Posts Tagged ‘Help for homeowners’
Friday, March 29th, 2013
The Responsible Homeowner Refinancing Act, a recently proposed bill in the House of Representatives, would help millions of homeowners refinance at lower interest rates, thus saving thousands of dollars a year and rewarding those who have been responsible in keeping up with mortgage payments.
HARP, he current refinancing program, only saves homeowners on the average about $2500 a year, but the new bill would increase the savings and the opportunity to refinance for millions of borrowers who met the eligibility requirements. The new bill also will supposedly help many who do not qualify under HARP.
Here is what else the new bill will do:
• Allow for streamlined refinancing options for Fannie Mae and Freddie Mac borrowers, whether or not they are currently underwater. Under the HARP program many underwater borrowers were cut out because of a lack of equity; the new legislation will require all servicers to adhere to the same set of rules, thus providing more underwater borrowers the opportunity to refinance.
• Eliminate appraisal costs for every borrower under the program
• Reduce refinance fees that are paid up-front
• Remove other barriers to competition, so that other lenders could compete for your business
• Streamline the application process so it is quicker
• Extend HARP for one year, so that eligible borrowers could access the program
I am happy that this new bill may help some borrowers be able to refinance into lower rate loans, however, the new bill will still only apply to borrowers whose loans are Fannie or Freddie loans. There is still a very large pool of homeowners out there who would love to refinance but do not have Fannie or Freddie loans. There has been talk of legislation that would help these other borrowers, but so far we have not seen it materialize. My hope is that this will be the next big focus of our legislators.
To track the progress of this bill you can visit this site.
Thursday, November 10th, 2011
Keep Your Home California, a state program that was designed to help homeowners avoid foreclosure, has broadened criteria and may now help you keep your home. The program, which debuted just over a year ago with four ways to help distressed homeowners, will now offer mortgage relief to more state residents.
The original program offered help via payment subsidies, mortgage reinstatements, negative equity reductions and financial assistance to those who must move (cannot afford to stay). Last Spring the program announced it was expanding to include home equity lines of credit, or for those took equity out from a refinance. The program has helped close to 8,000 moderate and low income homeowners who were heading toward loan default.
The new changes include the following:
– Allowing cash-out borrowers to be assisted under all four aspects of the program (this part of the program was proposed last Spring)
– Allowing multiple property borrowers to apply to the program. Those with second homes or those who are on title to another home will not be excluded from the program any longer.
– Extending the mortgage aid for unemployed borrowers to nine months instead of the original six. As defined under the original guidelines, borrowers receiving unemployment benefits are eligible to receive up to $3000 in aid per month.
– Increased reinstatement amount. Under the original program, if you missed one or more mortgage payment you could 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. That amount has now been increased to $20,000.
There are still restrictions and qualifications to participate in this program. For more information and to find out if you qualify, visit http://www.keepyourhomecalifornia.org/ or call (888) 954-5337.
Wednesday, October 26th, 2011
Recently the Obama administration announced changes to the Home Affordable Refinance Program (HARP) that are aimed at helping homeowners refinance mortgages, even when there is no equity in their homes. Their goal is to help the millions of homeowners and prevent more foreclosures, but what is involved and will it really work?
Some of the changes to HARP include the following:
1. Fee reduction. Many of the fees associated with refinancing will be reduced.
2. Current loan to value cap on fixed rate home loans will disappear. This was the reason many homeowners could not take advantage of HARP initially, since the value of their homes had decreased significantly.
3. Reduced underwriting guidelines. Some of the changes almost hint at a stated income situation, with a verbal income verification…but we will have to wait and see the specifics when they are announced.
4. Appraisal changes. The new plan will have a valuation system for appraisals, called “automated valuation,” which will do away with the need for new appraisals, and hopefully avoid appraisal issues that have plagued refinancing in the past.
There are a few caveats, most importantly that the homeowner has to be current on their mortgage. The home also must be a primary residence, and borrowers will be able to shop rates with other lenders, not just the lender who currently holds their loan. More details will be revealed next month. Some of these changes sound promising, and I do believe that more homeowners will get to take advantage of the lower rates without these restrictions, but the big question is:
Will the new HARP really help the housing market?
