Today, it was announced that both Fannie Mae and Freddie Mac are considering some mass loan modificatioon programs. Additionally, Citigroup has just announced a large scale loan mod plan. Details follow, as taken directly from the announcement:
NEW YORK - The government and the mortgage industry are launching the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, announced the plan Tuesday along with other government and industry officials, including Hope Now, an alliance of mortgage companies organized by the Bush administration last year.
"Foreclosures hurt families, their neighbors, whole communities and the overall housing market," said James Lockhart, the housing finance agency's director. "We need to stop this downward spiral."
The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million U.S. mortgages, or nearly six of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program.
Officials hope the new approach, which goes into effect Dec. 15., will become a model for loan servicing companies, which collect mortgage companies and distribute them to investors. These companies have been roundly criticized for being slow to respond to a surge in defaults.
To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.
Borrowers would get help in several ways: The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount to be deferred interest-free.
Citigroup announced late Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments. The New York-based banking giant also said it is also working to expand the program to include mortgages for which the bank collects payments but does not own.
Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are on the verge of falling behind. This represents about one-third of all the mortgages that Citigroup owns, the bank said.
Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan.
Late last month, JPMorgan Chase & Co expanded its mortgage modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007.
Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.
Tuesday, November 11, 2008
Thursday, November 6, 2008
Possible Relief in California
In information released to the media yesterday, Gov. Schwartzenegger proposed a new plan to help people facing foreclosure. His plan is directed at homeowners who have already received Notices of Default (NOD), but not yet been foreclosed upon.
The specifics, as outlined yesterday, include a 90 day stay on the foreclosure process for anyone owning a home who has already received the NOD. A lender could get an exemption from this stay if it has in place what was referred to as an "aggressive modification program", according to the account in today's SF Chronicle.
The Chron reports that the modifications would be modeled on the format that was used by the FDIC in the recent IndyMac bank failure and the foreclosing loans held by that institution. Under that plan, borrowers' monthly payments would have to be limited to no more than 38% of their incomes. The lenders involved would be allowed to achieve that level from any of the following methods: lowering the interest rate on the loan; extending the maturity of the loan up to a maximum length of 40 years; or deferring a portion of the principal from repayment until such future date as the home is either sold or refinanced by the borrower. The Chronicle estimates that such actions could reduce payments by as much as 25 to 30%, which is a sizable amount.
For example, a 25% cut on a monthly payment of $500 would leave a new payment amount of $375. In the case of a current mortgage payment of $2,000 a month, a 30% reduction would leave the borrower paying only $1400, not cheap, but far better than his/her current payment amount.
As for when this or any other plan may be available, that remains to be seen, but the Governor is said to be pushing hard to get the legislature to do something about it soon after it reconvenes in January.
The specifics, as outlined yesterday, include a 90 day stay on the foreclosure process for anyone owning a home who has already received the NOD. A lender could get an exemption from this stay if it has in place what was referred to as an "aggressive modification program", according to the account in today's SF Chronicle.
The Chron reports that the modifications would be modeled on the format that was used by the FDIC in the recent IndyMac bank failure and the foreclosing loans held by that institution. Under that plan, borrowers' monthly payments would have to be limited to no more than 38% of their incomes. The lenders involved would be allowed to achieve that level from any of the following methods: lowering the interest rate on the loan; extending the maturity of the loan up to a maximum length of 40 years; or deferring a portion of the principal from repayment until such future date as the home is either sold or refinanced by the borrower. The Chronicle estimates that such actions could reduce payments by as much as 25 to 30%, which is a sizable amount.
For example, a 25% cut on a monthly payment of $500 would leave a new payment amount of $375. In the case of a current mortgage payment of $2,000 a month, a 30% reduction would leave the borrower paying only $1400, not cheap, but far better than his/her current payment amount.
As for when this or any other plan may be available, that remains to be seen, but the Governor is said to be pushing hard to get the legislature to do something about it soon after it reconvenes in January.
Will Obama Help?
Well, the election is now over, ending 21 months of campaigning. Whether your candidate won or lost, one thing is likely--some additional relief from the foreclosure tsunami is likely to find its way into any overall financial relief package put together by Obama and the new Congress. As to the specifics, that will have to wait until the new government actually takes over--Congress on January 1, 2009; and Obama at noon on January 20.
Monday, October 6, 2008
Some Relief for Countrywide Borrowers!
In a settlement arrived at yesterday, Bank of America, the pending purchaser of Countrywide,announced that it will allow a combination of loan modifications and interest rate reductions for tens of thousands of mortgage holders in eleven states. The states are: California, Illinois, Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington.
