All posts tagged Loan Modification

The New American Dream

by Justin Miller on December 10, 2009 in Bailout, Foreclosure, Loan Modification with No comments

Apparently it is to stop paying your mortgage when you are upside down and rent.  Here is my opinion, a lot of people bought homes they couldn’t afford so yes they are responsible too.  However, we are human and make mistakes and I feel this goes back to the book I read, “Chain of Blame: How Wall Street Created The Credit Crisis.”  In this book Angelo Mozillo, CEO of Countrywide, said back in 2002 (I believe 2002) “if these weren’t good loans then Wall Street would sniff it out.  If you are lending the money you need to take control of the situation and not allow these individuals to purchase. 

I am going back to my favorite paragraph from a previous Wall Street Journal article.  “If the intent is to help homeowners, then foreclosure is undoubtedly the best solution. Household balance sheets have been destroyed by taking on too much debt via the purchase of inflated assets. With so little savings, a household with negative equity almost implies negative net worth. Walking away from the mortgage immediately repairs the balance sheet.”

This was an interesting comment and probably accurate.  “For the 4.8 million U.S. households that data provider LPS Applied Analytics estimates haven’t paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month — an injection that in the long term could be worth more than the tax breaks in the Obama administration’s economic-stimulus package.”

http://online.wsj.com/article/SB126040517376983621.html?mod=rss_economy 

FHA’s Loan Modification

by Justin Miller on September 30, 2009 in FHA Loans, Foreclosure, Loan Modification with No comments

HUD just released an updated mortgagee letter with regards to their modification program.  It is kind of confusing because HUD states if your interest rate is 50 basis points (.5%) or more above market rate then they will lower your interest rate to no more than 50 basis points above market rate.  Huh?  I know but the bottom line is that they want to lower your payment instead of modifying it and it increasing like so many other modifications that are out there.

If you have seen the statistics on the amount of loans modified and the percentage that are back in default, it was somewhere around 60%.  What they leave out or people tend to miss is that a large percentage of that 60% had payment INCREASES.  Yeah, not much of a modification. 

To read the full letter click on this link

http://www.hud.gov/utilities/intercept.cfm?/offices/adm/hudclips/letters/mortgagee/files/09-35ml.doc 

Hope For Homeowners Loan

by Justin Miller on February 3, 2009 in Bailout, Foreclosure, Loan Modification with No comments

The Hope for Homeowners loan is meant to help borrowers who are behind or upside down on their mortgage.  It is a new based on 90% of the current appraised value.  There are certain guidelines you have to adhere to in order to get this loan.  It is supposed to help 400,000 plus borrowers but has only helped 357 so far. 

 

The 1st link will include what you need to qualify for it and will address the shared appreciation with the government. 

 

Here is the link for Hope for Homeowners http://portal.hud.gov/portal/page?_pageid=73,7606147&_dad=portal&_schema=PORTAL 

 

Here is another link with a list of numbers to call for the different banking institutions. 

 

http://portal.hud.gov/portal/page?_pageid=73,1827476&_dad=portal&_schema=PORTAL

Central Bank’s Modifications

by Justin Miller on January 28, 2009 in Bailout, Loan Modification with No comments

There seems to be plenty of talk about modifying loans but very little action.  I guess we will have to wait and see.  According to the article below from The Wall Street Journal, The Federal Reserve has developed a new policy to modify mortgages tied to assets it acquired via recent federal bailouts, the latest step in the government’s attempt to alleviate the mortgage crisis.

