will come in around 260k-280k. Zillow lists my house at 269k although a week ago it was 280k. I owe 220k. I have not been late on any payments and my rate is currently 7.75%. Here is what I'm not sure about though. I'm currently the only one on the mortgage - but I lost my job in August of 2008 and have not found work yet. My wife is a nurse and makes approx 80k a year and has been at her job about 5 years. My wife is on the title right now. Just not the mortgage. Also she has no credit. All she has is some collections accounts on there. My credit is good with a score of about 700. They make no mention of credit score in their plan either though.

You didn't mention your location but I am suprised you are so little underwater with a spring 05 purchase compared to others.

Was the home severly underpriced when you bought it?

[Al_2009]

I'm about $200k underwater at this time, so this plan doesn't really help me significantly. I have a decent interest rate, but I need the bank to give me a principal reduction in order to make it viable for me to stay in my house.

What kinds of incentives are the banks getting in order to encourage mods/principal reductions?

[dajets68]

Originally Posted by AZ Meltdown

You didn't mention your location but I am suprised you are so little underwater with a spring 05 purchase compared to others.

Was the home severly underpriced when you bought it?

I live in Connecticut. I purchased in spring of 2006 and that is when the news started to break that the market was unraveling. Still people had their homes on the market at peek prices. The people across the street from me were asking 350k at the time I bought this house for 246k. Also the house up the street had just sold for 315k. I got a deal mainly because it was an outdated foreclosure. I have done some work to it and there is still some to be done. I've been patient with home depot and have done most of the work myself. I'm an accountant by trade so it has been slow go. Either way I literally purchased the house in the worst shape in the neighborhoon and have done minor cosmetic stuff to add to the curb appeal and the inside. I still haven't gotten the appraisel back - but I doubt it will be for less than the 220k I owe.

[dajets68]

Doesn't do a thing for me either because I put down less than 20% when I purchased. Another failed gov't plan.