Government taking over the giants....how does this affect me?

[nhern]

Hello,
Not sure if I'm posting this in the correct place, but I was just wondering how does the government taking over Freddie Mac & Fannie Mae affect us who are trying to obtain modifications? Do you think it will be easier? harder? Any and all information regarding this would be greatly appreciated! I am trying to obtain a modification from Litton, but I also have a HELOC with Green Point, who I have not tried to do anything yet. Don't know if the government taking over will possibly help us who desperately need it. Thank you. nhern

[12345]

i'd like to know too......

litton says send me info (exec team), then they call me and their front line people say i don;t pre-qaulify? GEEZ these people don;t talk to each toher....

[12345]

anyone have an idea?

[renee626]

was some legislation passed that will push lenders to make loan amount modifications? I read this in a New York Times article I now cannot find. I believe the government is pushing lenders to use money via fannie and freddi to modify loan amounts/principal on primary residences to 90% of current market value. can anyone verify!! when does this take effect? someone working on a modification says it will happen in October

[Maurice Bedard]

Hi renee,

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

Actually I think what you might have seen is the new FHA refinance guidelines which are going into effect on October 1st. This is part of a plan signed by the president back in July.
It isn't part of a modification............it is an actual loan refinance that you qualify for by going to an FHA approved lender. The lender participation is voluntary, not mandatory, so the investor that you have now will have to agree to accept a short payoff............and you can only have one loan on the property and only own one property...............
Here is some more info on it for you............

FACT SHEET: FHA TO PROVIDE ADDITIONAL MORTGAGE ASSISTANCE TO STRUGGLING HOMEOWNERS


The President has signed into law legislation that will allow HUD’s Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA’s existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.

Homeowners May Already Be Eligible For Assistance

Families should not wait to seek mortgage relief. Right now, homeowners can determine if they are already eligible for mortgage assistance through FHASecure, FHA’s existing refinancing program. They can obtain information through either of the following options:

1. Contact a local, HUD-approved housing counseling agency at HUD.gov;
2. Contact the HOPE NOW Alliance at 1-888-995-HOPE

Sustainable, Affordability Homeownership

Hope for Homeowners maintains FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

Their mortgage must have originated on or before January 1, 2008;
Their mortgage debt-to-income must be at least 31 percent;
They cannot afford their current loan;
They did not intentionally miss mortgage payments; and
They do not own second homes.
Features of FHA-insured loans under the new program include:

30-year, fixed rate mortgage;
Maximum 90 percent loan-to-value ratio;
No prepayment penalties;
$550,440 maximum mortgage amount;
Extinguishment of any subordinate liens; and
New home appraisals from FHA-approved appraisers.
HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.

Voluntary Lender Participation

FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure’s recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.

Market Stability and Liquidity

By continuing to slow the rate of foreclosures, this program will support FHA’s existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.

Funding

FHA will insure up to $300 billion in new loans. Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.

Program Timeline

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.

[12345]

i just read this today:

WASHINGTON(AP) -- Senate Democrats are urging Fannie Mae and Freddie Mac to immediately freeze foreclosures on mortgages they hold.

The troubled home loan giants, seized by the government Sunday, should instead work to help struggling borrowers stay in their homes, four senators say in a letter to the firms' new chief executives and the regulator now controlling them. They're calling for a 90-day freeze on foreclosures.

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) together hold or guarantee some $5 trillion in outstanding mortgages -- more than half the nation's total.

The Bush administration announced Sunday it was taking over the two companies in a bid to help reverse a prolonged housing and credit crisis

[borclu]

Hello. Has anybody called to see if they qualify for this new refinance effective oct 1. I called the hope line 2 weeks ago but they did not seem to know about it. Please inform where to call if anybody got to the correct person.
Thank you

[12345]

i believe for loans only between 2005 and 2008. my loan was done december 2003 so i don't qualify. shucks.

[1gringo1]

Would this apply to VA fixed loans too?

[Maurice Bedard]

gringo...............

The only thing that it has to do with your current loan is if the lender on your current loan, which you can only have one loan and own no other property, will accept a short payoff of the loan.................we just don't know at this time, which lenders are going to do this because it is voluntary only.................

It is a refinance going to an FHA approved lender..............so it is a new loan that you qualify for through an FHA approved lender.


If anyone goes to www.fha.gov you will be able to search in your area for an FHA approved lender because that is the only lenders that you can use to get this type of loan.

[renee626]

..so if you can get an FHA approved lender to voluntarily take this short pay off you have all of the related closing and processing expenses??

[Maurice Bedard]

Your current lender will have to accept a short payoff for the amount that you owe them.............
lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.

Q: How will the law help struggling homeowners keep their homes?

A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property’s current value.

Q: When will the program begin?

A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.

Q: Who is eligible?

A: To be eligible to participate in this program, a borrower must:

Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.

Have a monthly mortgage payment greater than at least 31 percent of the borrower’s total monthly income, as of March 1, 2008.

Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.