I have to say no to this. While this is a nice plan to help some more people get into lower mortgages, the fact is that it does not shine the light on the bigger problem in real estate – homeowners who have fallen behind on their mortgages. The new HARP offers no help to these people, and their homes will likely turn into a big future foreclosure wave. The negative equity in these homes is so great that neighborhoods will continue to be effected by their foreclosures, with comparables continuing to drop.
The other big problem I see with the new program is that it has to be implemented by the banks. Although some banks, like Bank of America, claim to embrace the new program, chances are we will still face many hurdles from the banks with implementation. Banks are simply too scared to refinance many mortgages, and the re-default rate is high, making them risky.
While I think the new HARP plan can help some homeowners, I think it is just the beginning. I stand by my opinion that housing must be fixed if we ever want to see the economy improve. We need MUCH more than what HARP can do. We need to help the millions of people who are unable to pay their mortgages, prevent the wave of foreclosures down the road, and find ways to deal with the heavy inventory currently owned by the lenders that is not yet on the market. To do this, we need the cooperation of the major lenders in formulating plans to help these people.
What do you think?
Tuesday, September 13th, 2011
After many real estate industry complaints that the new Obama administration recovery plans did nothing for housing (aside from refinancing assistance plans, which as we all know still require lender cooperation), out comes a plan with that goal in mind. But will this new plan really help distressed inventory and jobs, or is it merely another attempt that will eventually fall apart and leave the housing market no better off?
The new plan, called Project Rebuild, is actually not a completely new concept. Based on the already somewhat successful Neighborhood Stabilization Program (NSP), which in two parts provided grants to states and local governments (and later to non-profit agencies) to rebuild blighted neighborhoods, Project Rebuild focuses on jobs. The $15 billion program will connect out of work Americans with jobs to rebuild distressed neighborhoods, including both residential and commercial properties.
There are several problems with this approach.
1. How will neighborhoods be identified to participate? The program states that it will focus on the most distressed neighborhoods, yet there are so many areas that have these types of neighborhoods. While $15 billion seems like a lot of money, when you are talking about rebuilding homes and buildings it can go pretty quickly. Many states, like California, don’t have the money to fix all the broken neighborhoods, so while some may be helped this obviously will not make the problem substantially better.
2. How will states decide who gets these jobs? Many states have big unemployment numbers, and while the program states it will give jobs to people in the distressed areas again – this means the rest of those in other distressed areas will receive no jobs. It cannot cover everyone, and may not even be able to make a dent in jobless numbers. Also, there will likely be many people who cannot work in construction, for various physical reasons. What, specifically, are these jobs going to be, and how will they choose who gets them? What if people need training – is that part of the budget?
3. Will fixing some distressed areas really make that much of a difference in the distressed housing market? Should the feds even be involved in this? Some say that the feds need to leave the distressed markets alone, with perhaps the only exception being the need to get lenders to be more cooperative in working with distressed homeowners in avoiding foreclosure. (It is important to note there are federal programs with this goal in mind, but the fact is that the lenders still can do whatever they like, for the most part, and cooperation is not where it should be). Distressed markets can actually be good for housing, as they bring prices down so that more people can afford to buy. This can really be a blessing or it can be a problem, depending on your thinking.
I think it is fantastic to try and clean up some of those areas that have suffered the worst, and make these neighborhoods liveable once again…while at the same time providing jobs that meet that goal. We all know that there are so many people out there who are ready and able to work, and providing more jobs is a great goal. I am just not sure that this is the best way to do it, and even with private sector involvement I question whether there will be enough money to go around.
We could look at some other options. One that comes to mind is to pour some of that money into our public schools so that we can hire more teachers and reduce class sizes, bring back art and music and P.E. to many schools. Bolstering up schools is a win-win for everyone, including neighborhoods. This is just one idea, and I do think we need to do something about the lenders and the difficulties with them refusing to help people avoid foreclosure. In time, this will help heal neighborhoods as well. The fact is that we still do not have a strong program to help the housing market and homeowners.
What do you think? This is a tough call, and I would love to hear your thoughts – I invite you to comment below (if you do not see the comment box, simply click on the title of this post and then scroll down to the end).
Thursday, September 8th, 2011
Those of you who regularly read my blogs, or follow me on Twitter, know that I have been impressed lately with Bank of America when it comes to assisting with short sales. With a bad reputation in the past for not dealing with these sales in either a timely or attentive manner, B of A has truly come out of the darkness (where many other lenders are unfortunately still stuck) and is trying to get short sales sold.
