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

[Moe Bedard]

Here is some information regarding the Homeowner Affordability and Stability Plan announced by the President today to be implemented beginning March 4th.

Q & A:
http://www.treas.gov/initiatives/ees...ConsumerQA.pdf

Executive Summary:
http://www.treas.gov/initiatives/ees...iveSummary.pdf

Fact Sheet:
http://www.treas.gov/initiatives/ees.../FactSheet.pdf

Housing Example Sheet:
http://www.treas.gov/initiatives/ees...ampleSheet.pdf

[nitag]

Thanks ***... This answered so many of my questions.....

[MoneyPit]

I didn't read every word but it seems as if the help is only for those with Freddie and Fannie loans. Is this correct?

[00zx6r]

Thanks ***,
I think Homeowner Affordability and Stability Plan will not help the underwater -30%-60% equity.

[Moe Bedard]

00zx6r,


I think your right..............

MoneyPit,

I think that is referring to the refis...........but we will have to see on March 4th.

[brokemama]

Although I will qualify, the savings will not be very significant. NACA's proposal is much more realistic and helpful; will I still be able to continue with that? My file is complete with them.

[Moe Bedard]

brokemama,


There wouldn't be any reason why you couldn't continue with NACA...........and I would have to agree.......NACA's modification looks like a better, more affordable option for those that qualify.

[brokemama]

Thanks, ***. I am very interested in NACA's proposal and am praying that the lender agrees. I sent an overnight letter to Herb Allison as well; figured it couldn't hurt.

[Moe Bedard]

No it never does hurt to contact the CEO...........I hope you hear something good soon.

[brokemama]

I hope so too! Coincidentally, I just received a call from my counselor at NACA that the file was emailed to ALS. Great communication!

[Yanqui]

Still the program doesn't help those of us that were forced out due to medical/financial hardships to rent our primary. I will be filing BK 7 in March.

[emorybetsy]

Sounds like I will fall through every crack in this plan too.
1. not in foreclosure - no chapter 13
2. have more than one mortgage that needs modification - no modification
3. not creditworthy - no refinance

Am I right?

[HopingtoFind]

Originally Posted by emorybetsy

Sounds like I will fall through every crack in this plan too.
1. not in foreclosure - no chapter 13
2. have more than one mortgage that needs modification - no modification
3. not creditworthy - no refinance

Am I right?

On your #1:
1. 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.

On your #2:
6. 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.

On your #3:

I didn't see anywhere in the plan that you have to have good credit to qualify for refinance.

[emorybetsy]

I may be wrong but it sounds like there are three ways to get help, with different criteria for each: modification, refinance or bankruptcy.

for help in a bankruptcy you have to be in foreclosure
for modification you can only modify 1st mortgage
for refinance it has to already be a fanniemae or freddiemac loan (not sure if mine are) but they will do a traditional refinance but allow higher LTV.
I was so hopeful when I first read it but after re-reading it I don't know. I guess we will have to wait until March 4th for exact criteria.

My question #3
5. 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.

[emorybetsy]

It also sounds like they are only going to refinance 1st mortgage if second will agree to remaining second. So does that mean you can not combine first and second to create one mortgage?

[LHarveyMadman]

Originally Posted by emorybetsy

It also sounds like they are only going to refinance 1st mortgage if second will agree to remaining second. So does that mean you can not combine first and second to create one mortgage?

That is my interpretation of the plan. This is a modification plan, not a refinance plan. But I wonder if your situation is different since all 3 of your loans are held by the same lender. It doesn't seem like any loan would be subordinate to another.

[LHarveyMadman]

Wait, I take that back. Since your loans probably have different investors, then there is almost definitely an "order" to your loans.

[HopingtoFind]

Originally Posted by emorybetsy

I may be wrong but it sounds like there are three ways to get help, with different criteria for each: modification, refinance or bankruptcy.

for help in a bankruptcy you have to be in foreclosure
for modification you can only modify 1st mortgage
for refinance it has to already be a fanniemae or freddiemac loan (not sure if mine are) but they will do a traditional refinance but allow higher LTV.
I was so hopeful when I first read it but after re-reading it I don't know. I guess we will have to wait until March 4th for exact criteria.

My question #3
5. 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.

Aha..creditworthy.. I guess that is subject to interpretation. I know FHA will consider FICO in mid 500s, I think..

[LHarveyMadman]

You know, I found the use of the word "creditworthy" to be very unusual, as you have pointed out, HopingtoFind. There are many homeowners who are committed to paying their mortgage, but have missed several months of payments due to hardship. Their credit scores have been shot to Hades as a result. Are they no longer "creditworthy"?

