Long Beach, CA. You might not have caught key details that could have personal impact on you or people you know-now or in the recession months ahead. One of the most ambitious mass-market "loan modification" programs was outlined recently by the Federal Housing Finance Agency-overseer or Fannie Mae and Freddie Mac-along with the 33 banks and mortgage servicers who make up the private-sector Hope Now Alliance.
The program, which started nationwide December 15th, is for thousands of subprime and other borrowers who are seriously behind on payments-three months or more-and are slipping fast toward foreclosure. To be eligible for intervention, owners need to document that they can handle mortgage payments with up to 38 percent of their monthly gross income.
They also need to demonstrate that they have experienced some form of financial reversal that made them delinquent on their payments, and prove that they did not intentionally go into default just to get better terms.
If they can pass through these hoops, borrowers may qualify for sharply reduced interest rates, deferrals of principal payments or extended loan terms-whatever combination it takes to get them an affordable payment with their current income.
Participating lenders say they want to hear as early as possible from potential beneficiaries. If homeowners can't connect directly, they can work through the Hope Now Alliance (www.hopenow.com) or through the U.S. Department of Housing and Urban Development (www.hud.gov/foreclosure).
The same day the new federally assisted mass modifications effort was announced, one of the largest lenders and servicers-Citicorp-unveiled a program designed to catch at-risk home owners before they fall behind.
Beginning last month, Citicorp will reach out to an estimated 500,000 mortgage customers who are not currently delinquent but who appear to be at risk-either because their credit files show tell-take signs of financial stress or because their homes are located in markets Citicorp believes face serious economic strains and job losses in the coming year.
Although most mortgage industry executives and economists believe that today's foreclosure crisis is so serious that only wholesale remedial approaches can prevent home losses from piling up, not everyone agrees with the new programs or the loan modification options they throw to homeowners.
Bottom line for borrowers: Definitely pursue a loan modification if you qualify and need one. But talk with your servicer or loan officer to make sure that the revised terms you're signing up for are realistic for your long-range economic situation, and not likely to be just a temporary patch.
Kirk Mulhearn is the co-owner and manager of the Bixby Knolls' Prudential California Realty branch, and the co-manager of G.E.M., Golden Empire Mortgage, also located at the Bixby Knolls' office. He can be reached at 866-961-8042 ext.110 or on his cell @ 562.965.0054.
Comments(0)