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Loan Mod Program Starts

Loan modification program starts

The Treasury Department announced that the first six participants to sign up for

President Obama's loan modification program are JPMorgan Chase, which will get

up to $3.6 billion in subsidy and incentive payments; Wells Fargo, $2.9 billion;

and Citigroup, $2 billion. The others are GMAC Mortgage, $633 million; Saxon

Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.

A statement issued by Wells Fargo said, "We view this modification program as

yet another incremental opportunity for thousands of homeowners to preserve and

maintain the dream of homeownership." Left unsaid is the fact that now the

second wave of foreclosures will begin, as banks decide which loans are worth

trying to save and which are not.

Details of the loan modification program

Only loans where the cost of the foreclosure would be higher than the cost of

modification will qualify. The modification plan calls for the bank to reduce

interest rates so that the monthly obligation is no more than 38% of a

borrower's pre-tax income, and the government would then kick in money to bring

payments down to 31% of income. Mortgage servicers (banks and mortgage

companies) can also reduce the loan balance to achieve these affordability

levels, and the government will share in the cost of the reduction, up to the

amount the servicer would have received if it had reduced the interest rates.

Treasury will not provide subsidies to reduce rates to levels below 2%. In

addition to subsidizing the interest rates, servicers will use Treasury funding

to pay for incentives for themselves, homeowners, and investors. The program

gives servicers $1,000 for each modification and another $1,000 a year for three

years if the borrower stays current. It will also give $500 to servicers and

$1,500 to mortgage holders if they modify at-risk loans before the borrower

falls behind. Homeowners will even get up to $1,000 a year for five years if

they keep up with payments. The funds will be used to reduce their loan

principals.

Short Sales are growing...work with us!! See you on the other side!!

Charles Gardner

Real Estate Investor, Short Sales and Loan Mods

Shortsales@humble-homz.com

http://humblehomz-re-solutions.com/profit.aspx

Posted by Charles Gardner-Real Estate Consultant on 04/18/2009 05:41 PM

Comments (8)

loan modification, short sales, shortsales, foreclosures

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8 Comments on Loan Mod Program Starts

APR

um, I have not heard of this. Do we (Realtors get paid if we work on these). Or is this a way to cut us out and throw it back to the lenders to screw up again.

That is great the help cannot come fast enough. We are mainly working with Cash buyers now because the financier's are having such a hard time.

Hello Charles,

Great name. Don't know if they are trying to cut realtors out but there are legitimate loan mod companies that the lenders will be working with, If you get connected with one of these then you or any realtor can get paid by helping the home owner remain in their home. I think if you help them now when it comes time to sell who do you think they will remember.? YOU!!

MAY

Great info, thanks for the post.

Mark,

You are welcome about the post. Hope the informaiton was effective.

MAY

HI,

We just went through the request for loan mod with Saxon. We were told twice that our debt ratio was approved and they were waiting for the value to come back. The value came back and we were then told we did not debt ratio. There is no doubt that the value is there. But the company refused to give us any info on the Value or How they figured anything. Not one thing in writing. From all the research my husband has done (we have been in the mortgage business for 10 yrs+) we qualify. We are just 30 days late and will pull the money together to make the payment Monday, But how can they not disclose anythingat all? How do I get a ltter form them telling me how and why we were turned down. I intend to pursue this because their first suggestion was we do a short sale. This is a famiily home and worth way more than we owe on it. I am just curious has anyone else gone through this?

MAY

If you were trying for a loan mod based on HMP, see the following:

To obtain a property valuation input, servicers may use either an automated valuation model (AVM), provided that the AVM renders a reliable confidence score, or a broker's price opinion (BPO). A servicer may use an AVM provided by one of the GSEs. As an alternative, servicers may rely on their internal AVM provided that:

(i) the servicer is subject to supervision by a Federal regulatory agency;

(ii) the servicer's primary Federal regulatory agency has reviewed the model; and

(iii) the AVM renders a reliable confidence score.

If a GSE AVM or the servicer AVM is unable to render a value with a reliable confidence score, the servicer must obtain an assessment of the property value utilizing a BPO or a property valuation method acceptable to the servicer's Federal regulatory supervisor. Such assessment must be rendered in accordance with the Interagency Appraisal and Evaluation Guidelines (as if such guidelines apply to loan modifications).

In all cases, the property valuation used cannot be more than 90 days old.

Reference: "um, I have not heard of this. Do we (Realtors get paid if we work on these). Or is this a way to cut us out and throw it back to the lenders to screw up again."

The government paying servicers and homeowners has nothing to do with 3rd party (you) entities. It's an incentive for the servicers (lenders) to make the modification and for the homeowners to pay the mortgage on time. I think you misunderstood.

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