Making Home Affordable - Part 2
by Jim Sahnger*
In an effort to fill in some of the gaps exposed in the initial Making Home Affordable (MHA) program, Washington has stepped up its efforts to assist more distressed homeowners. In a press release on April 28th, the U.S. Treasury announced an update to the program designed to assist nearly 50% of those homeowners seeking relief from the MHA program.

With millions of lay-offs recently, optimism about the future is fleeting at best. As many as 6 million families are expected to face foreclosure in coming years. Combined with a loss or reduction in income, many families also have a second mortgage creating additional pressure on their monthly payment obligations.

In fact, by some estimates, nearly 50% of all distressed homeowners have not one, but two, mortgages. This is because, at the peak of the recent real estate boom, many borrowers chose to avoid PMI while putting less than 20% down. While beneficial for many home buyers at the time, having a second mortgage when seeking to refinance or modify a mortgage today often causes complications.

To minimize these complications, MHA announced plans to assist mortgage servicers with new guidelines to both incentivize participation and to help decrease payments for homeowners. These incentives have also been extended to homeowners enrolled in the program to assist them in making their future payments on time.

The new announcement also addressed the Hope for Homeowners (H4H) program created last year, which has failed miserably. Designed to help millions of distressed homeowners refinance their home by lowering interest rates and reducing their principal balances, the program has provided hope for less than 100 people!

The biggest news here on H4H is that participating servicers will be required to look at H4H in tandem while considering a loan modification. In order to support more investor participation, incentives will be extended to the servicer and the Treasury will purchase special H4H Ginnie Mae IIs wrapped by the GSEs(government-sponsored enterprises). And while this enhancement could potentially benefit homeowners, it does not look like an opportunity for originators to generate income.

To learn more about these enhancements, read the press release from the Treasury Department.

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*Jim Sahnger is Vice President of Palm Beach Financial Network's three branch offices in Florida and an elected member of the advisory panel for Bankrate.com. Jim is also frequently cited in local, national and international media as a mortgage lending expert. Jim's comments have been seen on CNBC.com, Wall Street Journal, MarketWatch, Washington Post, Forbes.com, and BusinessWeek.com as well as hundreds of other websites. A successful originator since 1993, Jim closed 225 loans and achieved over $70 million in production last year. His unique approach to cultivating relationships, database management and utilizing the media as a tool are the key factors in his remarkable success. In fact, Jim's proactive marketing ideas have led to the creation of some of LoanToolbox's most popular marketing tools, including Gift of Knowledge CDs, Platinum Plus, and YOU Magazine.