Scorecard on Obama’s Housing Recovery Plans

Dennis Norman St Louis

Dennis Norman

The U.S. Department of the Treasury and the Department of Housing and Urban Development today released their “October 2010 Scorecard” on the “Obama Administration’s Efforts to Stabilize the Housing Market”.

The scorecard points out the success of “The President’s housing market recovery efforts” but does point out that “data in the scorecard also show that the recovery in the housing market continues to remain fragile.” Continue reading “Scorecard on Obama’s Housing Recovery Plans

The Latest Data on the Home Affordable Modification Program

Ted Gayer, co-director of Economic Studies, Brookings Institute

Ted Gayer, Co-Director of Economic Studies, Brookings Institute

The U.S. Department of the Treasury and the Department of Housing and Urban Development released June data for the Obama administration’s Home Affordable Modification Program (HAMP). HAMP is the foreclosure prevention program targeted at borrowers who are delinquent in their mortgage payment or facing imminent risk of default on their mortgage.

It has always been an open question whether HAMP would prevent foreclosures or whether it would just delay inevitable foreclosures. While those who qualify for HAMP receive reduced mortgage Continue reading “The Latest Data on the Home Affordable Modification Program

Loan Modification Scams On the Rise

Dennis Norman

According to data from NeighborWorks America, a national nonprofit organization created by Congress to provide community-based revitalization efforts, every 13 seconds in America, there is another foreclosure filing. This means there are more than 6,600 home foreclosure filings per day and currently, more than 4.5 million households are at risk of foreclosure. Unfortunately there is no end in site as industry experts are predicting 1.5 – 2.0 million new foreclosures in 2010 and as many as a total of 8.1 million by 2012.

This many people in financial distress provides great opportunity for loan modification scam artists, who prey on unsuspecting homeowners with unethical and sometimes unlawful tactics to scam them out of money and often times their homes according to the report. Many of these homeowners have turned to loan modification or foreclosure “rescue” companies for help — only to realize they’ve been scammed. Loan modification scams are proliferating at a rapid pace.

To combat these scam artists and try to protect and educate consumers, NeighborWorks America has launched a “Loan Modification Scam Alert” campaign. Their scam alert website has many resources available to help consumers protect themselves and I would suggest that consumers that are facing falling behind on their mortgages, facing foreclosure or with other housing-related financial issues, check out the site.

The scam alert identifies the following as the most common loan modification scams :

  • Phony Counseling or Foreclosure Rescue Scams
    • The scam artist poses as a counselor and tells you he can negotiate a deal with your lender to save your house—if you pay him a fee first. He may even tell you not to contact your lender, lawyer or housing counselor—that he’ll handle all details. He may even insist that you make all mortgage payments directly to him while he negotiates with the lender. Once you pay the fee, or a few mortgage payments, the scammer disappears with your money.
  • Fake “Government” Modification Programs
    • Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, up-front fees to qualify for government mortgage modification programs. The scammer’s company name and Web site may sound like a real government agency. You may also see terms like “federal,” “TARP” or other words related to official U.S. government programs.
    • Your lender will be able to tell you if you qualify for any government programs to prevent foreclosure. And you do not have to pay to benefit from these programs.
  • Bait-and-Switch
    • The scam artist convinces you to sign documents for a “new loan modification” that will make your existing mortgage current. This is a trick. You actually just signed documents that surrender the title of your house to the scam artist in exchange for a “rescue” loan.
  • Rent-to-Own or Leaseback Scheme
    • A scammer urges you to surrender the title of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. He may tell you that surrendering the title will permit a borrower with a better credit rating to get new financing—and keep you from losing your home. However, the scammer may have no intention of ever selling the home back to you.
    • But the terms of these deals usually make buying back your home impossible. Worse yet, when the new borrower defaults on the loan, you’re evicted.
    • Variations:
      • The scammer raises your rent over time to the point that you can’t afford it. After missing several rent payments, you are evicted, leaving the “rescuer” free to sell your house.
      • The scammer offers to find a buyer for your home, but only if you sign over the deed and move out. The scammer promises to pay you some of the profit when the home sells. But the scammer simply rents out your home and keeps the profits while your lender proceeds with the foreclosure. You lose your home and are still responsible for the unpaid mortgage, because transferring the deed does not affect your mortgage obligation.
  • Bankruptcy to Avoid Foreclosure
    • The scammer may promise to negotiate with your lender or get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, he pockets the fee and files a bankruptcy case in your name—sometimes without your knowledge.
    • A bankruptcy filing often stops a home foreclosure, but only temporarily. Filing bankruptcy stops any collection and foreclosure while the bankruptcy court administers the case. But, eventually you must start paying your mortgage, or the lender will be able to foreclose.
    • You could lose the money you paid to the scammer and your home. Worse yet, a bankruptcy stays on your credit report for 10 years, which makes it difficult to obtain credit, buy a home, get life insurance or even get a job.