It sounds like a cop-out for the government, in case they need to backpedal on this proposal. In general, it seems like this plan contains a lot of hedged bets.

[Dan Bailey]

From what I read about it,

Obama plan will help you IF:
You owe more than 80% of homes value
You are current on payments
Fannie or Freddie is your investor
Home value cannot exceed 105% of current market valuefficeffice" />>>
What his plan does:
Calls those of us who really need the help “unscrupulous or irresponsible” (basically, if you do not fall in the above guidelines)
Pays servicers to modify loans ($1,000- much less than they are insured for in foreclosures. $ 500 to servicers, $1500 to investors if thy modify before the borrower falls behind IF they modify you IF you fit into the criteria) as an “incentive” for them to participate
Will work with congress to amend bankruptcy laws to allow judges to modify mortgages
Make any modification decisions voluntary on behalf of the investors.>>
Obamas plan DOES NOT:
Make anything mandatory
Reduce principle
Provide help for investment properties
Help those in immediate trouble>>
How I see this? Obama’s plan helps those who are not behind to reduce their rates. People who are not in hardship will take advantage of this to lower their rates and make more money.
It gives the investors something to point at to as an excuse to refuse to modify.
It gives the investors something to point at to justify receiving federal money.
If you’ve come here looking for help, Obama’s plan will most likely NOT help you at all.

[MoneyPit]

Well I don't have a Fannie or a Freddie but every other requirement applies to me. Bummer. I was so hopeful.
I know I'm underwater on my mortgage. I bought the house, I owe what a I borrowed. I just want a decent interest rate that I can afford. Looks like that won't be possible with this plan.
I hope that NACA can help me.

[LHarveyMadman]

Good summary, Dan. 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.

What I find a little surprising is that this plan is restricted to Fannie and Freddie loans. It's going to leave a lot of Californians out in the cold, because many of us have jumbos that originated prior to the increase in conforming limits. I thought that President Obama would have tried harder to please an important source of electoral votes. But maybe he just assumes that those votes are his, under any circumstance.

[LadyDoveFL]

Now, I interpreted the program differently...

There are TWO plans:

1. BORROWERS NOT AT RISK OF FORECLOSURE:

• Homeowners current on their single, conventional mortgage but have less than 80% equity

1. • can't refi at current low rates
   • will be able to refi IF current mtg is held by Freddie Mac/Fannie Mae ==OR== place by FM in mortgage-backed securities
   • refi-ed mtg can be more than 105% of current property value

• Homeowners current on their 1st and 2nd mortgages with 1st mortgage amount less than 105% of their property value
  • can't refi at current low rates
  • new program will allow owner to ONLY refi the FIRST mortgage, not the 2nd -- AND ONLY IF the 2nd mtg lender AGREES to remain the 2nd

2. BORROWERS AT RISK OF FUTURE FORECLOSURE
(because of being behind on pmts or underwater):

• • 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
  • refi will bring payments down to about 31% of income and will allow owner to pay down principle
  • govt incentive of $1000/year principle reduction if homeowner stays current on payments; $5000 max

More information forthcoming on March 4th which is when the Homeowner Affordability and Stability Plan program starts. Lenders will be offered monetary incentives to offer refis to eligible borrowers as these loan mods are still voluntary on the part of the lenders.

That's my take...

Originally Posted by Dan Bailey

From what I read about it,

Obama plan will help you IF:
You owe more than 80% of homes value
You are current on payments
Fannie or Freddie is your investor
Home value cannot exceed 105% of current market valuefficeffice" />>>
What his plan does:
Calls those of us who really need the help “unscrupulous or irresponsible” (basically, if you do not fall in the above guidelines)
Pays servicers to modify loans ($1,000- much less than they are insured for in foreclosures. $ 500 to servicers, $1500 to investors if thy modify before the borrower falls behind IF they modify you IF you fit into the criteria) as an “incentive” for them to participate
Will work with congress to amend bankruptcy laws to allow judges to modify mortgages
Make any modification decisions voluntary on behalf of the investors.>>
Obamas plan DOES NOT:
Make anything mandatory
Reduce principle
Provide help for investment properties
Help those in immediate trouble>>
How I see this? Obama’s plan helps those who are not behind to reduce their rates. People who are not in hardship will take advantage of this to lower their rates and make more money.
It gives the investors something to point at to as an excuse to refuse to modify.
It gives the investors something to point at to justify receiving federal money.
If you’ve come here looking for help, Obama’s plan will most likely NOT help you at all.

[MoneyPit]

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

[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?