Loan Modification programs may work for unemployed

REALTOR® Magazine-Daily News-Unemployed Might Get Anti-Foreclosure Help: "The Obama administration is reportedly considering a program that would give loan forbearance to the unemployed. The aim of the program is to provide help without distorting the housing market.

The program would augment the federal loan modification program, giving unemployed workers more time and financial leeway to qualify for a new loan.

So far the loan modification program hasn’t been very successful for a variety of reasons, including the declining equity many troubled borrowers have in their homes and rising unemployment figures that make lenders unwilling to participate."

I will believe this one when I see it. So far almost all these initiatives have been good for the lenders and not the borrowers. This one might be useful for the temporarily unemployed.

I suspect it will still have some sort of taxpayer payout to the lenders.

loan modification programs

Loan Modification - mortgage meltdown part 2

Seller Info: "Loan Modification and the Mortgage Meltdown what will happen to real estate prices | Print |

Loan Modification or short sale, we may be heading for a mortgage meltdown part 2.



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Countrywide Settlement - Loan Modification program and terms

News & Alerts - California Dept. of Justice - Office of the Attorney General

In a nutshell, this settlement will enable eligible subprime and pay-option mortgage borrowers to avoid foreclosure by obtaining a modified and affordable loan. The loans covered by the settlement are among the riskiest and highest defaulting loans at the center of America’s foreclosure crisis. Assuming every eligible borrower and investor participates, this loan modification program will provide up to $3.5 billion to California borrowers as follows:

• Suspension of foreclosures for eligible borrowers with subprime and pay-option adjustable rate loans pending determination of borrower ability to afford loan modifications;

• Loan modifications valued at up to $3.4 billion worth of reduced interest payments and, for certain borrowers, reduction of their principal balances;

• Waiver of late fees of up to $33.6 million;

• Waiver of prepayment penalties of up to $25.6 million for borrowers who receive modifications, pay off, or refinance their loans;

• $27.9 million in payments to borrowers who are 120 or more days delinquent or whose homes have already been foreclosed; and

• Approximately $25.2 million in additional payments to borrowers who, in the future, cannot afford monthly payments under the loan modification program and lose their homes to foreclosure.

More specifically, the modification program covers subprime and pay-option adjustable-rate mortgage loans in which the borrower’s first payment was due between January 1, 2004 and December 31, 2007. The program will be available for loans in default that are secured by owner-occupied property and serviced by Countrywide Financial or one of its affiliates. In addition, the borrower’s loan balance must be 75% or more of the current value of the home, and the borrower must be able to afford adjusted monthly payments under the terms of the modification.

The terms of the modification will vary based on the type of loan, including:

• “Pay-option ARM loans,” in which loan balances increase each month if a borrower makes only a minimum payment. Borrowers may be eligible to have their principal reduced to 95% of their home’s current value and may also qualify for an interest-rate reduction or conversion to an interest-only payment.

• Subprime adjustable-rate loans, such as 2/28 loans. Borrowers may have their interest rate reduced to the initial rate. If the borrower still cannot afford it, the borrower may be eligible for further interest-rate reductions to as low as 3.5%.

• Subprime fixed loans. Borrowers may be eligible for interest-rate reductions.

• “Hope for Homeowners Program.” If they qualify, some borrowers may be placed in loans made through this federal program.

• Alt-A and prime loans. Borrowers who are in default, but have Alt-A and prime loans, may also be considered for modifications, depending on circumstances.

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Loan Modification - Fannie and Freddie have new plans

The Wall Street Journal announced that the two entities will deploying a new faster paced loan modification program designed to avoid foreclosure.

1. There seems to be some questions about whether the program will allow principle reduction.

2. Will it change the re-default rate which so far has been very high. (I have read that it is around 40% withing the first year. (how many more will default next year)

3. Will these loan modifications - effect the borrowers anti-deficiency protections? (You should probably have a lawyer review your documents to see if you would still be protected by California's anti deficiency laws.)

4. What will be done with second loans?

5. This program is for people who are 90 days late. Before a homeowner allows themselves to be 90 days late, they should determine all of their options.