In addition to visiting the Loan Modification Scam Alert website, one of the best things you can do to protect yourself is to educate yourself about programs such as HAMP (the Home Affordable Modification Program) for loan modifications as well as HAFA (The Home Affordable Foreclosure Alternatives program) so that you understand how the programs actually operate and see that you don’t need to necessarily pay someone for assistance.

I’ve written many articles on both the HAMP as well as HAFA program with complete information on the programs as well as links to information on the programs. To access these articles easily, simply click on the links below:

HAMP Articles (Home Affordable Modiciation Program)

HAFA (Home Affordable Foreclosure Alternatives Program)

 

Fannie Mae Issues Guidelines For HAFA Short-Sales and Deed-in-Lieu

UPDATE- June 2, 2010: The National Association of REALTORS obtained answers from the Treasury Department on 3 common questions about HAFA:

  1. agents are not permitted to rebate a portion of their commission to the buyer,
  2. sellers who are real estate agents must list their home for sale with another broker, not their own broker, and
  3. the incentive allowed for subordinate lien holders (6% of any one subordinate lien, up to a total of $6,000 for all subordinate liens) is a hard cap and may not be supplemented from any source.

Dennis Norman

In March I did an update on the Home Affordable Foreclosures Alternative (HAFA) Program which was scheduled to go into effect April 5, 2010.  Today, Fannie Mae issued guidelines to their servicers outlining the policies and produres Fannie Mae had adopted as a result of HAFA.

What is HAFA?  In a nutshell it gives qualifying homeowners the opportunity to do a short-sale or deed-in-lieu rather than face foreclosure:

The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives help the lender out by avoiding the potentially lengthy and expensive foreclosure proceedings and also by protecting the property by minimizing the time it is vacant and subject to vandalism and deterioration. These options help out the borrower by avoiding the foreclosure process and the uncertainty that comes with it and allows the borrower to negotiate when they will give up possession of their home as well as, under the HAFA program be released from any further liability from the loan including short-fall and deficiencies.

Highlights of the guidelines given to mortgage servicers by Fannie-Mae:

  • Servicers are “encouraged to adapt their processes to implement these Fannie Mae HAFA policies and procedures immediately;” however, they have until August 1, 2010 to implement them.
  • The HAFA  Short-Sale and HAFA DIL (deed-in-lieu) program will be offered to borrowers through December 31, 2012

Borrower Eligibility for HAFA Consideration:

  • A borrower cannot be considered for HAFA until the borrower has been evaluated for a HAMP modification (including, but not limited to, providing all required income documentation).
  • Once a borrower has met all of the eligibility criteria for HAMP, the borrower must be considered for a HAFA short sale or DIL (after all home retention options have been considered) if the borrower:
    • was not offered a trial modification due to inability to meet the HAMP qualifications (for example, did not pass the net present value (NPV) evaluation or meet the target monthly mortgage payment ratio based on verified income);
    • failed to complete the trial period successfully;
    • became two consecutive payments (31 or more days) delinquent on the modified mortgage loan; or
    • requests a short sale or DIL.
  • Lender’s are not allowed to consider a borrower for a Fannie Mae HAFA short sale or DIL (without consent from Fannie Mae) if:
    • a foreclosure sale is scheduled to be held within 60 days of the borrower’s request for a Fannie Mae HAFA short sale or DIL, ordetermination that a borrower is ineligible for HAMP, or;
    • a foreclosure proceeding could be initiated and reasonably be expected to result in a foreclosure sale being held within 60 days of the borrower’s request for a Fannie Mae HAFA short sale or DIL or determination that a borrower is ineligible for HAMP; or;
    • the mortgage loan is secured by a property in Florida on which foreclosure proceedings are pending, judgment has been obtained, or a hearing on summary judgment or trial is scheduled within 60 days.