Not have been convicted of fraud.

Q: How can a homeowner access this new program?

A: Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender. The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program. If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30-year fixed rate loans.

Q: Are lenders required to participate in this program?

A: No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

Q: How does this law help neighborhoods that have been hit by the foreclosure crisis?

A: The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market.

Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?

A: No. It is narrowly tailored to keep families in their homes. For example:

Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.

Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.

In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.

Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

Q: Will this law reward families who bought homes they could not afford?

A: Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices.
To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders. It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.

Q: How will this law make it more affordable to own a home?

A: There are a number of provisions that will make homeownership more affordable:

Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).

Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.

Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state’s residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.

Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).

Q: Does the law provide help to those who still cannot afford to own a home?

A: Yes. The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis. For example:

The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.
In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.


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[JoJoJodyJo]

Yeah, but I question how this loan will really help. We looked into the FHA Secure loan, and there is an additional 2.5% cost to the rate for that loan (from every bank and lender we called). My total current payment is around $3,000 for $538,000 (first and second combined) in loans, and my new payment with the FHA Secure loan would be over $3100 for a loan amount of $305,000. This is because FHA now has a sliding scale on the mortgage insurance we are required to pay (depending on our credit score - which if we're late on our mortgages is very low), and the interest rate is substantially higher. I don't see how that helps me if I can't make my current payment as it is...

[Maurice Bedard]

Jody,

The Q&A here is for the new bill and the new FHA guidelines that are beginning on October 1st. And unfortunately also for those new guidelines one can not have a second mortgage on the property.............right there it eliminates alot of people..............and you can not own any other properties...............again, that eliminates even more people.............along with the fact that they throw in the word "voluntary" to the investors to accept 90% of the current value of the property.............just like the FHA Secure............... it would seem on the surface that this is not going to be able to help either..........

[JoJoJodyJo]

Jody,

The Q&A here is for the new bill and the new FHA guidelines that are beginning on October 1st. And unfortunately also for those new guidelines one can not have a second mortgage on the property.............right there it eliminates alot of people..............and you can not own any other properties...............again, that eliminates even more people.............along with the fact that they throw in the word "voluntary" to the investors to accept 90% of the current value of the property.............just like the FHA Secure............... it would seem on the surface that this is not going to be able to help either..........

Which is exactly my point - more lip service from our government designed to make it look like they're doing something when in fact, they're not. I have yet to see anything different from this administration so I'm not holding my breath that the government will come up with a real solution for all of us.

[renee626]

I have been in communications with Countrywide since literally March/April requesting modification. Oh by the way I should say a lawyer found Countrywide legally out of compliance with RESPA in my original loan and current comps for my home are at $350,000. Literally only now September, less that a month from the loan payment (if I do nothing) jumping from $2500 to $3500-interest, and I am backed into a corner does Countrywide now offers the following "modification." Keep loan amount the same $476,000 (yes Countrywide predatory lending practices with well over 5 reps pressing the offer talked me into a negative AM); stretch the loan from 30 to 40 years with a 5.25% fixed rate. Monthly payments will be higher than I am currently paying which I can barely do now. This seems like more predatory practices. I am pressing Countrywide for the 90% voluntary FHA offer

but confess I am confused and overwhelmed. No way can I pay $3500 monthly. No way I want to be saddled with a mortgage stuck at $476,000 for house only worth $350,000 at best!!

[renee626]

Should I try for the rate freeze? To keep my terms from changing in October to give me more time to figure this out and see the outcome of the new October legislation?

[Maurice Bedard]

The program start date is October 1st which is two weeks away, so what you might want to do is to call an FHA approved lender in your area which you can find at www.fha.gov
and ask if you would be able to qualify for the program.........

[renee626]

My current rate 6.65% current loan amount $476,809. original $460,000, term 27 years. recent comps two sold in my zipcode comparable for $350,000 and everyone expects prices to continue down. next month the rate goes to 6.1%

Countrywide is offering the following 5.25% fixed stretched to 40 years. For 5 years a payment of $2111 + escrow. for remainder 35 years $2513 + escrow... will give me two months this Sept and October to "rest" with no payments

or I as of October 1st I can try for the new legislation FHA approved lender loan set at 90% current value (of $350,000) with Countrywide agreeing to a short pay off and the existing lender (Countrywide) according to the legislation covers related fees and closing costs. The term is a 30 year term

With the October 90% FHA loan there is a debate about whether I'd have to pay taxes this year on the difference between my current loan amount $476,000 and 90% of $350,000 as some sort of gain (?) anyone know?

.... I'd love to hear your thoughts .... this week?

[nady24]

I was trying to get a loan mod with Select Portfolio Servicing.
I was told today that the house appraisal must be sent to the investor who is Fannie Mae.
They will be the only ones to determine if It is approved or not.
I thought the investor was SPS.
does anyone knows anything about this?

thank you.

[Maurice Bedard]

SPS (Select Portfolio Servicing) is just the servicer of the loan...............they are paid by the investor to do this.