UPDATED! Q & A on President's Making Home Affordable Refinance and Modification Options

[indig0blue]

It is my understanding that the Fannie/Freddie requirement only applies to "Option 1" which is the refi help. If you want to do the loan mod based on mortgage payment to income ratio then that is based on your servicer and/or bank volunteering to partake in the program.

I have the same concern about the Fannie/Freddie thing because I am with OCWEN and do not know what bank backs my mortgage. This is a critical detail for me because I need to be able to get a loan modification to be ok.

Hopefully I understood the fine print right.

[LadyDoveFL]

Here's the blurb from the HASP Fact Sheet:

• To ensure long-term affordability, lenders will keep the modified payments in place for five years. After that point, the interest rate can be gradually stepped-up to the conforming loan rte in place AT THE TIME OF THE MODIFICATION. Note: Lenders can also bring down monthly payments to those affordability targets through reducing the amount of mortgage principal. The initiative will provide a partial share of the costs of this principal reduction, up to the amount the lender would have received for an interest rate reduction.

Originally Posted by Schnelle

"will be able to refi at lower interest rate FOR UP TO FIVE YEARS; after 5 years, interest rate will increase slightly UNTIL it reaches current levels"

When it reaches the "current levels" will it be fixed for the life of the loan?

[LadyDoveFL]

Originally Posted by MoneyPit

LadyDove is the 2nd plan only Freddie/Fannie as well?
I'm so impatient. I can't wait until March 4. lol.

Nothing was mentioned in the documentation about the 2nd option being constrained to FreddieMac- or FannieMae-backed loans. It only mentions that "no home mortgages larger than the Freddie/Fannie conforming limits will be eligible".

[LadyDoveFL]

Whoops! There is a third part of the plan (that's what I get for answering posts while at the office ):

3. BORROWERS FACING FORECLOSURE

• Allow Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options
• contact your servicer or credit counselor...in order to allow sufficient time to evaluate the borrower's eligibility.

That's all I could find regarding those owners already in the foreclosure process.

[TreadWater]

How about those who recently lost their homes? I guess we're SOL?

[kymburley]

Originally Posted by LHarveyMadman

However, I don't think that people who have fallen behind for legitimate reasons (loss of job, disability) will be called irresponsible. I think our President was referring to those who bit off more than they could chew at the outset. A person who bought a home within his/her means but ran into trouble because of unexpected hardship would still be considered responsible; a person with a $50,000 income who bought a $1,000,000 home (not uncommon in my part of the world) who is facing an ARM reset on their stated income loan would not be considered responsible.

I felt like I was called irresponsible because I've been laid off for a year.

How do you know if your loan is stated income? What does that mean? My mtg broker said some weird things to me like we can't do **** (don't know the term) because your husband is military and it's easy to see how much he makes. I'm scared we got into this house via trickery... How do you check that for sure?

[LHarveyMadman]

kymburley, it's not your fault that you were laid off. Losing your job doesn't make you irresponsible.

A stated income loan is one in which you don't document your true income in order to get the loan. It always comes with a higher interest rate and a lot of these loans fall into the subprime category. A person with an income of $50,000 a year could claim to have an income of $300,000 in order to qualify for a mortgage on a big house. This type of loan was offered to us when we bought our home, to try to qualify for a more expensive home than our income could support. We refused because we didn't want to buy a house beyond our means. But a lot of people used this type of loan to do just that. It was used by a lot of budding real estate investors who wanted to cash in on the soaring home prices.

Look at your loan documents. Does the amount of income that is listed on your application correct? Or is it some obviously inflated number? If the latter is true, you almost certainly were sold a stated income loan.

It might be hard to prove that you were duped into this sort of loan. It becomes a he-said-she-said situation.

[unclmikl]

well it seems to me the best thing that could happen is loans start getting buzz cuts by judges in bankruptcy courts. as this will put the fear of god in banks,servicers and investors and maybe they will get serious about correcting these exotic loans.

the banks that wrote these loans ought to brought up on Federal RICO and Rackateering charges as thier loans are a form of EXTORTION

[MoneyPit]

lviney
You should really check out http://naca.com They are a non profit organization and their services are free. Click on the "home save" tab to start the process.
I can't speak personally about success with them as I just started but I'm hopeful.

[jhn_plsn]

105% of the value, who has not surpassed this.
Credit Worthy how is this determined. New hidden score.
Sounds like it will help those who don't really need it rather want it.

I think I will start a pool as to how many this plan will help.

My first guess based on the last government flop is 12.

[emorybetsy]

unclmikl
Even the bankruptcy route doesn't help those with Jumbo loans.

[lynne]

Well March 4 is here and I am awaiting press release of the guidelines. Are others anxious too? I am hopeful that lenders are ready for the number of calls they will receive.

[PEACHES_38]

I'm anxiously awaiting also. My lender has been trying to force me to accept a modification that, in my opinion, doesn't really help my situation. Before agreeing to anything, I wanted to wait on these guidelines. I hope it makes a difference.