Financial Requirements of Borrower for HAFA:

The lender, prior to deciding if the borrower is eligible for HAFA, must determine if the borrower has:

  • the ability to continue making the mortgage payments but chooses not to do so; or
  • substantial unencumbered assets or significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment (including tax and insurance payments) or $5,000, whichever is greater; or
  • high surplus income.

So the bottom line here is, if you have a bunch of assets, money in the bank or high income relative to you debt, Fannie Mae is not going to be interested in letting you walk away from your deficiency after a short-sale, or DIL.

On question that has come up on other posts I’ve written about this, is the effect of bankruptcy on eligibility for HAFA….Here’s the answer from Fannie Mae:

  • A borrower in an active Chapter 7 or Chapter 13 bankruptcy case must be considered for a Fannie Mae HAFA short sale or DIL if the borrower, borrower’s counsel, or bankruptcy trustee submits a request to the servicer. However, the servicer is not required to solicit borrowers in active bankruptcy cases for shorts sales or DILs. With the borrower’s permission, a bankruptcy trustee may contact the servicer to request a short sale or DIL. The servicer and its counsel must work with the borrower or borrower’s counsel to obtain any court and/or trustee approvals required in accordance with local court rules and procedures. The servicer must extend the required time frames outlined in this Announcement as necessary to accommodate delays in obtaining bankruptcy court approvals or receiving any periodic payment when made to a bankruptcy trustee.

Lenders must, upon determination of eligibility for a HAFA Short-Sale or DIL, determine the fair market value of the property:

  • As soon as a borrower is determined to be eligible for a Fannie Mae HAFA short sale or DIL and has demonstrated a willingness to participate, the servicer must take the necessary steps to determine the market value of the mortgaged property. Fannie Mae will require a broker price opinion (BPO) based on an interior and exterior inspection of the property or, if licensing requirements in the state dictate use of an appraisal for these purposes, an appraisal
  • The BPO (or appraisal, if required) must be dated within 90 calendar days of the date the relevant HAFA Agreement is executed by the servicer.

Allowable Fees on Short-Sale:

Fannie-Mae will allow:

  • real estate sales commission customary for the market. The servicer may not require that the commission be reduced to less than 6 percent of the sales price of the property;
  • real estate taxes and other assessments prorated to the date of closing;
  • local and state transfer taxes and stamps;
  • title and settlement charges typically paid by the seller;
  • seller’s attorney fees for settlement services typically provided by a title or escrow company;wood-destroying pest inspections and treatment, when required by local law or custom;
  • homeowners’ or condominium association fees that are past due, if applicable.
  • Fees paid to a third party to negotiate a short sale with the servicer (commonly referred to as “short sale negotiation fees” or “short sale processing fees”) must NOT be deducted from the sales proceeds or charged to the borrower.
    • Additionally, the Servicer, its agents, or any outsourcing firm it employs must not charge (either directly or indirectly) any outsourcing fee, short sale negotiation fee, or similar fee in connection with any Fannie Mae loan.

In addition, Fannie Mae will allow;

  • The Lessor of 6% of the balance of a junior lien, or $6,000, to settle the second lien.
  • $3,000 to the Seller, to be paid out of sale proceeds, to help defray the costs of relocation.

Short-Sale Approval Should be Faster:

One of the major hindrances to short-sales has been the amount of time it takes for a lender or servicer to respond to an offer to purchaser, many times taking several months.  Under these new guidelines that should not be a problem because, provided the Seller’s Agent has submitted all the required document to Fannie Mae (they only have 3 business days to submit) then the servicer must respond to the offer within 10 business days indicating acceptance or rejection of the offer. This is huge and should really help facilitate short-sales.

