question regarding barney frank's plan

[ccsint]

Hi everyone,

I'm curious on your thoughts on this section of the mortgage plan that Barney Frank is pushing:


Eligibility Requirements for Existing Loans (Requires All of the Following):

· To remove any incentive for borrowers to “purposely default,” the borrower must have had a mortgage debt-to-income ratio of no less that 35 percent as of March 1, 2008, and must certify that he/she has not intentionally defaulted on existing mortgage(s);


My question is regarding the "must certify that he/she has not intentionally defaulted". It seems like there is no explicit language that says that the borrower has to be behind on their mortgage; only meet the debt-to-income ratio. Any thoughts on how this will actually get implemented?

Also, any thoughts on whether llenders "voluntarily" comply?

All the best,

ccsint

[Maurice Bedard]

Sorry, a bit late to the question. Hope all is well.

To remove any incentive for borrowers to “purposely default,” the borrower must have had a mortgage debt-to-income ratio of no less that 35 percent as of March 1, 2008, and must certify that he/she has not intentionally defaulted on existing mortgage(s);

I think that is going to be hard for a lot of people in ARM's right now. That debt ratio is what it should be, but not where most borrowers are at.

My question is regarding the "must certify that he/she has not intentionally defaulted". It seems like there is no explicit language that says that the borrower has to be behind on their mortgage; only meet the debt-to-income ratio. Any thoughts on how this will actually get implemented?

I am not clear on this and haven't researched it as much as I should. This reminded me to do that.

Also, any thoughts on whether lenders "voluntarily" comply?

This is something that I believe is going to happen in the near future. Everything regarding the mortgage clean up is voluntary. This involves contracts and many people involved in each and every loan workout.

The goal is to stream line all this. Whether it be loan modifications or FHA loans. Thus far, it hasn't happened.


Take care and best of luck!

[ccsint]

Thanks Moe!

As someone who upside down by nearly 25% in SoCal in a single year, and has a 41% debt to income ratio, I am following this bill intently. My only concern so far is whether I qualify, as I am (barely) able to cover the payments each month, and whether lenders voluntarily agree to reduce principal.

Keep up the great work.

ccsint

[Steven]

My debt-to-income ratio is closer to 50% with my current mortgage rate and I can easily demonstrate and certify that I am not intentionally defaulting on my mortgage, so this looks like a good fit for me, if it was passed. Now I would be curious to see how many lenders "voluntarily" agree to this.

[Steven]

Is there any word on whether Barney Frank's plan would encourage lenders to "volunteer" to work under his plan by offering incentives if they do... or threaten negative consequences if they don't?

[MLG619]

Yes, I too am watching this as my home is worth $150K less and my DTI is 50%. I don't know about these lenders writing that much principal down though but then again, how much would it cost them if they were do the write down vs. a short refi or a foreclosure. I'm not asking to be bailed out, I just need some kind of help!

[ccsint]

I was thinking about this last night.

It is likely that the bill giving immunity to the loan servicers for changing loan terms will pass. Therefore, for loans that have been sold, there should be few reasons why servicers refuse to do the modification.

In my case, my second is completely under water. Will they agree to completely wipe out the second and part of the first?

[ccsint]

WASHINGTON, April 29 (Reuters) - The U.S. Congress could send a package of proposals for housing and mortgage reform to the White House by July 4, a senior House Democrat said on Tuesday.

Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee, said the package was aimed at reducing the potential foreclosures facing troubled U.S. homeowners. It would include expanded powers for the Federal Housing Administration and government-sponsored mortgage finance companies, he said.

Frank made his comments to reporters following a speech at a banking conference.

(Reporting by John Poirier, Editing by Chizu Nomiyama)

[ccsint]

This also gives me hope (both of my mortgages are through CW, but they will be integrated with Bank of America by the end of the year):

Bank of America reiterates willingness to write down principal

"Addressing another demand by the advocacy groups, McGee said the bank would be willing in some circumstances to write down the principal on mortgages to keep borrowers from becoming discouraged and defaulting because their loans are so far "underwater." "

[ayadao]

How does this new bailout affect 2nd mortgages

[MrRoss]

Does anyone know if this bill and/or proposal is still alive? If so, what's the status?

[ccsint]

The plan is under final consideration; and could be signed by the president in the next few weeks. 2nd lenders are a problem and are not directly addressed in the bill; they'll have to come to an agreement to eliminate their position.


http://www.chicagotribune.com/classified/realestate/news/chi-re-harney-housing-relief-072jul20,0,2318021.story

[MrRoss]

Does the government give the lenders who agree to the losses any money, tax breaks, or any kind of kickbacks to make it worthwhile for them to help people?

[MrRoss]

Is there a way to follow the status of this bill online somewhere?

[ccsint]

The best bet is in the major news sites, as it's going to pass the senate shortly and Bush has agreed to sign it.

http://biz.yahoo.com/rb/080723/fannie_freddie.html

^^ I think the debt to income ratio in the article is wrong; everywhere else it is 31% or 35%. Maybe 40% with all household expenses.

[MrRoss]

That doesn't show any specifics on it. Where can you find out the qualifications people need to meet to be eligible for this?

[Maurice Bedard]

MrRoss,


I put the information in your original thread so that you can be able click on it and read it...............the links are not functioning in this section of the forum...........

[MrRoss]

Thanks for the links Cat. I read the article and have a question. Does this paragraph below mean that if you have a current 2nd mortgage on your house (I do for approximately 75K) that you aren't eligible for this refinance? What if the 2nd you have is the 20% part of the original 80/20 mortgage you bought your house with? It was originally a loan that was refinanced into a Line to lower the payment on it. No extra money was ever drawn on the line and it was only used for the original purchase and subsequent refinance.

If this is true, it seems like it's pretty much impossible to get this debt "retired" and then fight with the 1st mortgage holder to eat another $150-$200k. Also, when they say you have to be spending 40% of income on "all" household debt, what does this mean exactly? Does it pertain to property taxes, insurance, utility, phone, HOA, etc.. along with your mortgage payments? What else is part of the 40%??

Anyone have any thoughts or insights on this?

"Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program."

[ccsint]

Hi MrRoss,

I answered your questions here -

http://www.loansafe.org/forum/breaking-foreclosure-news/3901-final-housing-bill-passes-house-bush-sign-into-law.html


The debt to income ratio needs to be higher than 31%, not 40%. If your 2nd is with another lender then you are indeed in for a battle... ;(

[pam11]

what about the mortgage crisis? we have been forgotten about so you can give to the rich and we all are struggling to try & keep our homes, but it looks like there is no chance of this! even if there was help, why are they raising the interest rate now? it's because the rich will get richer * the poorer will get poorer! we need help now too. we work very hard and try to do the right things in life but things come up in your life that you have no control of. it makes us feel really bad and this is not a nice feeling to be going through. please i have so many stories about the people loosing their homes and it makes me even more sad, i feel sorry for all us. what about the good ol usa, not more more, it is just for the rich.