Archive for the ‘California help for homeowners’ Category

Could Elimination of Housing Counseling Programs Hurt YOU?

Monday, April 18th, 2011

In what I personally think is a big mistake, Congress announced that it is eliminating $88 million in funds for housing counseling programs. These are the programs that allow struggling homeowners and others with questions to call in and get counseling advice. It is often the first step in pre-foreclosure, or even in avoiding foreclosure altogether.

One of my favorite counseling hotlines, HopeNow, stated that it is not being shut down, but will be effected by the cuts. I have referred people to HopeNow for years. It is approved by the Department of Housing and Urban Development (HUD) and the people who work the phone lines actually know what they are talking about. The biggest complaint I have heard is that sometimes one has to hold for help for some time, but the advice is real and they really do go over specific situations and crunch numbers with callers.

Why would the government want to cut these programs? Well, I think that the government is busy trying to come up with ways to prevent foreclosures and help the housing mess by implementing new programs (of course, we have not seen these as of yet, but the most promising seem to be on the way, stemming from the robo-signing lender punishment saga). At the same time they are trying to trim our exorbitant budget, so these goals may conflict.

Many states are creating their own programs to cover the slack the federal programs have left behind after being canceled, but there are only a handful that have such programs in operation already.

So what is a troubled homeowner to do now? Some federal programs have been eliminated, not all states have yet implemented programs to help, and the mandated lender reforms (currently in the works as punishment for the robo-signing scandal) are not yet finalized. People need to know their options.

Basically there are three options, and some of them have multiple sub-options:

1. Stay in your home. To do so you may need to look into a loan modification, change of job, or a complete reevaluation of your finances so that you can eliminate or lower other expenses. You may need to get creative, consider getting a second job, renting a room or putting your young children to work (just a hint of black humor/sarcasm–of course I don’t recommend this).

2. Sell your home. If you cannot make number one work and you need to sell it will either be a traditional sale or a short sale. Either way, make sure to work with a Realtor who is experienced in your area, and if you are doing a short sale make sure that person is experienced in this regard. You also should look into the HAFA program if you are considering a short sale–at least you can get money to help with moving expenses (up to $3000–see previous posts. To find them go to the categories list to the right of my blog and click on short sales).

3. Foreclosure. This is the last resort, or course. But many times there may be no other option if you are in over your head financially, have a job loss, illness, changed circumstances, divorce, etc. Just make sure you speak with your financial planner, attorney or accountant (or all 3, in my opinion) before doing so. You need to understand all options so you can make the right choice.

As we continue to see cuts to vital programs options may dwindle, at least for a while. I have discussed multiple times how I feel states will start to jump in to help residents with their own programs, much like California has done with Keep Your Home California. If you do not yet have a program in your state I would still advise contacting HopeNow or La Raza. Your lender may have counselors available to help you as well. But do not wait until it is too late. If you are not yet delinquent on your payments you need to start researching now. Best of luck.

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CA Foreclosure Relief Programs Expand Eligibility

Saturday, April 9th, 2011

If you are a home owner in California and are having difficulty with making your mortgage payments, you may be in luck. California recently announced an expansion to three of its four Keep Your Home California programs.

Originally the Keep Your Home California programs did not apply to home equity accounts, but that is no longer the case. Those with equity lines of credit or who took equity out from a refinance can now qualify for the Unemployment Mortgage Assistance Program, Mortgage Reinstatement Assistance and Transition Assistance Programs. Mortgages originated after January 1, 2009 will now qualify under these programs.

The Unemployment Mortgage Assistance Program helps unemployed homeowners who are in imminent danger of defaulting by offering up to $3000 a month to cover the mortgage.

The Mortgage Reinstatement Assistance Program assists homeowners who have a documented financial hardship by giving up to $15,000 to help with mortgage payments.

The Transition Assistance Program offers funds to help homeowners with relocation where they cannot pay their mortgage and are in the process of a short sale or deed in lieu of foreclosure.

So far the California programs are in the process of helping over 2,000 homeowners, and these new program expansions will undoubtedly help many more people seek assistance under the Keep Your Home California general plan. Many servicers are participating in these programs, either completely or in part. To learn the requirements and find out if you are eligible please visit the website at http://www.keepyourhomecalifornia.org/ or call 888-954-KEEP (5337).

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California Tries to Speed Up Short Sales

Monday, April 4th, 2011

Always the first to stir the mix, California is once again making strides by trying to shorten the short sale process with Fannie Mae backed loans. The California Association of Realtors (CAR) is working together with Fannie Mae to help Realtors get short sale approvals in a shorter time frame by leveraging technology and an assistance desk.