Deed-in-Lieu Eligibility:

Generally, for a borrower to be eligible for a Fannie Mae HAFA DIL, the mortgaged property must have been listed for sale at market value for 120 days or more. A servicer may waive the requirement that the property securing the mortgage loan previously be listed for sale in cases involving:

  • a serious illness or disability,
  • a deceased borrower or co-borrower,
  • a borrower or co-borrower who has been relocated or who has been deployed by the military,
  • a determination that local market conditions would impede a sale of the property,
  • a borrower who demonstrates an unwillingness or inability to maintain or market the property during the listing period, or
  • a borrower who has expressed an interest in doing a Deed for Lease

This is simply an overview of the Fannie-Mae guidelines and the HAFA program…there is much more, but this gives you the idea.  For starters, this is nothing that  a homeowner would want to take on alone in my opinion.  I think you need a qualified real estate broker or agent, that has in-depth knowledge about HAMP and HAFA and the short-sale process.

To get more information I suggest your read my post from March, you can access that by clicking here, or if you really want to have some fun, you can read the complete Fannie-Mae guidelines by clicking here.

 

Home Affordable Modification Program (HAMP) Update

 

Dennis Norman

As readers know, I have been somewhat critical of the Home Affordable Modification Program (HAMP) which is part of the Obama administrations’ Making Home Affordable Program for a few reasons, one is I believe it is just a temporary “band-aid” and not a cure for the problem and two, it does not appear the program is going to help near as many people as the Obama administration initially said it would. Yesterday a report was issued that shows there is progress being made and, through the end of March, a total of 230,000 homeowners have received a permanent loan modification, which is good, but it is not enough to put the program on track to help 3-4 million people by 2012 as originally promised (although as I addressed in a recent post, the administration has changed their position on what was promised).

Highlights from the report:

  • HAMP Trials offered to borrowers since inception of program – 1,436,802
  • All HAMP Trials Started Since Program Inception – 1,166,925
    • 57,000 new trial modifications were added in March, down from 72,000 in February.
  • Permanent modfications have been received – 230,801
    • Over 60,000 trial modifications converted to permanent modifications in March, and increase from almost 53,000 in February.
  • Current Active Modifications (Trial and Permanent) – 1,008,873
    • Active Trial Modifications – 780,951
    • Active Permanent Modifications – 227,922
  • Pending Permanent Modifications – 108,212
  • Trial Modifications Canceled – 155,173
  • Permanent Modifications Canceled – 2.879

hamp-charts-march-2010

hamp-charts-march-2010-2

Obama Administration HAMP Loan Modification Program Falling Short

Dennis Norman

The Treasury Department Plans to Spend $50 Billion on HAMP…Is it Going to “help keep “3 to 4 million Americans in their homes” as Promised Though?

Last week Herbert M. Allison, Assistant Secretary for Financial Stability for the U.S. Department of the Treasury, testified before the House Committee on Oversight and Government Reform as to “Is the Home Affordable Modification Program Preserving Homeownership?”.

Early in his testimony Allison states that, at the time the HAMP program was announced, President Obama said the program would “enable as many as 3 to 4 million homeowners to modify the terms of the mortgages”. Allison goes on to say that now that we are one year into the program that “HAMP is on track to have actual trial modifications for up to 3 to 4 million homeowners by 2012.” Hmm…am I missing something, or did the President’s message get watered down here? When HAMP was announced and there was all the talk by the administration of modifying loans for 3 to 4 million Americans to “keep them in their homes” I assumed that they meant for Americans to keep their homes longer than an extra month or two which would be the hoped for outcome of borrower’s receiving a permanent loan modification. Unfortunately now it looks like, based upon Allison’s testimony, the administration is changing their postion now and are now saying the 3-4 Million people they referred to includes not only the people that actually receive a permanent loan modification (so far only 12 percent of the people that were offered a trial modification) but all of the people that received a trial modification (lower payment for 3 months) and even those people that were offered a trial modification but didn’t take it. It appears to me the benefit of the HAMP program has been greatly overstated; the benefit of HAMP appears to have over-promised and under-delivered.