Starting in December, the program will adjust the size of the loan payments so that they do not exceed 34% of the borrower's income. In some cases, loan principal will also be adjusted. No modification fees will be charged, and prepayment penalties are to be waived.
In the case of homeowners whio will be unable to keep their homes even with this assistance, the agreement also provides a vehicle to assist them in moving to new locations.
Starting in December, the program will adjust the size of the loan payments so that they do not exceed 34% of the borrower's income. In some cases, loan principal will also be adjusted. No modification fees will be charged, and prepayment penalties are to be waived.
In the case of homeowners whio will be unable to keep their homes even with this assistance, the agreement also provides a vehicle to assist them in moving to new locations.
Tuesday, September 30, 2008
Bailout Help
As everyone waits for news of the bailout, and its terms, the subject of help for homeowners is discussed almost as frequently as the other proposed subjects. Until a bill is finally passed, no-one will really know whether there is any new help for homeowners facing foreclosure. The Democrats have tried to get some form of additional aid for homeowners inserted into the bill, but the Republicans have just as adamantly opposed such assistance. While some form of 'bailout' bill is DEFINITELY NECESSARY, it is taking a great deal of work and discussion to get there. This was proven this week as the supposedly agreed upon terms failed to pass in the House by a narrow margin.
Keep your attention here, and as soon as I have more information for you, it will be here immediately.
Keep your attention here, and as soon as I have more information for you, it will be here immediately.
Thursday, August 21, 2008
ATTENTION-INDYMAC BOROWERS!
Good News! If your loan is with Indymac Bank, the federal government has just announced that if you are 'seriously delinquent' or in default on your mortgage and it's from Indymac, you will be able to switch it to a fixed rate loan with an interest rate of about 6.5% per annum. So far, no one has defined exactly what is meant by 'seriously delinquent' or how it differs from default. However, just the fact that the FDIC, who is managing the failed bank, is willing to do this is definitely a big plus. Basically, it requires that you be able to accurately document your situation when you apply for the switch. The best way to get started is to go to your local Indymac location, and ask about this plan.
Tuesday, August 19, 2008
Housing & Economic Recovery Act--Details
Well, Pres. Bush finally signed this act a couple of weeks ago, providing some much needed help to suffering homeowners. Although best estimates are that it will benefit only 4-500,000 of those owners in danger of losing their homes to foreclosure, it goes a lot farther than any earlier "solutions" offered by the administration.
Highlights are as follows:
A.) The FHA will be permitted to insure up to $300 Billion in refinanced mortgaged mortgages. This will give lenders an incentive to refi many existing loans that may face default and foreclosure.
B.) Provide $3.9 Billion to local communities to buy and rehab foreclosed properties in especially hard hit areas. This will create a new source of affordable housing and help avoid some blight.
C.) Provide a wide range of new support from the Treasury to both Fannie Mae and Freddie Mac. This support will include purchase of some of their loan portfolios as well as buying stock in the firms. As these two organizations own or guarantee about half of all mortgages in the nation, this is a vital step in re-establishing confidence in the mortgage market while also increasing liquidity for home buyers seeking loans.
D.) Cap loans that Freddie & Fannie can buy, and that FHA can insure, at $625,000. This is higher than the old figure of $417,000, though below the $729,750 temporary limits for high cost regions.
E.) Provide $15 Billion in tax breaks, including a credit of up to $7500 for first time buyers buying between April 9, 2008 and July 1, 2009, as well as a deduction on 2008 property taxes for those taxpayers not itemizing.
Highlights are as follows:
A.) The FHA will be permitted to insure up to $300 Billion in refinanced mortgaged mortgages. This will give lenders an incentive to refi many existing loans that may face default and foreclosure.
B.) Provide $3.9 Billion to local communities to buy and rehab foreclosed properties in especially hard hit areas. This will create a new source of affordable housing and help avoid some blight.
C.) Provide a wide range of new support from the Treasury to both Fannie Mae and Freddie Mac. This support will include purchase of some of their loan portfolios as well as buying stock in the firms. As these two organizations own or guarantee about half of all mortgages in the nation, this is a vital step in re-establishing confidence in the mortgage market while also increasing liquidity for home buyers seeking loans.
D.) Cap loans that Freddie & Fannie can buy, and that FHA can insure, at $625,000. This is higher than the old figure of $417,000, though below the $729,750 temporary limits for high cost regions.
E.) Provide $15 Billion in tax breaks, including a credit of up to $7500 for first time buyers buying between April 9, 2008 and July 1, 2009, as well as a deduction on 2008 property taxes for those taxpayers not itemizing.
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