With the help of local multiple listing services (MLSs), agents will be able to provide accurate comparative market analysis data to pinpoint property valuations, thus providing the comprehensive information needed for faster approvals. The Fannie Mae Short Sale Assistance Desk will assist agents with the process.

The new system aims to provide agents with a response within one week that the initial submission was reviewed. If not received in that period the Short Sale Assistance Desk will aid agents in obtaining responses from the servicer. The goal is for agents to work with the servicers first, and then have the Assistance Desk step in if necessary.

The Short Sale Assistance Desk aims to get an initial response in 20 days, final property valuations within 30 days, and a final decision within 60 days of the original offer submission. That means a maximum of 60 days for short sale approval–this could make a big difference in the market.

To qualify for assistance the following requirements must be met: the first lien on the property must be owned by Fannie Mae, there must be a valid offer on the property, the agent must have a signed authorization form from the borrower and must be a member of the MLS.

This attempt by California is testament to the fact that states will be playing a bigger role in distressed property issues. Hopefully this will have a positive effect in making short sales shorter and strengthening our markets.

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Federal Foreclosure Mitigation Programs to be Axed

Friday, February 25th, 2011

Four federal programs that were created to help troubled homeowners escape the foreclosure ax are on the endangered list this week. Included are HAMP, the FHA’s short refinance program, HUD’s Neighborhood Stabilization Program and the Emergency Homeowner Relief Fund.

While created with good intentions of helping millions of borrowers, these programs in reality have all failed to make a dent in the plight of the distressed borrower on a grand scale. Reports show that many borrowers no longer even contact counseling services set up to assist with help under these programs. One member of the House Financial Services Committee, which has called a hearing for March 2 to review these programs, opined that the programs have actually done more harm than good.

The main argument against the above programs is their cost, which is translated to the tax payers. The cost of helping just one homeowner can be so astronomical that it just doesn’t make sense. Often things created in haste that are not well thought-out can have this result, and unfortunately in this case the backlash is that the housing market cannot recover in such circumstances.

In lieu of federal programs to help underwater and troubled borrowers, the slack will be left to individual lenders and states to come up with programs that will realistically aid borrowers. California has jumped into the proverbial boat first with Keep Your Home California, a program that packs a lot of punch and sounds promising. Pennsylvania has a successful program that provides assistance to unemployed homeowners. The proof will be in the pudding, and lenders will need to cooperate in order to help with recovery efforts. Inevitably other states will need to formulate programs as well, so eyes will be on the California guinea pig.

The bottom line is that the market cannot recover unless there is cooperation from the lenders. Short sales need to be streamlined and loan modifications need to be considered for those who qualify, and with time restraints. It does justice for no one–the borrower, the lender, the housing market, the neighbors of the homes in question–to draw out these processes. We need to help those who need it, and provide them with alternatives. We don’t just need band aids folks, we need hard labor to build back our markets.

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California Helps Struggling Homeowners

Tuesday, February 15th, 2011

The federal plans to assist homeowners who are facing foreclosure or are underwater with their mortgages, specifically the Home Affordability Modification Program (HAMP) have not lived up to promises. States are now realizing that it is up to them to deal with these issues, and California is one of the first states to create four new statewide mortgage aid programs that actually look promising.

Keep Your Home California plans to offer $2 billion in aid, and aims to assist 100,000 households to avoid foreclosure…the goal is to keep people in their homes. Each program requires the participation of the mortgage servicer. One of the biggest obstacles with the federal programs were lack of participation, however, some of the biggest mortgage service providers have already signed on and agreed to assist with the program. Others are involved in some of the programs, but housing agency officials expect the number to grow in time. Funding comes from the U.S. Treasury.

The program goal is to help low- and moderate-income families stay in their homes where there has been financial hardship. death, illness/disability, or recent increase in monthly mortgage payments creating a risk of default. Here is what the programs intend to provide:

1. Offer up to $3000 a month for homeowners who are unemployed, for up to 6 months.

2. Offer up to $15,000 per household to assist those who have fallen behind in payments due to temporary changes in housing circumstances

3. Offer relocation assistance to homeowners who have already completed short sales or deed in lieu of foreclosures

4. Offer monetary compensation to cut mortgage balances owed on homes that are worth significantly less than the amount owed by the borrower

To view a list of participating servicers or receive further information, visit http://www.keepyourhomecalifornia.org/ or call 888-954-KEEP(5337). If you live outside of California you should contact your state offices to see if there are any similar programs planned for your state.