6. This program does not apply to investment properties.

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Loan Modification - Indymac requirements

Must be a first mortgage and must be a loan owned, or securitized and serviced, by IndyMac Federal
Primary residence and owner occupied

IndyMac borrower already seriously delinquent or in default.

IndyMac borrowers at risk of default due to payment resets or changes in the borrowers’ repayment capacities.

Modifications would be designed to achieve sustainable payments at a 38 percent debt-to-income (DTI) ratio of principal, interest, taxes and insurance.

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Loan Modification - Citibank

According the California Association of Realtors, Citibank has a new program. Form November 11, 2008 to sometime in may 2009:


Must be first mortgage and must be a loan Citi owns.
The property must be the primary residence and owner occupied (owner may own a second home).
The borrower is working in good faith with Citi.
The borrower currently may not be behind on their payments but may require help to stay current.
Current total monthly mortgage payments exceed 38 percent of gross monthly income.

For more information on Loan Modification in California

Loan Modification - Countrywide's foreclosure relief program

Countrywide Financial - Real Estate Mortgage Lender - Home Loans - Equity Loan Mortgages

* Beginning December 1, 2008, Countrywide will proactively contact subprime and Pay Option ARM borrowers whose loans are scheduled for an interest rate change. We will invite them to contact us if they believe they will not be able to afford the new payments.
* Countrywide will not advance foreclosures for eligible borrowers for the time necessary to determine the borrowers' interest in staying in the home and their ability to afford the new terms as well as the investor's willingness to accept a loan modification.
* Countrywide will waive late/delinquency fees for missed payments when modifying loans and will not charge modification fees to borrowers in the participating states.
* When possible, Countrywide will waive prepayment penalties in connection with any workout or refinance, whether or not the new loan is originated with Countrywide.



Eligibility
Borrowers eligible for loan modifications under this program must have received a qualifying subprime mortgage or a Pay Option adjustable rate mortgage prior to December 31, 2007, and the property must be a 1-4 unit owner-occupied residential property. In addition, certain other requirements are set out in the program:

* The borrower is 60 days or more delinquent and the current loan-to-value ratio is 75% or higher;
* The borrower is current today but becomes 60 days or more delinquent at any time prior to June 30, 2012, and the loan-to-value ratio at the time of the modification is 75% or higher;
* The borrower has a subprime hybrid ARM and the borrower is current but reasonably likely to become 60 days or more delinquent as a consequence of a rate reset, and the loan-to-value ratio at the time of the modification is 75% or higher;
* The borrower has a Pay Option ARM and the borrower is current but reasonably likely to become 60 days or more delinquent as a consequence of a rate reset or payment recast based on negative amortization, and the loan-to-value ratio at the time of the modification is 75% or higher.

In addition, customers may be eligible for the early payment default benefit of this program if: (1) the customer has a Countrywide-originated first lien loan; (2) the loan was on or prior to December 31, 2007; (3) the customer's primary residence is the property that secures the loan; (4) the customer has made three or fewer payments over the life of the loan (the borrower's state may expand eligibility); and (5) the customer has either lost his home to foreclosure or is at least 120 days in arrears on mortgage payments.

Loan Modification Program Details
Countrywide will first offer eligible borrowers an FHA refinance under the HOPE for Homeowners Program. If not eligible for that program, Countrywide will offer these specific programs based on product type.

Subprime 2-, 3- 5-, 7- and 10-Year Hybrid ARM borrowers will receive an unsolicited extension/restoration of the introductory rate for five years and an invitation to contact Countrywide for additional relief if affordability concerns persist. Borrowers who cannot afford the introductory rate will be considered on a streamlined basis for a five-year interest rate reduction to as low as 3.5% (based on the affordability equation) and a conversion to a fixed-rate mortgage at the end of five years.

Pay Option ARM borrowers accepting a streamlined loan modification option will have the negative amortization feature eliminated from their loan. The mortgage interest rate will be reduced to as low as 2.5%, and the loan will be converted into either a fixed-rate mortgage or a ten-year interest-only loan. For single property owners who currently have no equity in their homes, Countrywide will write-down the principal balance to as low as 95% of the current value of the property to restore an equity position.

Subprime Fixed-Rate borrowers will receive a streamlined loan modification, by reducing the mortgage interest rate to as low as 2.5% and converting the loan into a fixed-rate or 10-year interest only loan with affordable step rate increases and lifetime cap.

