According to several articles I recently read, the the new Obama Administrations Mortgage Balance Forgiveness Program will not be available to all homeowners in all markets. This begs the question of how many homeowners WILL actually qualify? And the investors (banks) still have to agree to participate. So how many lenders will really do this?
Qualifications for the program: It will write down the 1st lien prinicpal to 97.75% of the home's value. Some homeowners will have their negative equity wiped out to the point where they in fact have some equity! The 1st and 2nd will be 115% LTV. Section 14B in TARP funding is allotted to pay for this program.
The program increases incentives for short sales and offers even more than the upcoming HAFA program. There will also be increased incentives to drop 2nd liens. What will happen to HELOC's and the investors who hold those loans?
Also, the lenders cannot foreclose while the borrower is in the modification process.
Of course, none of this becomes official until HUD sends a mortgagee letter to the borrower. Then, secondary sources willing to purchase these loans must be found. It could be a long time before this program becomes viable.
Comments(1)