Now there is another reason to be happy if you are a homeowner with a B of A loan who needs to short sale your property: B of A is making it easier for you to get your home sold.
Bank of America has agreed to allow real estate agents to submit back up offers in sales where the buyer decides to walk away from the purchase, or doesn’t qualify. Once a backup offer is submitted, the lender will not require that the entire process start from scratch. In other words, the back up buyer will slide right in and the process will pick up from that point. This could save LOTS of time.
Bank of America was the first lender to institute a system where offers and all pertinent documents could be submitted online, and where access is available to the listing agent and homeowner 24 hours a day. This system, called Equator, virtually eliminated having to fax and email documents to the lender multiple times – gone are the “we never received that” days (even though the agent faxed it twice, emailed, it, AND mailed it via certified mail).
Bank of America has also established a help handle on social media sites, like Twitter (BofA_Help), which is attended to during business hours and gets results (I cannot tell you how much it has helped me).
This newest weapon in B of A’s arsenal will allow agents to continue to market a property and take back up offers, which could be a lifesaver if buyer number one cannot proceed with the purchase.
So kudos go to Bank of America, for really trying to find ways to speed up short sales. All we can hope is that they will continue to find more ways to help, and that other lenders will follow suit. I would love to hear what you have to say on this subject – please feel free to submit a comment by clicking on the title of this blog and then scrolling to the end.
Tuesday, September 6th, 2011
There has been quite a bit going on in the distressed property market as of late, and if you are a homeowner who is underwater or are unable to continue to pay your mortgage, there is some good news on the horizon to help you.
HAMP incentives increased for early borrower assistance: Fannie Mae has increased HAMP incentives to servicers who work out loan modifications with borrowers. HAMP – the Home Affordable Modification Program – is a program that encourages lenders to work with homeowners in issuing loan modifications. It gives financial incentives to the lenders who successfully work modifications. With the new increase, the feds are attempting to sweeten the proverbial pot to encourage even more modifications in lieu of short sales and foreclosures, and the goal is to do so early in the delinquency process. While the lenders still have to agree to issue the modifications, hopefully these extra incentives will push them toward looking more closely at modifications before rushing to initiate foreclosure proceedings.
Housing counseling agencies awarded money by HUD: HUD (The U.S. Department of Housing and Urban Development) has awarded $10 million to housing counseling agencies across the country, in order to strengthen counseling available to struggling homeowners. The money will be distributed to areas that face high incidences of foreclosures, and is good news for desperate homeowners.
Feds are telling states to design more state-specific programs to help borrowers: Several prominent economists have been sharing their view that states can do more to help distressed homeowners, acknowledging that the biggest problem in doing so is state funding. To that regard, HUD earlier this year created the EHLP – the Emergency Homeowner’s Loan Program. It, along with other federal programs, provided $1 billion to states with programs geared toward helping homeowners. Many state programs have realized great success in this endeavor, and the problem facing these programs going forward will be the federal budget situation. If you are looking for a way to get help with a distressed home situation, now is a great time to find out if there are any state programs that can assist you.
If you are delinquent on your mortgage and have not discussed options with a counselor, a Realtor and your accountant or financial planner, it is imperative that you do so. There are options available to you, but the longer you wait, the less of a chance that you may be able to reap the benefits of any of these options. The government is attempting to help you, and there are some programs available for free, such as HopeNow, the free counseling agency that can review your situation with you and make suggestions about available options. They can be reached at (888)995-HOPE.
Wednesday, June 15th, 2011
Over the past several years there have been attempts to let judges take over lender issues, such as those related to foreclosures and bankruptcy. Some states, like California and New York, have allowed judges to intervene in ruling on improper foreclosures, or in cases where lenders assign mortgages for which they have no documented proof of ownership. There is much controversy in allowing the courts to step in and help fix some of these housing-related issues, but I think it is high time we do so.
The courts, although not known for being expeditious in many instances, could revolutionize the housing crisis by appointing judges to focus specifically on these cases. Not only would it protect future homeowners from wrongful foreclosures, but it would send a message to lenders to be more thorough in their processes, and likely lead to more and quicker loan modifications and short sale blessings.