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Free Distressed Homeowner Workshop Thursday

Tuesday, October 19th, 2010

If you are underwater with your mortgage or are facing circumstances that may effect your ability to pay in the future, there is a workshop this Thursday that is just for you. This free workshop will be held at the San Diego Convention Center from 1 p.m to 7:30 p.m. There will be numerous lenders and loan servicers present, as well as HUD counsellors.

This program will allow you to register and meet in person with a servicer from your loan provider, ask questions and discuss available options for your situation. The program is sponsored by the Obama administration’s Making Home Affordable Program, the HopeNow Alliance and Neighborhood Works America.

I encourage you to go if you are in a difficult situation, as this offers you a direct line of communication with your lender and counsellors, instead of spending hours on the phone trying to work something out. Make sure to bring your financial records and proof of hardship along with you.

For more information visit MakingHomeAffordable.gov, HopeNow.com or nw.org.

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Will the Next New Loan Modification Program Help YOU?

Tuesday, September 28th, 2010

There is a new loan modification program in the works, and it promises to help struggling homeowners despite income level, credit history or loan to value ratio. Sound too good to be true?

The new program plans to allow for 30-year fixed rate mortgages at the prevailing rate (which currently is between 4 and 4.5%) for those homeowners who need to refinance government-backed loans. These include Fannie Mae, Freddie Mac, Ginnie Mae, FHA and VA loans. Approximately 30 million U.S. homeowners will be eligible for these modifications.

Will it work? This is the most liberally created plan induced to date, and we will have to see as more details become available exactly how it will work. Obviously, allowing blanket loan modifications to so many homeowners without regards to credit, income or current loan to value ratios is extremely risky for lenders, and it will be a tough battle to push the legislation through Congress. However, if this program sees the light of day it could have enormous healing consequences for the housing market.

I will keep you posted as soon as I learn more.

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California May Help YOU Keep Your Home

Tuesday, September 14th, 2010

If you are a Californian and you are having difficulties with your mortgage, you may be in luck. Starting November 1 a new program entitled Keep Your Home will go into effect. The program offers principal reductions (essentially loan modifications), money for “catching up” with your payments, payment subsidies and money for relocation assistance if those are not possible, but you will have to meet the criteria to be eligible for this program.

Eligibility/Types of Assistance

* Payment Subsidy: You must be in “imminent danger” of foreclosure, due to job loss, short-term financial troubles or illness. These homeowners can obtain up to $1500 or 50% of the value of their monthly mortgage payment, whichever is less, for up to six months.

* Mortgage Reinstatement: If you have missed one or more mortgage payments you may be eligible to obtain up to $15,000 or 50% of the delinquent amount, whichever is less, in order to reinstate your mortgage and avoid foreclosure. Caveat: in order for this option to work your lender MUST agree to match the monetary assistance dollar-for-dollar. That means that if you are eligible for the entire $15,000 your lender must agree to reduce your mortgage by $15,000. In essence it is similar to a modification and is a great way to prevent foreclosure, but it remains to be seen whether lenders will follow through.

* Negative Equity Reduction: If you are upside down (owe more than your home is worth in the current market) you may be eligible to receive up to $50,000 towards reduction of the principal balance on your mortgage, to bring it closer to the market comparables and avoid foreclosure. Caveat: Here the lender must also agree to match this number, meaning it will reduce the principal balance of your mortgage by the same amount.

* Must move: For those homeowners who cannot afford to remain in their homes there is still hope. If you agree to work with your lender on a short sale or deed in lieu of foreclosure, you may be eligible to receive up to $5,000 in order to help ease your move to another residence that you can afford. The money is paid through your loan service provider and is granted on a one-time only basis.

* Note that for any of the above means of assistance to apply you must meet the following criteria:

–Home must be in California

–Home is your principal place of residence (no vacation homes)

–Income restrictions must be met

–Homeowner must sign an affidavit stating that your income will allow you to make modified payments on your mortgage, that you are behind on payments or in danger of imminent default, etc.

–The property cannot be vacant, abandoned or in need of major repair

–You must not have taken cash out of your home in a cash out refinance

The state has allocated $700 million toward this program (where this money comes from in a state that is in financial trouble I haven’t a clue, but regardless the money is there). All in all it is clear that the state of California is trying to promote homeownership that is sustainable, while at the same time preventing foreclosure rates from skyrocketing and home sales prices to plummet. These ideas are a positive step in the right direction and we will see where the program goes after November 1. For more information visit the California Housing Finance Agency (CalHFA) website at http://keepyourhome.calhfa.ca.gov/. You can also call (916)373-2585.

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