second mortgages & Obama

[ccsint]

Countrywide & BoA modification guys keep saying that a new program for dealing with second mortgages is supposed to be enacted in the next few weeks...anybody hear anything about this?

The WSJ reported on this on 4/3, but we're nearing the end of April...anybody hear anything new?

Homeowner-Aid Plan Caught in Second-Loan Spat - WSJ.com

The administration left vague, however, a plan to pay loan-servicing companies to help extinguish second liens, such as home-equity lines of credit and down-payment loans. Government officials said at the time such an effort would reduce the borrower's indebtedness and make it more likely that the homeowner would stay current on the modified mortgage.

The Treasury is "actively working" on the second-lien issue and will announce "something within the next few weeks," said department spokesman Andrew Williams.

One proposal would require lenders to cap monthly payments on second loans at a set percentage of the borrower's gross income. The lender would be expected to "eat the vast majority" of the cost, with the government subsidizing a small portion, according to an administration official. Treasury still hasn't settled on the level of the cap or the size of the government contribution.

[snapple candy]

This is a great article. Thanks for sharing the link. Maybe thats why my lender whom holds my 1st and 2nd is pushing to foreclose now. I stopped making 2nd payments 2 mths ago and am pushing in writing that the 2nd be considered as part of the mod program.??? Maybe they want to push me out before new guidelines force them to deal with it.

[ladyfijiana]

I keep my fingers cross for 2nd mortgage. I am paying 11% on my second mortgage. Hopefully we can hear something on 2nd soon.
Thanks for posting the link on that article.

[Tartbird]

They absoulutely need to deal with the 2nd mortgage issue. The prices of homes were so over inflated that there is almost no one who is having mortgage problems and is upside down in their homes who does not have a second to deal with!

Tartbird

[kat10]

Since a HELOC is secured to the property is it considered a second?

[~Jess~]

My 2nd is with Wells Fargo & is completely unsecured at this point due to the declining value of my home. I called them & had my mod within a week! I just had to fax a hardship letter & paystubs. They dropped my rate to 0.31% for 4 years, cutting my payment by 1/3, and we'd never even been late! So even without a set "Obama" plan in place, it's worth a shot applying for a mod if you're seriously underwater. Good luck, all!

[~Jess~]

Originally Posted by kat10

Since a HELOC is secured to the property is it considered a second?

Yes. Any loan--no matter what it's called--that is listed in second place on your deed of trust is considered a 2nd mortgage.

[HopingtoFind]

1st, 2nd or 3rd are just an order in which loans were recorded.

[ultimate4799]

This is good news for 2nd loan if it goes through... Looking forward on this

[Mike Jones]

Originally Posted by ~Jess~

My 2nd is with Wells Fargo & is completely unsecured at this point due to the declining value of my home. I called them & had my mod within a week! I just had to fax a hardship letter & paystubs. They dropped my rate to 0.31% for 4 years, cutting my payment by 1/3, and we'd never even been late! So even without a set "Obama" plan in place, it's worth a shot applying for a mod if you're seriously underwater. Good luck, all!

Can you please elaborate on how the 2nd became unsecured? I'm not sure I understand that. Then what if it is unsecured and not pay or even file bankruptcy on it? Wouldn't that be a way out of it should it come down to that?

[snapple candy]

Mike,
I think what she means is the 2nd is worthless paper since house is worth less than what is owed therefore they cannot collect on it.

[Mike Jones]

Originally Posted by snapple candy

Mike,
I think what she means is the 2nd is worthless paper since house is worth less than what is owed therefore they cannot collect on it.

Oh ok, but could they still proceed with foreclosure on failure to pay for it?

[~Jess~]

What I mean by unsecured is that although they are still listed on my deed of trust, if they were stupid enough to foreclose, they wouldn't get any money out of it, and would, in fact lose money due to having to pay all the costs of foreclosure.

My home is worth maybe $180k. I owe $258k, only 33k of that is on my 2nd. No way in heck would they try to foreclose on me since they'd lose even more money than if they just wrote it off...