The goal of the policy, which lawmakers have sought for months, is to “avoid preventable foreclosures” on residential mortgage assets that are held, owned or controlled by the central bank, Fed Chairman Ben Bernanke wrote to top lawmakers Tuesday.

http://online.wsj.com/article/SB123311240039823003.html?mod=todays_us_page_one

New Rescue Options

by Justin Miller on January 21, 2009 in Bailout, Foreclosure, Loan Modification with No comments

The article below talks about new options for rescuing this current real estate market.  There are talks of nationalizing some of the banks with the biggest problems.  According to The Wall Street Journal article, “The hours-old administration of President Barack Obama is expected to move swiftly to try to stabilize the financial system by pumping more capital into weakened banks and buying bad assets. Nationalization appears to be a last resort, but other options on the table move the U.S. in that direction. In one idea under consideration, the government could buy convertible securities from financial institutions, an approach that could ultimately leave the government owning large chunks of many firms’ common shares.”

http://online.wsj.com/article/SB123249848926800519.html?mod=testMod

More Help Is On The Way

by Justin Miller on January 21, 2009 in Bailout, Foreclosure, Loan Modification with No comments

The Wall Street Journal reported that the U.S. government, recognizing that the banking crisis is far larger than originally thought, is laying the groundwork for a second phase of its rescue attempt, with plans to purge bad assets that are paralyzing the financial system. Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp., in consultation with the incoming Obama administration, are discussing a plan to create a government bank that would buy up the bad investments and loans that are behind the huge losses that U.S. banks continue to report, say government officials. Also under consideration is an additional and giant government guarantee of banks’ assets against further losses.  The latest government proposals are aimed at attracting private capital back to the banking system, efforts that have until now largely failed. “All of these ideas are designed ultimately to facilitate more lending in the economy,” said FDIC Chairman Sheila Bair. “It’s essential to get some private capital back into these banks.”

J.P. Morgan Chase To The Rescue

by Justin Miller on January 21, 2009 in Bailout, Foreclosure, Loan Modification with No comments

Hopefully many more will follow.  According to The Wall Street Journal J.P. Morgan Chase & Co. is expanding its two-month-old program to modify mortgages to include not only mortgages the bank owns but also more than $1 trillion of loans the bank sold to investors.

The TARP Funds 2nd Half Is Set For Release

by Justin Miller on January 16, 2009 in Bailout, Foreclosure, Loan Modification with No comments

According to the article below from The Wall Street Journal, the senate has cleared the way for the Obama administration to have access to the remaining $700 billion from the TARP fund.  “To overcome political objections, the incoming Obama administration pledged to spend $50 billion to $100 billion on a “sweeping” foreclosure-prevention effort. It also said it would impose tougher restrictions on banks that receive government aid, including requirements on banks to lend money, increased restrictions on executive compensation and curtailed dividend payments for some firms.” 

This could really help to stabilize the current real estate market.  Stopping foreclosures and getting the banks to lend is the key to stimulate the economy.  It is not just a matter of supply and demand in my opinion. 

 

http://online.wsj.com/article/SB123205759811587287.html?mod=todays_us_page_one 

Fighting a Foreclosure

by Justin Miller on January 13, 2009 in Bailout, Foreclosure, Loan Modification with No comments

Below is a great article from Kiplinger about fighting a foreclosure along with great tips.   

 

http://www.kiplinger.com/magazine/archives/2009/02/fight-a-foreclosure.html

More On Cram-Downs

by Justin Miller on January 10, 2009 in Bailout, Foreclosure, Loan Modification with No comments

The Wall Street Journal reported that Citigroup reached a deal with top Senate Democrats on a measure that would allow judges to set new repayment terms for millions of mortgage holders who wind up in bankruptcy court. The deal is likely the first of several measures being crafted this year that propose to trim the principal owed by homeowners saddled with mortgages that are larger than the current value of their house. It marks a surprising change of direction by the financial-services industry.

What is a cram-down again?  In a cram-down, a judge modifies a loan, often reducing principal so a borrower can afford it. Lenders hate it because they have to absorb the loss. Bankruptcy judges currently have the ability to modify certain personal loans and even mortgages on vacation homes, but they can not cram-down mortgages on primary residences.

This is good news.  The reason is because a lender is going to be more willing to work with a borrower in foreclosure by reducing their principle, lowering the rate, etc. so that they don’t claim a Chapter 13 bankruptcy and have to deal with the bankruptcy judge.  This way we won’t have as many borrowers re-defaulting on their modifications.

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