Loan modification programs will provide payments within the limits of an Affordability Equation set out in the agreement and be targeted to equate to 34% of the borrower's household income.

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Loan Modification Programs - Hope for Homeowners

HOPE for Homeowners

NOTE: Homeowners, contact your existing lender and/or a new lender to discuss how you may qualify for the H4H program.

The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes.

The program is effective from October 1, 2008 to September 30, 2011.

As many as 400,000 homeowners could avoid foreclosure through this program over the next three years. If you are having trouble making your mortgage payments, HOPE for Homeowners may be able to help you, by refinancing your loan into a new 30-year fixed-rate loan with lower payments.

How the Program Works

There are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program:

1.
Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program.

2.
Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan.

3.
Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners.

4.
Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.


It is envisioned that the primary way homeowners will initially participate in this program is through the servicing lender on their existing mortgage. Servicers that do not have an underwriting component to their mortgage operations will partner with an FHA-approved lender that does.

Step 1: Cost-Benefit Analysis

Lender considerations:

Given their fiduciary responsibilities and financial obligations, lenders will assess their portfolio and perform a cost-benefit analysis to determine the feasibility of offering this program to struggling homeowners.

1.
Affordability versus value: lenders will take a loss on the difference between the existing obligations and the new loan, which is set at 90 percent of current appraised value. The lender may choose to provide homeowners with an affordable monthly mortgage payment through a loan modification rather than accepting the losses associated with declining property values.
2.
Borrower eligibility: Lenders that determine the H4H program is a feasible and effective option for mitigating losses will assess the homeowner’s eligibility for the program:

o
The existing mortgage was originated on or before January 1, 2008;
o
Existing mortgage payment(s) as of March 1, 2008 exceeds 31 percent of the borrowers gross monthly income;
o
The homeowner did not intentionally default, does not have an ownership interest in other residential real estate and has not been convicted of fraud in the last 10 years under Federal and state law; and
o
The homeowner did not provide materially false information (e.g., lied about income) to obtain the mortgage that is being refinanced into the H4H mortgage.

Consumer considerations:

The lender will disclose to the homeowner the benefits of the program:

*
Home retention,
*
New affordable mortgage based on current appraised value,
*
10 percent equity

The lender will also disclose to the homeowner the costs of the program:

*
3 percent upfront mortgage insurance premium and a 1.5 percent annual premium,
*
Equity and appreciation sharing with the Federal government, and<
br/> *
Prohibition against new junior liens against the property unless they are directly related to property maintenance.

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Loan Modification - U.S. considering new foreclosure prevention Program

Potential foreclosure plan still being debated - Oct. 30, 2008

NEW YORK (CNNMoney.com) -- The government is expected to announce soon that it will devote up to $50 billion to directly address the source of the financial crisis: bad mortgages and millions of homeowners at risk of foreclosure.

White House spokesman Tony Fratto said on Thursday that "no decisions" have been made on "a number of housing proposals" that the administration has been reviewing "for some time."

But three administration officials indicated to CNN that the new program would be designed to prevent foreclosures by having lenders reduce delinquent borrowers' mortgage payments to affordable levels. In exchange the government would guarantee some percentage of each loan to backstop lenders if borrowers re-default on modified mortgages.

The plan could help up to 3 million homeowners, although that number is not firm, according to the administration sources.

If it comes to fruition, the government's new loan program could trump the efforts of the Hope for Homeowners program put into place on Oct. 1 by the Federal Housing Administration.

Lawmakers spent months fighting over the legislation that created the FHA program before enacting it in July. Lenders may be more likely to participate in the latest government plan if it imposes less stringent requirements.

The Hope for Homeowners program offers full government backing for lenders that agree to write down a mortgage to 90% of a home's appraised value. But the loss to lenders can be greater than 10% because many troubled homeowners are also "under water" because of falling home prices - meaning they owe more on their home than its current market value. So to participate in Hope for Homeowners, lenders in many cases would have to lock in a sizeable loss.

The plan being considered likely would not require such a strict writedown. Instead, it might require that the new payment for the borrower be affordable.

For more information on California Loan Modification