Mortgage defaults worsen

Freddie Needs $13.8 Billion as Mortgage Defaults Worsen - WSJ.com

Freddie Mac said it will need a $13.8 billion cash infusion from the U.S. Treasury as losses stemming from home-mortgage defaults surge and its future role in the housing market becomes cloudier.

The mortgage titan and its sister company, Fannie Mae, which were taken over by the government in early September, are losing ground in their mission to play a larger role in the mortgage market and to help prop up U.S. home prices. Their share of the U.S. mortgage market is falling, as lenders increasingly make loans insured by the Federal Housing Administration, rather than ones guaranteed by Fannie ...

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.

For more information on Loan Modification

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.

for more information on Loan Modification

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<
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Prohibition against new junior liens against the property unless they are directly related to property maintenance.

For more information on Loan Modification

Homesales decline on economic slowdown

Our office had at least 2 approved short sales in San Diego cancel last month as the buyers did not want to close.  Many people got scared as the Dow was collapsing. 

This stat just confirms what we saw. 

Pending Home Sales Down on Tight Credit and Economic Slowdown

Pending home sales fell on the heels of a strong gain a month earlier as credit tightened and economic conditions deteriorated, according to the National Association of Realtors®.

The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in September, declined 4.6 percent to 89.2 from an upwardly revised reading of 93.5 in August, but is 1.6 percent higher than September 2007 when it stood at 87.8.

Lawrence Yun, NAR chief economist, said pending sales have been above year-ago levels for two months in a row. “The month-to-month weakening in pending home sales is understandable, but because the index remains above year-ago levels it means we’re still in a broad period of stabilization,” he said. “Conditions remain mixed around the country, but markets that are showing annual sales gains include Long Island, N.Y.; Boston; Minneapolis; Denver and Washington, D.C., in addition to consistent solid gains in California and Florida.” ²