Call me simple, or maybe blame it on my law school education, but I don’t understand why so many problems take so long to remedy, when all it does is create more problems and batter our economy even further. There ARE solutions to problems, but it seems we don’t tend to implement them. Politicians talk about solutions until they are blue in the face, but why not just put one in place and see what happens. Things can’t possibly get any worse. If it doesn’t work, we’ll try something else – but we can’t sit around doing NOTHING!
So I say let the judges look at pre-foreclosure filings. Make the lenders prove ownership. Jumping through these hoops a few times will likely be a hassle, hopefully causing lenders to think twice about NOT looking at loan modifications or short sales as options for distressed sellers. The burden on the legal system and the expense associated with it would likely be temporary, and surely not as great as the current strain on housing and the costs of foreclosure.
What do you think?
Wednesday, March 4th, 2009
If you hold a mortgage with Citigroup and are unemployed, the announcement made March 3 can help you with your payments. Citigroup has created a new program whereby it will temporarily lower mortgage payments for borrowers who have recently lost their jobs.
1. Recent job loss (you must provide proof of unemployment and sign a form indicating you are seeking new employment)
2. Borrower must be at least 60 days behind in payments
3. The home must be your primary residence (you must live there)
4. The program applies only to loans lower than or equal to $417,500
The payments will be lowered to an average of $500 a month for up to three months, and interest and penalties will be waived during this time. Citigroup currently holds over 1.4 million mortgages and services four million additional loans which will NOT qualify under this program.
Citgroup indicated that they believe this new plan will assist thousands of borrowers, and help prevent more foreclosures as the downturn in the economy leads to job losses. They are also hopeful that their program will prompt other lenders to follow in their footsteps. This big announcement follows Citigroup’s earlier news in November that it planned to modify loan terms by as much as $20 billion for borrowers who are at risk of falling behind on loan payments, but are currently not in default as of yet (how effective this program is remains to be seen). Both plans on Citigroup’s table were created from within the company, and the company denies the federal government had any role in it’s programs.
This appears to be a good faith effort on Citigroup’s behalf to assist troubled borrowers. It is a win-win situation to attempt to help borrowers in any way, as foreclosures effect not only the borrowers but have a great financial impact on the lender as well. With unemployment rates climbing monthly (the Labor Department figures show an increase to 7.6% in January, up from 7.2% in December 2008), this may be a lifeline to Citigroup mortgage holders to buy them some time for find alternate employment. Let’s hope other lenders follow their lead in the coming days.
Friday, February 27th, 2009
For those of you who read my post of a few days ago (How the new Homeowner Affordability and Stability Plan Can Help You, February 24)), you should know that over the last several days there has been a great deal of information released on the details of this plan, of which I feel the need to share. I would encourage you to read the prior post in conjunction with this one.
As the author of a book written to help people through the foreclosure mess (www.MortgageWalkawayOptions.com), I was particularly optimistic about the new plan, thinking that so many people would have a new option available to them, and would thus get help. Since the plan goes into effect next week, on March 4, there have been many questions, information released on a daily basis, and much argument on late night political and news shows over the plan. Today I spent a lot of time pouring over some of the information, which I will summarize.
1. How is Eligibility Determined Under the Program? It is important to know that ALL of the details will be announced on March 4, however from the information available it is easy enough to figure out some of the key points of the plan, but here are the main requirements:
a) You must make enough income to be able to afford new payments
b) The program is limited to loans held or securitized by Fannie Mae or Freddie Mac. To find out if your loan is held by either of these entities you can call your lender after March 4.
c) Your home must be your primary residence (no second/vacation/rental properties). Multiple unit properties WILL qualify as long as you live in one of the units as your primary residence.
d) Your loan cannot exceed current Fannie Mae or Freddie Mac loan limits (this could eliminate many people).
e) Your lender is NOT REQUIRED to modify your loan‚the program is voluntary. As I mentioned in my other blog there are financial incentives to lenders to offer the modifications.
2. Will Principal Balances on the New Loans Be Reduced? NO. While the wording in the plan did not indicate this, it has become clear that the new loan that is created will lower your payments (because you will have a new, lower interest rate), BUT there will be no reduction in your principal balance. As I mentioned in my other post, you will have the opportunity to reduce that principal balance by $5,000 at the end of 5 years if you are current on all your payments at that time, but other than that the balance will be unaffected. Caveat: If you are a borrower paying interest only payments and you refinance to a lower, fixed rate you may not see your payments go down, BUT you will likely save a great deal over the life of the loan.