[gretnaj]

My house is worth about 170k. I owe 224 but owe more on my 2nd than on my first...about 102 on my first and 122 on my 2nd....the 1st is at 7% but the 2nd is at 13.5%...the 2nd is killing us. Wonder if this will help us out at all?
I hope so!!! Between my husband and i we have received $800 in paycuts in the last 2 months. Isn't it so great our tax $$$ is bailing these banks out so they are able to use our money to foreclose on us? Our 2nd is with ditech so I know for sure they would foreclose!!!!

[Mike Jones]

Gotcha Jess. Only issue is that Im afraid they will do a foreclosure if I dont pay and right now they're not offering any good deal to mod the 2nd or settle it for cent on the dollar :/

[gretnaj]

Latest announcement about 2nd mtg plan.
Let's all hope this will help us out. If I could just get my 2nd down from 13.5% to the 7% that my first is that would be such a help!



WASHINGTON (Reuters) -- The U.S. Treasury Department will Tuesday tap a $50 billion housing rescue fund to pay off mortgage investors and reduce monthly payments for millions of borrowers, said a senior administration official.

Mortgage servicers that own a small stake in costly loans will receive a cash payment to either erase the debt or agree to accept a reduced return on their investment.

"It will be a shared effort with lenders, investors, borrowers and the government to ease or extinguish second-lien mortgage payments," a senior administration official told Reuters.

During the height of the housing boom, some borrowers were able to buy a home with no downpayment by adding a second lien, and many of those loans are now failing as the economy and housing market struggle.

Second liens typically carry a higher interest rate than primary mortgages but those second liens will have a lower rate under the modification plan, the officials said.

"The second lien holder, as is appropriate in the junior position, is taking more of a reduction in interest rate," one official said. "The interest rate will go at least as low as the interest rate on the first and it will (fall) much further to get there."

Tuesday's announcement will build on President Barack Obama's housing rescue plan announced in February that aims to reduce the cost of homeownership for up to 9 million borrowers straining to make their monthly payments.

Rescue gets a revamp
Officials will also announce new incentives for the Hope for Homeowners program conceived last summer to refinance hundreds of thousands of struggling borrowers.

In fact, the program has only aided a handful of homeowners and the Department of Housing and Urban Development will offer mortgage servicers thousands of dollars for each home loan that they successfully modify under that troubled program, the officials said.

The officials said that they will continue to remove other bureaucratic encumbrances and expand incentives where needed to steer more homeowners away from default.

Some analysts have faulted officials and lawmakers for leaving Hope for Homeowners hamstrung by the question of second liens as those investors have had a near veto power on modifications.

"It has taken policymakers a long time to realize that second liens are a showstopper," said Dwight Jaffe, a professor of housing finance at Berkeley University in California.

[ccsint]

Here's another article:



Most exciting part:

Under the program, servicers must agree to modify all second mortgages where the first mortgage has already been modified. To qualify for payment, servicers must extend the term of the second mortgage and reduce the interest rate to match the first mortgage. Then, the government will share the cost with the servicer of reducing the rate down to 1% for amortizing loans and 2% for interest-only loans.

If I had a 2% IO and extended term on my second...that would be a game-changer.

[gretnaj]

I wonder if It would not apply to me b/c I have not modified my 1st?
I wonder if I should do that? I had not b/c it is the 2nd that has the 13.5% and I am struggling so badly with.

[ccsint]

I had not either -

In my case, both are with BoA/Countrywide, so they would do both at the same time. Not sure how the government is going to force 2nd mortgage holders to modify if the 1st is modifed with the Obama plan.

If yours are separate, it probably makes sense to try and get the 1st modified. Obviously get someone elses opinion before making any critical decisions.

[ladyfijiana]

We called Indy Mac or One West Bank and they said they heard of this new plan but that is all. Maybe it is too new but hopefully it works out and everybody can get the 2nd mortgage rate reduced.
Thanks for keeping us inform.