Later, in his testimony, Allison says that HAMP was “designed to keep eligible homeowners in their homes with long term affordable mortgages” which seems like a contradiction to me. Based upon his earlier statement it seems a large part of the plan is just to offer a borrower a temporary short-term modification and call it a success.

Here are the facts and figures from the testimony:
  • Since HAMP began 1.4 million people have been offered a loan modification for a trial period of 3 months
    • As of the end of February, 1.1 million people that were offered a trial period (78.5 percent), have entered the trial modification.
    • As of the end of February, 822,000 (58.7 percent of those offered a trial and 74.7 percent of the people that entered into the trial phase) people had been in the trial phase of the modification process for more than three months and could be eligible for conversion to a permanent loan modification subject to “submitting all necessary documents, remaining current on payments and meeting other technical requirements”. (The number of people of the 822,000 that completed the trial but failed to receive a permanent modification due to one of more of the aforementioend conditions was not given but would be an interesting stat to see).
    • As of the end of February 170,000 people have received a permanent loan modification (12.1 percent of the total number of people offered a trial, 15.5 percent of the total people that entered a trial and 20.7 percent of the total people that completed the trial)
    • As of the end of February 92,000 more borrowers have been approved for a permanent modification but have not yet received it. Assuming those borrowers can comply with the conditions mentioned above that will bring the total permanent loan modifications up to 262,000 or 18.7 percent of the total people offered a trial and 32 percent of those people that completed the trial period.
  • Allison stated that, even those borrowers receiving a permanent loan modification, “a significant number will redefault.”
  • Allison states “In fact, we designed our program specifically to protect the taxpayer.” Hey, I thought the purpose was to keep 3 – 4 Million Americans in their homes??
  • For those borrowers that have received a permanent loan modification, the median payment reduction has been around $500 per month.

Is this really helping the borrower?

While I don’t want to take away from the significance of someone being able to keep their home, from what I see I question whether or not HAMP is really doing that. The numbers appear to be more window dressing than anything. To count the offer of a 3 month reduction, or even the trial period itself, as a success I think is wrong..in fact, for the homeowner in that situation it may be down-right cruel and just dragging out their agony. I have heard stories of many borrowers that got their hopes up only to end up back in the same spot a couple of months down the road.

There are some stats that, if I can figure out how to get them, would be interesting such as; the percentage of people that complete the trial period and then fail to obtain a permanent modification for not meeting the conditions discussed above and, as time moves on, the percentage of people that, 6 months or so after receiving a modification, are still able to keep up with their payments.

What is the cost of HAMP?

According to the testimony,the Treasury has set aside $50 Billion in TARP funds for HAMP and they plan on “using the full $50 Billion budget.”

Now lets do a little cost/benefit analyis. For the sake of my analysis we will need to make some assumptions. Below are my assumptions:

  • Let’s give the program the benefit of the doubt and assume that by the time the program ends 4,000,000 borrowers have been offered a trial loan modification.
  • Even though currently only 12.1 percent of the people offered a trial have received a permanent modification, I’m going to use 18.7 percent for the projection of the number of people that receive a permanent loan modification as that is what the number would be if all the people currently approved actually get a modification (I think I’m being generous). Based upon this, by the end of the program 748,000 borrowers will have received a permanent loan modification.

Based upon my assumptions above, if this program ends up costing $50 Billion as indicated and 748,000 borrowers receive a permanent modification, then it works out to costing $66,844 per borrower for the program. The big question is, does this actually “fix” the problem for these folks and are they truly able to stay in their homes or will it do nothing more than delay the inevitable and give these borrowers a few extra months before they find themselves facing the loss of their home again?

Ask me in a couple of years and I’ll have the answer.

Help for homeowners facing foreclosure or are underwater

Dennis Norman

Back in early December I did a post about a new program that was announced in November, the Home Affordable Foreclosures Alternative (HAFA) Program which is scheduled to go into effect April 5, 2010. There was recently supplemental documentation published as well as FAQ’s about the program and I have to admit, it seems to me the government is getting it right with this program.