[lynne]

Best of Luck to you Peaches. I hope it helps us. Keep me updated on your outcome if you would.

[Dan Bailey]

FinancialStability.gov March 4th update

[Dan Bailey]

Summary of Guidelines:

http://www.treas.gov/press/releases/...es_summary.pdf


Modification Program Guidelines:

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


Fact Sheet:

http://www.treas.gov/press/releases/...fact_sheet.pdf


nothing has really changed from the original announcement

[robcg]

Hi, from what I understand this will benefit greatly anyone whose loan is under Mac or Freddie - all other banks it's voluntary to participate in this program? Is this correct? In my case I am with HomeQ.

- robcg

[Moe Bedard]

rob,

Homeq is the servicer...............Fannie and Freddie are investors.....

Has Homeq ever let you know who the investor is on your loan.........if it is Fannie or Freddie they would be able to let you know.........

[robcg]

It's not under them. I logged into HomeQ web site to look at my account and I saw the below:

Loan - 325XXXXXX On February 10th President Obama announced the Homeowner Affordability and Stability Plan. Part of the plan allows for the refinancing of loans guaranteed by Fannie Mae or Freddie Mac. Your account is not an account that is guaranteed by Fannie Mae or Freddie Mac. Additional information regarding the program can be found at FinancialStability.gov.

What do you think my chances are, especially if they already did a mod in Aug of last year and my payment is definitely more than 31 or 38% of my grossly income?

[jacksjean]

Silly Question - What does "Front-End DTI Calculation" mean?

[HobieCat]

I started to read up on these detailed guidelines that were released today. My lender is GMAC and the investors of the loan is Fannie Mae. GMAC however has not been very up front about their modification guidelines.

I think it would be beneficial if readers post your questions on this site so we get all our ducks in a row before each of us goes to our lenders and get them to help. It is now the law that they are required to do this.

For the Home Refinancing Option:

What are the eligibility criteria for a Home Affordable Refinance?
•The property must be owner occupied,
•The borrower must have sufficient income to support the new mortgage debt, and
•The first mortgage may not exceed 105% of the current market value of the property. For example if the property is worth $200,000, the borrower must owe $210,000 or less.

How would Lenders determine "Sufficient Income"? (I understand they are using Gross Income instead of Net Income.) Is it annual gross income multiply by 3 or by 2 to qualify for the loan amount owed?

To be eligible for a Home Affordable Modification, a borrower must:
•be an owner-occupant in a one to four unit property, and have
•an unpaid principal balance that is equal to or less than $729,750 (for one unit properties and higher for two to four unit properties, consult the Guidance for limits),
•a loan that was originated before January 1, 2009,
•a mortgage payment (including taxes, insurance, and homeowners association dues) that is more than 31% of the borrowers' gross monthly income, and
•have experienced a significant change in income or expenses, to the point that the current mortgage payment is no longer affordable.

Is there also surplus net income requirement after expenses (including the mortgage that you are trying to workout)? If there is, then what is the amount?

[messi]

"an unpaid principal balance that is equal to or less than $729,750" Does this mean jumbo loans less than 729,750 are eligible?

[LHarveyMadman]

Originally Posted by messi

"an unpaid principal balance that is equal to or less than $729,750" Does this mean jumbo loans less than 729,750 are eligible?

I saw that too, and I was wondering the same thing. I haven't read the details, but is this still the plan that applies only to loans backed by Fannie and Freddie? If so, then it would only affect jumbo loans that were originated when Fannie and Freddie temporarily increased their conforming limits to $729,750.

Remember, however, that the $729,750 number did not apply to all localities. If your home was in a low cost area, then the "jumbo conforming" or "super conforming" limit was lower. In those lower cost areas, a $700,000 loan might not have been eligible for purchase by either entity.

[greenapples]

Hello,

I have a Fannie Mae loan, however I do not qualify for the option of refinancing (option 1) because I live in CA and I'm too underwater and owe more than 105% of what the house is worth.

However, I'm wondering if I qualify for the loan modification option under this new plan? Unlike the financing option above which is exclusive to Fannie Mae and Freddie Mac loans, the guidelines for the loan mod does not get into the specifics of the investors.

Does anyone know Fannie Mae loans can only qualify for option 1 (refinance) but NOT for option 2 (loan mod to 31% of gross income)?

Thanks very much!

P.S. I'm new here and from what I've read so far, this site is extremely helpful and people on here are so supportive. I'm glad I found this site!

[Moe Bedard]

Hi greenapples,


Welcome to the forum and thank you for joining.................

The modification program is open to any investor backed loan........
here is the Q & A for the guidelines given to servicers........

http://www.financialstability.gov/docs/counselor_qa.pdf


If this is the only property that you own............you can also go through NACA instead.........they are a HUD approved counseling agency and they signed an agreement with FannieMae to help modify the loans that they back..........the Home Save modification services are free............
here is the link.........
https://www.naca.com/refinance/refinanceTenStep.jsp