The $300 billion recovery act signed in July is ready to take effect. It was mandated for mortgage servicers to modify loans for certain homeowners and help avoid foreclosure under these requirements:

1. A default on the mortgage either has already happened or is “reasonably foreseeable.”
2. The home owner lives in the property as his or her primary residence.
3. The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.

The institute further advises:

1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.

2. Send the letter along with documented evidence — your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.

3. Deal directly with a representative of the lender’s “loss mitigation” or workout department– not a broker, loan originator or other mortgage staffer.

More help for homeowners can be found here: “Foreclosure Prevention Efforts Grow.

Source: http://realtytimes.com/rtpages/20081016_bailout.htm

Bookmark to:

This program allows certain borrowers who struggle with their current mortgage to refinance into affordable FHA-insured mortgages. This program has been implemented as of October 1, 2008.

Good news is that you don’t have to wait to find relief from this program. FHASecure, which is FHA’s existing refinancing program, can help homeowners determine whether or not they are eligible for this refinance right now. Here are several ways to obtain more information regarding this program:

1. Contact a local, HUD-approved housing counseling agency at HUD.gov;
2. Contact the HOPE NOW Alliance at (888) 995-HOPE; or
3. Call FHA at (800) CALL-FHA.

Hope for Homeowners requires that new loans needs to be based on a family’s long-term ability to repay the refinanced mortgage, and only owner-occupants are eligible for the FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

• Their mortgage must have originated on or before January 1, 2008;
• Their mortgage debt-to-income must be at least 31 percent;
• They cannot afford their current loan;
• They did not intentionally miss mortgage payments; and
• They do not own second homes.

Features of FHA-insured loans under the new program include:

• 30-year, fixed rate mortgage;
• Maximum 90 percent loan-to-value ratio;
• No prepayment penalties;
• $550,440 maximum mortgage amount;
• Extinguishment of any subordinate liens; and
• New home appraisals from FHA-approved appraisers.

Although this program is available for the current homeowner, FHA will continue to offer lenders the alternative option to foreclose on their borrowers. Also, similar to FHASecure’s recent additions, lenders are encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property.

If we continue to slow down the foreclosures, this program supports FHA’s efforts to stabilizing our local housing markets.  According to U.S. Department of Housing and Urban Development, from September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.

FHA claims that they will insure up to $300 billion in new loans. Borrowers will end up pay an upfront premium of 3 percent of the original mortgage amount, and an annual premium of 1.5 percent of the outstanding mortgage amount. However, any other costs incurred by FHA can be reimbursed by Fannie Mae and Freddie Mac.

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure hopes to help 500,000 families by the end of the year.

If you’re struggling, you’re not alone. Do not opt out this program! Hope for Homeowners will help you ease the burden of your faulty mortgage in today’s economy.

Bookmark to: