March 4 plan update

[Dan Bailey]

FinancialStability.gov

Alot of info to go through.

[Dan Bailey]

http://www.treas.gov/press/releases/...guidelines.pdf
GUIDELINES

[Dan Bailey]

Q&A: http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

[snapple candy]

Dan, Thanks for the links. I am sure the blogs here will dissect this in the days to come. A brief peruse yielded a few important items:


OF NOTE: If the servicer determines that a non-defaulted borrower facing a financial hardship is in Imminent Default and will be unable to make his or her mortgage payment in the immediate future, the servicer must apply the NPV Test. They also mention "participating servicers".

Loan Modification Terms and Procedures
•
Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.
•
Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPV test will compare the net present value of cash flows with modification and without modification. If the test is positive
– meaning that the net present value of expected cash flow is greater in the modification scenario – the servicer must modify absent fraud or a contract prohibition.
•
Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.
•
Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).
•
The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.

[Yanqui]

Thanks Dan.

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 wonder ifthey will take into account the paying of my mortgages for the last seven years on time and the fact that I am unemployed and had to have two surgeries last year? I'm close to getting work. They make everything so rigid without an individual account of we all got into this mess.

[Ragdoll]

Thanks for the info! I'm trying for another modification, a real one this time. I would love my payments to be 31% of our income.

[Yanqui]

The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.

I needed this last year. First the 2% and extend the loan to 40 years forebearing the the first three months and adjusting the principle to current market values. I would have been able to save my credit scores and relieve alot of stress.

[LenderNoHelp]

Do we know if CountryWide is participating, since it states Freddie and Fannie backed loans will be eligible??

[mayela]

I just called countrywide and they told me wells fargo is the investor and not freddie mac or fannie may and that I dont qualify for a mod, to short sale my home! does this mean I dont qualify for the new Obama Plan?

[horions59]

I asked IndyMac both in a formal written request and on the phone for my investor on my loan and I have received nothing.

Can I also assume that IndyMac loans will not be participating in the federal program?

[LenderNoHelp]

Mayela,

Why did CW say you don't qualify for a loan mod? Did you not show a surplus? I have been trying to fight with them for awhile, receive different responses everytime based on what the calculation show each month so I finally called the 995-HOPE number. The HUD Counselor wrote a recommendation for a loan mod for me directly to loss mit dept. on Monday Still waiting for outcome on that. If we are not backed by Fannie and Freddie, we probabally won't qualify for the refinance but hopefully we can qualify for the Home Affordable Modification Program.

[indeep1959]

Trying to sort through this plan,does it only help people who are current? What happens if someone is a month or two behind,no help? If so,would it be wise to beg or borrow from, say a relative, to become current in order to qualify?

[Moe Bedard]

indeep,


The Q & A guidelines that were given to servicers can be found here................
http://www.financialstability.gov/docs/counselor_qa.pdf

[Jumbo101]

The plan is great except for 2 things.
1. My loan is not with Fannie or Freddie
2. I am so underwater I cant qualify

So how is this plan going to reach anyone in California, AZ, Nevada, or Florida? This bill would be great if they got rid of these 2 things. Imagine all the money that would flow back into the economy if everyone had an extra $1K to spend and felt like there house was at current levels.

[indeep1959]

Originally Posted by *** Damiano

indeep,


The Q & A guidelines that were given to servicers can be found here................
http://www.financialstability.gov/docs/counselor_qa.pdf

OK,it seems even delinquent loans are included.
This might be able to help me, I'm right at the break even point,100% LTV

[jhn_plsn]

Originally Posted by Jumbo101

The plan is great except for 2 things.
1. My loan is not with Fannie or Freddie
2. I am so underwater I cant qualify

So how is this plan going to reach anyone in California, AZ, Nevada, or Florida? This bill would be great if they got rid of these 2 things. Imagine all the money that would flow back into the economy if everyone had an extra $1K to spend and felt like there house was at current levels.

Ditto.

Focussed on making mortgage payments so CC debt went to hell, therfore credit score is bottomed out. So what now, BK. I do like the idea of the BK judge having the authority to cram down or make some kind of judgement. Although if you read the rule is you have to have proof that you gave the mortgage company a chance to modify. I'm good to go there to. I was able to get the 1st to go to a low interest only on the first so that one is ok, but if all of it could be reduced to the 31% ratio I would be in much better shape. We'll wee.

[scv_guy]

I hope the House rejects this version of the plan announced yesterday!


The way I read this, it appears that the Bill only applies to people who owe as much as 5% more than the current market value of their home.

I am simply a home owner, but it seems we need a plan that will help the majority, not the minority. The lenders need to put some skin into the game now instead of waiting for the government to help them maintain shareholder value. Many people in crisis that I talk and email with feel that a rate reduction will help them, but if any little thing goes wrong and their income drops or COL rises, they are back in trouble. I do not know anyone in crisis who falls within the 5% category.

Many people believe that government-subsidized principle reductions are the only way to help, as the adjustment will help bring home values back/closer to reality. While this would help me, I am still on the fence over this. For example, a 10% principle reduction and a rate reduction to 5.00% would take my mortgage to an affordable level and help me avoid BK.

Additionally, there appears to be no standard (or formula) for judges to use, should the judge decide to rewrite a mortgage in bankruptcy.

Am I reading this wrong? What am I missing?

A friend emailed this today: Typical bureaucratic ambiguity in a Bill that, once again, helps people least in need of help!


Any thoughts, comments, ideas?

[indeep1959]

Originally Posted by scv_guy

I hope the House rejects this version of the plan announced yesterday!


The way I read this, it appears that the Bill only applies to people who owe as much as 5% more than the current market value of their home.

I am simply a home owner, but it seems we need a plan that will help the majority, not the minority. The lenders need to put some skin into the game now instead of waiting for the government to help them maintain shareholder value. Many people in crisis that I talk and email with feel that a rate reduction will help them, but if any little thing goes wrong and their income drops or COL rises, they are back in trouble. I do not know anyone in crisis who falls within the 5% category.

Many people believe that government-subsidized principle reductions are the only way to help, as the adjustment will help bring home values back/closer to reality. While this would help me, I am still on the fence over this. For example, a 10% principle reduction and a rate reduction to 5.00% would take my mortgage to an affordable level and help me avoid BK.

Additionally, there appears to be no standard (or formula) for judges to use, should the judge decide to rewrite a mortgage in bankruptcy.

Am I reading this wrong? What am I missing?

A friend emailed this today: Typical bureaucratic ambiguity in a Bill that, once again, helps people least in need of help!


Any thoughts, comments, ideas?

Its a done deal.

[Jumbo101]

scv I agree with you, They probably could of cut our principal to current appraisal and saved money. The banks do not want to cut principal. The government should make them cut it. Instead we give them money and do not make them tell us what they do with it. We bail out Car companies that sell products no one wants. Meanwhile they allow more foreclosures and let neighborhood's be ruined and allow people to walk instead of keeping them in homes and getting them to spend money on things like, um CARS.

This all is starting to remind me of another time in history say 1765 to 1775. Jefferson would love this stuff. To bad nobody in Power is anywhere near the class of our founders.

[JerzeeGal]

Can anyone tell me if the Modification plan that is for Fannie Mae or Fannie Mac loans is different or the same as the "Obama Plan?" I am being considered for the Obama plan and I know that my loan is not a Fannie Mac or Mae. Thanks.

[Moe Bedard]

The only difference is that there is also a refinance option for Fannie/Freddie backed loans.


here is a link to the guidelines for the modification program.............
http://www.treas.gov/press/releases/...guidelines.pdf

[JerzeeGal]

Thank you again *** and I started to read the 17 pages of this document but my eyes were going buggy.
So then I guess what you are saying is that I could still be approved under the "Obama Plan" which is what my lender keeps telling me that they are considering me for but I just did not know what it entails. I guess I have to wait then.

[snapple candy]

JerzeeGal,
I have read both the obama guidelines and the fanniemae guidelines and I did see some differences. One being that fanniemae is prohibiting principal reductions. The obama plan states principal reductions are allowed. I have yet to figure out why they are different since fannie and freddie were taken over by the govt. I have not combed thru to find out any other differences but this was a standout. I think fannie guidelines are at www.efanniemae.com. I am wondering also how I will be evaluated and under which criteria. Assuming it is fanniemae backed loan, I am wondering if they have to obide by their own guidelines rather than Obama guidelines.

[jhn_plsn]

It seems to me, and this is purely uneducated speculation on my part, that the new programs are limited in their scope so that inflation will be more likely to stay in check. If the plans help to many people the fear is probably that we will go out and drive up demand and inflation may get out of control.
Just a thought.

[scv_guy]

jhn_plsn - A friend of mine in mortgage lending mentioned this same scenario.

I have already lost faith in Obama, as have many of my friends and colleagues. Even some of my hard-core democrat friends are starting to worry that these bad decisions with housing issues will kill Obama's momentum. Many feel, that, even with the money and effort spent on good PR, if enough Americans lose their homes due to Obama's poor plans and/or lack of reacting to the problem, it will be tough for him to recover. The primary reason is that he has provided vaporware solutions as of now. He has done nothing to help MOST Americans in home-mortgage dire straights. If he spent his time understanding and addressing the real issues instead of worrying about the lenders that support his campaign, he may be able to lead his team down the road to saving the American housing market.

Also, is it just me, or does the stock market take a hit each time Obama opens his mouth? It seems that his last 5-6 speeches yielded a major hit on wall street the same or next days...???