3. What if You Have Both a First and Second Mortgage? The ball is in the lender’s court on this one. As long as the amount due on your first mortgage is less than 105% of the value of the property, the lender of the second loan can choose whether or not you will be able to refinance; this will basically depend on whether the second lender can remain in second position and on whether you can afford the new payment terms on the first mortgage.
4. Interest Rates on the New Loans: These will be determined by the market rates and will typically be 15 or 30 year term mortgages with fixed rates. Good news: there will be no prepayment penalties or balloon payments.
5. Do you Need to be Behind on Mortgage Payments to Qualify? No. As long as you have sufficient income to make payments on the new loan and are at risk of imminent default you can qualify under the program (assuming you meet the other criteria).
I hope this is a start to clarifying the program for everyone. It certainly has opened my eyes. The best piece of advice I can offer you is to GET EDUCATED and understand other possible options that may be available to you. My book provides this information in a very basic format if you need more information. You can download it at www.MortgageWalkawayOptions.com.
I thought maybe this book might become obsolete in light of the new program, but now more than ever it is important to understand all options. To find out if you qualify under the new legislation please call your lender after March 4 and tell them you would like to be considered under the new Homeowner Affordability and Stability plan. Best of luck to you.
Tuesday, February 24th, 2009
As you likely know, the Obama administration has instituted a new plan to help homeowners facing foreclosure-the Homeowner Affordability and Stability Plan. The good news is that the plan actually reaches beyond merely helping those who are behind on their payments‚it will actually help those who are current with payments but have declined property values. It also is going to help the pre-foreclosure process in general, mainly loan modifications. There are three different sub-categories of assistance.
First, the plan is going to allow 3-4 million responsible homeowners access to low-cost refinancing and loan modifications, thus reducing monthly payments and creating a new loan that reflects the current value of your home. Hallelujah!
Second, the new plan is going to create a $75 billion stability initiative to help at-risk homeowners who are struggling to make their mortgage payments but cannot sell their homes (because the home’s value has decreased below the amount owed on the loans). The goal of this part of the plan is to help people stay in their homes, and to protect neighborhoods from foreclosures that bring prices down even further. Loan modifications will be allowed BEFORE borrowers miss payments (something that has not been done up until now), thus supporting responsible homeowners.
This second part of the plan has some fantastic built-in financial incentives for both lenders and borrowers. Lenders will be paid for every eligible loan modification granted, AND also will receive monthly fees as long as the borrower stays current on the loan. This will continue for three years. Service providers will also be paid for initiating modifications BEFORE a borrower has defaulted on their payments.
Borrowers will reap some benefits too‚if they stay current with their payments on the new loan they will receive up to $1000 a year for five years toward reducing the balance of the principal on the loan. So if you fall under this category and get a modification, as long as you keep current on your payments for five years you will have your principal balance reduced by $5,000 at the end of that period‚Ä¶can you say ‚ÄúFANTASTIC!‚Äù Really, how often does the government just give away free money?!
The final BIG news under this second part of the plan is that the government is going to create CLEAR and CONSISTENT GUIDELINES for loan modifications. This means that all lenders will have the same set of rules to follow when granting modifications. You have NO idea how much this will help you if you are a struggling homeowner, but let’s just say this is amazing‚no more bending over backwards to figure out what your lender’s program entails (only to find out that since yesterday the plan or offer has changed‚you might laugh but this is common practice).
There will be strict reporting and oversight between the Treasury, HUD, the Federal Reserve and other committees to make sure all the above guidelines are followed. Judicial modifications of home mortgages will be allowed in bankruptcy cases, renters of foreclosed properties will receive financial assistance and help with moving, and other government programs already in existence to help homeowners will be improved.
Third, the plan will support low mortgage rates by building confidence in Fannie Mae and Freddie Mac. This will increase stability and liquidity in mortgage-backed securities and help stabilize the housing market.
This plan is made to really help homeowners and our housing market. With strict oversight and adherence to the guidelines established by the administration, I think this plan could have a big impact on the housing market. But what I am most excited about is that it will help millions of people stay in their homes.