THE HAFA PROGRAM:

The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives help the lender out by avoiding the potentially lengthy and expensive foreclosure proceedings and also by protecting the property by minimizing the time it is vacant and subject to vandalism and deterioration. These options help out the borrower by avoiding the foreclosure process and the uncertainty that comes with it and allows the borrower to negotiate when they will give up possession of their home as well as, under the HAFA program be released from any further liability from the loan including short-fall and deficiencies.

How will the short sale process work under HAFA?

  • You will need to enter into a short-sale/deed in lieu agreement iwth your lender.
  • Before listing your home for sale your lender will approve a list price on your home or give you the amount of sale proceeds that are acceptable to them under a short sale. The lender will also let you know what costs may be deducted from the sale proceeds, such as commission and closing costs.
  • After you list your home and receive an offer from a buyer, you will submit the offer, along with a “Request to Approve a Short Sale form, to your lender. In addition, you will need to submit proof that the buyer has funds to purchase your home, such as a letter that the buyer is approved for a mortgage. After you provide the necessary documentation to your lender, your lender has 10 business days to approve the sale.
  • At the closing of the sale the lender is to release you from ALL responsiblities for repaying your mortgage. Plus, you will receive $3,000 from the proceeds to help pay some of your moving expenses.

Your responsibilities under the HAFA short sale.

  • Keep your house and your property in good condition and repair and cooperate with your broker to show it to potential buyers.
  • You may be required to continue to make full or partial mortgage payments (this will be determined by your lender)
  • You must be able to provide the buyer of your home with clear title. To start, determine if you have other loans, judgments or liens secured by your home, such as a home-equity line of credit or a second mortgage. If there are such liens, you will need to either pay these loans off in full or negotiate with the lien holders to release them before the closing date. Under this program, you must make sure other lien holders will agree not to pursue other legal action related to the pay off of their lien, such as a deficiency judgment. You can get help from your broker to negotiate with the other lien holders.
  • The program allows up to 6% of the unpaid principal balance of each loan (not to exceed an aggregate of $6,000 for all the loans in total) to be paid from the sale proceeds to help get a lien release.
  • At several stages of the short sale process, such as after an offer is received, you will need to complete some paperwork. You are responsible for returning all documents within the time allowed in your short sale agreement with your lender.

Additional Info on Short-Sales.

  • You cannot list the property with, or sell it to anyone that you are related to or have a close personal or business relationship with, it must be an “arms length transaction”.
  • If you have a real estate license, you cannot earn a commission by listing your owner property. Nor can you have an agreement to receive a portion of the commission.
  • The buyer of your home must agree not to sell the home within 90 calendar days of the date it is sold by you.
  • You must not have any expectation that you will be able to buy or rent (it’s your lenders discretion on the rent) your house back after closing.

HAFA Short-Sale FAQ’s

  • How much real estate commission can be paid out of the sale proceeds? Six Percent is the maximum commission and the seller, nor buyer, can receive any portion of the commission.
  • Can a lender that has a second mortgage or other junior lien request additional payments from the seller or real estate agent in addition to what they are allowed to receive from sale proceeds? No.
  • What if the property was a principal residence but is vacant at the time the lender evaluates the deal for a Short-Sale or Deed-In-Lieu? The property can be vacant for up to 90 days prior to the date of the Short Sale Agreement and still be eligible but only if the borrower can provide documentation showing that the borrower was required to relocate at least 100 miles from the mortgaged property to accept new employment or was transferred by the current employer, and there is no evidence indicating the purchaser has purchased a new home 90 days prior to the agreement.

Deed in lieu option.

If by the termination date of your short-sale agreement with your lender you have not been able to sell your home, but you have complied with all of your responsibilities under the agreement, then you will be given the opportunity to convey (transfer) ownership of your home to the lender. While this will not allow you to keep your home it will prevent you from going through a foreclosure and will release you from all responsibility to repay the mortgage debt. Additionally, you will still be eligible to receive $3,000 to help with your moving expenses.

Additionally, if you are unable to afford your first mortgage (and therefore not able to do a short sale) you will be considered for the deed-in-lieu option.

Bank of America to do HAMP Second-Lien Modification Program

Dennis Norman

Bank of America announced that it is the first mortgage servicer to sign an agreement formally committing to participation in the pending second-lien component of the federal government’s Home Affordable Modification Program (HAMP).

