Archive
Fannie Mae’s New Loan Workout Hierarchy
The link below identifies the Fannie Mae loss mitigation options that are available to assist borrowers experiencing financial hardship.
It is 19 pages and goes through a temporary and a long-term hardship. I am not an expert when it comes to this because I don’t do modifications but I wanted to make sure to share it with you.
https://www.efanniemae.com/sf/servicing/pdf/loanworkoutfactsheet.pdf
Loan Modification Help Coming To South Florida
If you know of anyone in need of a loan modification I would recommend for them to attend this event.
The nonprofit Neighborhood Assistance Corporation of America — hero to the struggling homeowner, bully to big banks — said it will conduct its third South Florida mortgage counseling extravaganza Aug. 27-31 in West Palm Beach.
The Boston-based group touts an 80 percent success rate, crediting much of the achievement to hundreds of bank representatives who attend its programs and meet face-to-face with homeowners.
There was an article back in December about this and 80% that were expected to receive workouts within weeks according to CNNMoney.
“Wynn was able to get his modification at a “Save the Dream” event offered by the Neighborhood Assistance Corporation of America (NACA) in New York City last Friday. Lenders from nearly all the major banks and servicers were in attendance and promising to restructure loans based on what borrowers could afford. As a result, many homeowners walked in with their mortgage problems and walked out with solutions. In fact, according to Bruce Marks, NACA’s founder, 40% of attendees left with decisions the same day. About 80% are expected to receive workouts within weeks. His organization has already hosted about 400,000 borrowers at more than a dozen of these events.”
Lenders May Go After Homeowners
This is very real and I am sure there will be many that will buy the deficiency judgments from the banks for pennies on the dollar and then go after the homeowners.
Lenders will file a tidal wave of lawsuits against homeowners in the next few years as a way to recoup losses when home sales or foreclosure auctions don’t result in enough money to pay the mortgages in full, real estate and legal analysts say.
Under Florida law, banks have five years from the date of the sale to file for so-called deficiency judgments and up to 20 years to collect. Lenders can garnish wages or make claims on borrowers’ assets.
Fannie & Freddie Won’t Pay Down Your Mortgage
They are saying that they prefer to do interest rate reductions and term extensions. My opinion is that you only help those who lost their job or had a real hardship which wouldn’t include a mortgage broker who’s income decreased. All of us who do not receive guaranteed pay need to make sure we spend less and save for a rainy day. I was told when I first got in the business that if you make $200,000 you should spend like you make $50,000. That might be an extreme but I sure which I listened a little better myself. I and many others hopefully will learn from our mistakes.
In order to make the modifications work I feel you need to do a principle reduction. I am not saying that is fair or what should be done but I think it would lower the re-default rate on the modifications dramatically. It’s all psychological.
What’s holding them back is the companies’ mandate to conserve their assets and limit their need for taxpayer-funded cash infusions, experts said. If Fannie and Freddie lower homeowners’ loan balances, they are locking in losses because they have to write down the value of those mortgages. Essentially, that means using tax dollars to pay people’s mortgages.
Surprise Tax Hits With Foreclosures
This was interesting and something I did not know.
“While canceled debt originally used to buy or build a house can be exempted from tax filings, debt used for other purposes cannot. “I just thought I’d get out from under the house and that would be that,” she says.”
Make sure to always consult a CPA. Another thing that is happening in South Florida right now is that they are going after people who claimed their property as a Homestead property, meaning they occupy the property as their primary residence, but it really wasn’t. State and local governments are looking for ways to make up for lost revenue so you better be careful.
http://online.wsj.com/article/SB20001424052748703686304575228783947789118.html?mod=djemITP_h
Homes Can Be Lost By Mistake When Banks Miscommunicate
That’s quite a headline. Unfortunately it is true and I am sure it is making people irate. I would guess that this can happen because the banks are so unstaffed. I have to imagine that it is pretty hard to staff up and take on more employees to handle foreclosures and short sales when the distressed sales are exactly why everyone had to let go of their employees.
Apparently another reason this happens is due to disorganization. “Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.”
I think it’s a combination of being understaffed, disorganized, and having employees who just don’t’ know what they are doing. Everything to do with the mortgage business right now is a learning curve even for those who have been in the business for over 20 years. You could never begin to understand this unless you were in the business so next time instead of yelling and screaming, try being more sympathetic. Whether you are right or wrong you will get much further with that mindset.
http://www.usatoday.com/money/economy/housing/2010-05-05-foreclosures05_CV_N.htm
Right To Rent Bill
This is just a proposal but it’s a bill filed in the US House of Representatives would allow mortgage borrowers to remain in their homes, as renters, for up to five years after receiving a foreclosure notice.
I guess it’s not a bad idea if the borrower who is not making their mortgage payments decides to make their rent payments. It would create cash flow for the bank and allow home values to regain some value assuming that the market does stabilize.
There are stipulations in order to qualify for this. Yep, always a catch and you always need to read the fine print. The right to rent program would be limited to homes purchased at or below the median price for its metropolitan statistical area, and must have been the borrower’s principal residence for no less than 2 years. Only mortgages originated before July 1, 2007 will be eligible.
Proposed Plan For Distressed Borrowers In Florida
I’m not going to hold my breath but here is what they are saying on Florida.
Florida, which would receive $418 million, proposed using the majority of its allocation toward making mortgage payments for up to nine months for up to 12,000 unemployed borrowers. It also would commit $40 million toward providing up to $15,000 in down payments for 4,000 prospective home buyers.
http://online.wsj.com/article/SB20001424052748704464704575208390699479772.html?mod=djemITP_h
Short Sale Reform – Home Affordable Foreclosure Alternative Plan
I don’t recall reading this last week but I am sure it will make some very irate. ” I find it interesting that before the plan even went into effect today, the Administration upped the incentives a week ago, doubling the amount of cash to $3000 offered as borrower “relocation expenses” and juicing the payoffs to the others as well. Of course they want to push short sales because of course they know that their modification program isn’t working as planned.”
The reason the program will struggle and probably be as helpful as the other programs is because the banks need to “weigh what’s going to save them the most money and cause them the least bleeding on their books.” It’s all about their balance sheet and since the mark-to-market accounting rules were changed to let banks keep loans on their books as “performing” even if the values of the underlying properties have fallen below the loan amount. I guess time will tell.
FHA Announces Principle Reductions
Below is the link for what FHA just announced. Please Note: It hasn’t been implemented yet.
If you are an optimist and do NOT have an FHA loan feel free to read it. They are saying that “total mortgage debt for the borrower after the refinancing cannot be greater than 115% of the current value of the home – including both first and any other mortgages.”
See page 2 of the PDF where it states that you must be current on your mortgage, a primary residence, etc.
MillerOnMortgages
- An error has occurred; the feed is probably down. Try again later.
Miller on Mortgages 