The US Attorney General has announced a plan to help homeowners, who are underwater on their mortgages, get relief.
Before you start doing “the wave” there are a couple of items you need to know:
· Your loan must be owned by one of five banks: Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial
· You will need to be delinquent on your payments, threat of foreclosure, and mortgage is more than the home’s current value
If you qualify then this program will reduce the amount of principal on your mortgage. Numbers range from $15,000 to $20,000 in principal reduction.
Overall Freddie Mac, Fannie Mae, own approximately 46% of the nation’s mortgages (including mine!). This means that the plan will be offered to a small amount of homeowners.
In my opinion: In my neighborhood (an hour north of Atlanta) I have seen multiple foreclosures in the past few years. Matter of fact there are another four that are available at this time. The reasons for these foreclosures were varied: Loss of a job, builders losing their companies, divorces, and one neighbor convicted for federal mail fraud! While their home were in short sale, and then ultimately advertised for foreclosure, I looked at the debt acquired on their homes. The numbers, in some cases, were astonishing! Multiple mortgages in excess of 110% of the purchase of the home. One homeowner had over $1 million dollar in loans on his home (the home sold in foreclosure for approximately $390,000). My take on my local foreclosure market is this: The majority of folks I knew had a lot of debt in the good times and was always on the edge. No program would help them stay in their home. It appears that the quicker we can clean out the foreclosures in my neighborhood then the quicker we can return to some sense of a normal real estate market. $20,000 reductions on my neighbor’s loan principal will not help!
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