[Moe Bedard]

WASHINGTON – The Obama Administration today announced details of new efforts to help bring relief to responsible homeowners under the Making Home Affordable Program, including an effort to achieve greater affordability for homeowners by lowering payments on their second mortgages as well as a set of measures to help underwater borrowers stay in their homes.

“With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan,” said Treasury Secretary Tim Geithner. “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall. Every step we take forward is done with that imperative in mind.”

"Today's announcements will make it easier for borrowers to modify or refinance their loans under FHA's Hope for Homeowners program," said HUD Secretary Shaun Donovan. "We encourage Congress to enact the necessary legislative changes to make the Hope for Homeowners program an integral part of the Making Home Affordable Program."

The Second Lien Program announced today will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50 percent of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien. Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.

Separately, the Administration has also announced steps to incorporate the Federal Housing Administration’s (FHA) Hope for Homeowners into Making Home Affordable. Hope for Homeowners requires the holder of the mortgage to accept a payoff below the current market value of the home, allowing the borrower to refinance into a new FHA-guaranteed loan. Refinancing into a new loan below the home’s market value takes a borrower from a position of being underwater to having equity in their home. By increasing a homeowner’s equity in the home, Hope for Homeowners can produce a better outcome for borrowers who qualify.

Under the changes announced today and, when evaluating borrowers for a Home Affordable Modification, servicers will be required to determine eligibility for a Hope for Homeowners refinancing. Where Hope for Homeowners proves to be viable, the servicer must offer this option to the borrower. To ensure proper alignment of incentives, servicers and lenders will receive pay-for-success payments for Hope for Homeowners refinancings similar to those offered for Home Affordable Modifications. These additional supports are designed to work in tandem and take effect with the improved and expanded program under consideration by Congress. The Administration supports legislation to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program.

Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than75 percent of all loans in the country are now covered by the Making Home Affordable Program.

Continuing to bolster its outreach around the program, the Administration also announced today a new effort to engage directly with homeowners via MakingHomeAffordable.gov. Starting today, homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov. To submit a question, homeowners can visit Making Home Affordable - Asked and Answered: Questions from Homeowners like You. Selected questions from homeowners across the country and responses from the Administration will be available at Making Home Affordable - Asked and Answered.

For additional details on the program announced today, please see the Program Update Fact Sheet.

http://www.financialstability.gov/do...nFactSheet.pdf

http://www.financialstability.gov/do...ngExamples.pdf

[snapple candy]

I think this sounds really great but I wont believe it until I see it actually happen. Hope for homeowners to date has not been all that effective. If you cant force the borrower to modify your loan under the guidelines, it still all is voluntary and means nothing until the lenders step up to the plate and actual provide affordable and sustainable modifications. Ill be going to that web site and submitting my questions for sure. Thanks for all the info and links ***.

[gretnaj]

I called gmac/ditech with questions on their mod form last night.....usual treatment from these horrible folks! If this goes through it kind of looks like I could deal with my 1st mtg holder Wells Fargo? (if mods are done in tandem). I wounder how long this will take to be in the system?

[ccsint]

From reading the Treasury fact sheet, companies that are participating in the Obama modification plans will be forced to also participate in the 2nd mortgage and Hope for Homeowner plans.

If qualified for both plans, the homeowner is supposed to be able to choose between the two. In order to make it more palatable, they added some additional financial incentives for HtH.

HtH may still be the way to go for many of us..downside is that the government shares in any home appreciation down th eline, but you get the principal writedown. I'm upside down 200k myself, so this probably would be the best. But on the other hand, I'd also be happy with a 2% IO second mortgage (maybe slightly less happy).

[gretnaj]

I wonder how long this will take to go into effect?
I called GMAC/DITECH for advice on their loss/mitt form and they very rudely told me that the form was for 1st mtgs not 2nd...they are doing anything with their 2nds.
I asked if she had heard of this and she said they would never participate in something like that.