Bank of America LogoBank of America has systems in place to begin implementing the Second Lien Modification Program (2MP) with the release of final program policies and guidelines by federal regulatory agencies, which is expected soon. 2MP will require modifications that reduce the monthly payments on qualifying home equity loans and lines of credit under certain conditions, including completion of a HAMP modification on the first mortgage on the property.

“For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment,” said Barbara Desoer, president of Bank of America Home Loans.

This is a pretty significant move since Bank of America is the largest mortgage servicer in the country with nearly 14 million loans, approximately 3 million of which are second liens. The bank says they will modify eligible second liens regardless of whether the first lien is serviced by them or another servicer.

St Louis Real Estate – Permanent Loan Modifications under HAMP triples in December

Dennis Norman

This week the Treasury Department issed a report which included stats on the Home Affordable Modification Program (HAMP) which is part of the Obama administrations’ Making Home Affordable Program and “is a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments”. The HAMP program got underway around March of this year and is set to expire December 31, 2012. According to the government website HAMP is intended to help keep “3 to 4 million Americans in their homes by preventing avoidable foreclosures.”

Permanent modifications triple in December from November:

According to the report there was great progress made in December with getting borrowers moved from the trial loan modification period to a permanent modification. Last month when I wrote about the November report there were just a little over 30,000 permanent loan modifications done since the program started, however the December report shows that over 112,000 permanent loan modifications have been done or offered to borrowers.

Here are highlights from the report:

  • Number of Trial Period Plan Offers Extended to Borrowers (Cumulative) – 1,164,507
  • All HAMP Trials Started Since Program Inception – 902,620
  • All Active Modifications (Trial and Permanent) – 853,696
  • Active Trial Modifications – 787,231
  • Permanent Modifications – 66,465
  • Permanent Modifications Pending Borrower Acceptance – 46,056
  • Total Permanent Modifications Approved by Servicers – 112,521

hamp-dec-2009-hardship-chart

hamp-dec-2009-chart-showing-activity-by-state

Is the Obama Administrations’ Home Affordable Modification Program (HAMP) working?

Dennis Norman

Dennis Norman

This week the Treasury Department issed a report which included stats on the Home Affordable Modification Program (HAMP) which is part of the Obama administrations’ Making Home Affordable Program and “is a loan modification program designed to reduce delinquent and at-risk borrowers’ monthly mortgage payments”. The HAMP program got underway around March of this year and is set to expire December 31, 2012. According to the government website HAMP is intended to help keep “3 to 4 million Americans in their homes by preventing avoidable foreclosures.”

So is the Loan Modification plan working?

To try to find an answer to this, let’s look at the data in the Treasury Department report (data is through November, 2009): Continue reading “Is the Obama Administrations’ Home Affordable Modification Program (HAMP) working?

Home Affordable Foreclosure Alternatives Program (HAFA) Launched

Dennis Norman

Dennis Norman

Last week the Treasury Department announced the Home Affordable Foreclosure Alternatives Program (HAFA), the latest program under the Home Affordable Modification Program (HAMP), designed to offer alternatives to homeowners facing foreclosure.

THE HAFA PROGRAM:

The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives help the lender out by avoiding the Continue reading “Home Affordable Foreclosure Alternatives Program (HAFA) Launched

HAMP loan modifications up 40 percent in September; Serious mortgage delinquencies up 147 percent in past year

Dennis Norman

Dennis Norman

By: Dennis Norman

Yesterday the Federal Housing Finance Agency (FHFA) reported that Fannie Mae and Freddie Mac’s trial mortgage loan modifications under the Obama Administrations Home Affordable Modification Plan (HAMP) were up more than 40 percent in September 2009 from the previous month. According to the report, mortgage loans that are 60-plus-days delinquent increased to 1,401,000 borrowers in July, up a whopping 147 percent from July, 2008 when there were 566,000 borrowers 60 plus days delinquent.

Here are highlights from the report (all the data, unless noted otherwise is from July 31, 2009): Continue reading “HAMP loan modifications up 40 percent in September; Serious mortgage delinquencies up 147 percent in past year