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Posts Tagged ‘bailout’

Obama Loan Modification Details

Subprime lenders who fueled the U.S. housing crisis may be reaping benefits from the Obama administration’s Home Loan Modification program, according to a report from the Center for Public Integrity (CPI).

The $75-billion program, dubbed Making Home Affordable, grants taxpayer subsidies to lenders who successfully lower monthly payments for troubled borrowers. However, the study shows, 21 of the top 25 participating lenders were involved in subprime loans, which led to the housing collapse in the first place.

CPI executive director Bill Buzenberg says that much of the money is simply going back to the same companies that started the problem. According to the report, three of the biggest lenders - Countrywide, Wells Fargo, and JPMorgan Chase - are eligible for several billion dollars in aid under the program.

The government has recently urged lenders to crank up their home loan modification assistance programs as the Making Home Affordable plan went off to a slow start. As of last month, less than 10% of eligible borrowers have been aided by the program, according to estimates by the Treasury Department.

The CPI report went on to show that mortgage lenders and servicers have been slow in following the government’s efforts to stem foreclosures, despite “intense pressure” from the White House and the Congress. This is why, the report said, the government has resorted to incentive payments to get them to participate.

Major lenders have slammed the report, saying it undermines their real efforts to help homeowners. Scott Talbott of the Financial Services Roundtable, a group consisting of the largest U.S. lenders, says that it oversimplified the roots of the housing crisis and ignored the complexities of the real estate market.

Talbott added that lenders are doing what they can to help troubled homeowners through the Making Home Affordable program, as well as other foreclosure prevention initiatives.

To choose the best home loan modification program consult an authorized home loan modification consultant. For more news and articles on home loan modification program visit the best online Loan modification Information Resource: CDLoanMod.com

About the Author:

The Author is a Loan Modification Assistance specialist who writes on various home loan modification related topics to help people understand & choose the best Loan Modification option. For more helpful articles visit the author’s blog at http://loan-modification assistance.blogspot.com

Source - Home Loan Modification Program May Be Helping Subprime Lenders

Seattle Mortgage Reel Weekly Recap April 10, 2009

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Mortgage Modification Updates

Q:  Hi Todd. Are there set rules for mortgage modifications.  I get different answers depending on who I talk to.

A:  Great question.  There are some questions in real estate where a good real estate should say, "I don't know."  Until now this was one of those questions.  I say ‘until now' because the current administration's housing plan addresses the issue of homeowners who can't afford their monthly payments because of a number hardships.  This plan encourages lenders to modify homeowner's mortgages that fall under the definition of hardship.

And therein lies the rub.  The definition is loose at best and includes such things as ARM payment increase, lost income and increased expenses.

The bottom line:  an approved mortgage modification would reduce the current payment to 31 percent of before-tax income of the mortgagee.  These adjustments would hold for five years in most cases, and after that the lender is allowed to raise the rate by 1 percentage point per year until the rate is close to the prevailing rate during the week that the loan modification was approved.

The goal here according to the Treasury Department is to prevent the destructive impact of foreclosures on families and communities.  Gee, I don't remember the Treasury warning us or Freddie and Fannie about the problem with giving anyone with a heartbeat a mortgage a few years back...but I digress.  I know many people in Northern Virginia who have been foreclosed on that will not benefit by this plan now...oops...I digressed again.

So, the qualifications for a loan modification:

• 1) It must be the primary residence, occupied and inhabitable'
• 2) The first mortgage balance must be $729,750 or less'
• 3) It's alright if foreclosure proceedings have already begun or if the borrower is suing the lender,

The lender then figures out what it will take to decrease the monthly payments 31 percent of the borrower's income.

The house payment would include principle, interest, taxes, home owner's insurance, and hoa/condo dues.  Mortgage insurance premiums are excluded.

It's also important to note that past-due interest taxes and insurance are added to the balance while late fees must be waived.

The bottom line is that in the world of Real Estate mortgage servicers apply extremely different rules to the world of loan modifications, and the hope is that these guidelines will serve to provide more consistency to the public.

We shall see.  What is certain is that anyone facing a house payment they can't afford needs to educate themselves on the mortgage modification process as the other option involves calling me as their real estate agent to sell their home as a short-sale.  There's plenty of that business for me in the Northern Virginia Real Estate market, but I'd rather my client to be spared that process.

About the Author:

Northern Virginia Real Estate Arlington Real Estate http://www.kolaschrealestate.com For more information on Real Estate in Northern Virginia, please click any link above

Source - Real Estate Q&A with Kolasch Real Estate March 2009 – Mortgage Modification update

Do-It-Yourself Mortgage Modification

The big problem seems to be people defaulting on their mortgage loans, which leads to foreclosure and losses for the banks.

What if the banks offered to take 20% of the mortgage amount and put it in a non-interest accruing loan account, base mortgage payments on the 80% balance at high interest rate, allow the home owner to make optional payments to pay down the 20% to qualify for lower interests rates on the 80% mortgage, would this be helpful in keeping these mortgages viable?

Would this help in avoiding a taxpayer bailout of the financial system?