Bailout. . how is it going to affect you?
Obama Bailout, Modifications and
SHORT SALES.. . how will it affect you?
that a lot of anxious homeowners
were waiting for this report. .I have the highlights here. These
answers were posted at a White House Forum to inform the public of
owe more than my property is worth, do I still qualify to refinance
under the Homeowner Affordability and Stability Plan?
loans will now include those where the new first mortgage (including
refinancing costs) will not exceed 105% of the current market value of
property. For example, if your property is worth
$200,000 but you
owe $210,000 or less you may qualify. The current value of
will be determined after you apply to refinance.
is not much
room here for most homeowners, 105% . .try 150%!
reality in the street
is that most homeowners are several thousands of dollars under water.
do not live in the house that secures the mortgage I’d like
to modify. Is this mortgage eligible for the Homeowner
Affordability and Stability Plan?
For example, if you own a house that you use as a vacation home or that
rent out to tenants, the mortgage on that house is not
eligible. If you
used to live in the home but you moved out, the mortgage is not
Only the mortgage on your primary residence is eligible. The
lender will check to see if the dwelling is your primary residence.
wasn’t a surprise.
. but it gives you notice that if you are thinking of moving out of
before you find an option to settle your mortgage. .you will not be
you are already living somewhere else.
do I know if I am eligible?
eligibility details will be announced on March 4th when the program
starts. The criteria for eligibility will include having
income to make the new payment and an acceptable mortgage payment
history. The program is limited to loans held or securitized
Mae or Freddie Mac.
The key thing
here is that you will have to wait until March 4th
to call your
lender and find out first if your mortgage(s) are securitized by Fannie
refinancing lower my payments?
objective of the Homeowner Affordability and Stability Plan is to
creditworthy borrowers who have shown a commitment to paying their
with affordable payments that are sustainable for the life of the loan.
Borrowers whose mortgage interest rates are much higher than
market rate should see an immediate reduction in their payments.
Borrowers who are paying interest only, or who have a low
rate that will increase in the future, may not see their current
down if they refinance to a fixed rate. These borrowers,
save a great deal over the life of the loan. When you submit
application, your lender will give you a "Good Faith Estimate" that
includes your new interest rate, mortgage payment and the amount that
pay over the life of the loan. Compare this to your current
terms. If it is not an improvement, a refinancing may not be
Ok, this is your
opportunity. . if you are in a interest only loan program and CAN
afford to pay
your monthly payments right now. . .don’t wait until your
payments go up and
get you into trouble. Even if you are current on your payments, call
holder and ASK THEM to help you refinance and convert your loan to a
rate. Your current payments may not change but you will save thousands
dollars over the life of your loan.
reduce the amount that I owe on my loan?
The objective of the Homeowner Affordability and Stability Plan is to
borrowers refinance into safer, more affordable fixed rate
Refinancing will not reduce the amount you owe to the first mortgage
any other debt you owe. However, by reducing the interest
refinancing should save you money by reducing the amount of interest
repay over the life of the loan.
.if you were hoping for a magic bullet here. .there will not be an
across the nation
mandate to reduce everyone’s principals.
I need to be behind on my mortgage payments to be eligible for a
Borrowers who are struggling to stay current on their mortgage payments
eligible if their income is not sufficient to continue to make their
payments and they are at risk of imminent default. This may
be due to
several factors, such as a loss of income, a significant increase in
or an interest rate that will reset to an unaffordable
This is not
new. .if you see trouble ahead. . CALL YOUR BANK NOW!
do I know if I qualify for a payment reduction under the Homeowner
Affordability and Stability Plan?
general, you may qualify for a mortgage modification if (a) you occupy
house as your primary residence; (b) your monthly mortgage payment is
than 31% of your monthly gross income; and (c) your loan is not large
exceed current Fannie Mae and Freddie Mac loan limits. Final
will be determined by your mortgage lender based on your financial
and detailed guidelines that will be available on March
Key figure. .
31% of your monthly gross income. In any event on March the 4th
should have detailed guidelines.
have two mortgages. Will the Homeowner
Affordability and Stability Plan reduce the payments on both?
the first mortgage is eligible for a modification.
This is a
surprise. .when you consider the second mortgages are normally the most
in rate charges to the homeowners. I have seen rates in the 12% range
could have a first mortgage for 6%. They are excluded??
much will a modification cost me?
is no cost to borrowers for a modification under the Homeowner
and Stability Plan. If you wish to get assistance from a
housing counseling agency or are referred to a counselor as a condition
modification, you will not be charged a fee. Borrowers should
any organization that attempts to charge a fee for housing counseling
modification of a delinquent loan, especially if they require a fee in
I have always advised
my clients that there is no better person to modify your loan than your
self. There are many organizations around that will help you modify
if you just call them. Why pay someone else to do that for you??
my lender required to modify my loan?
Mortgage lenders participate in the program on a voluntary basis and
evaluated for modification on a case-by-case basis. But the
offering substantial incentives and it is expected that most major
flaw exists in the “voluntary” part . .but I
believe that this time the banks
will get in the bandwagon if they want to continue in receiving bailout
owe more than my house is worth. Will the Homeowner
Affordability and Stability Plan reduce what I owe?
primary objective of the Homeowner Affordability and Stability Plan is
borrowers avoid foreclosure by modifying troubled loans to achieve a
the borrower can afford. Lenders are likely to lower payments
reducing loan interest rates. However, the program offers
principal reductions and at your lender’s discretion
modifications may include
upfront reductions of loan principal.
This is what SHORT
SALES ARE FOR. If you owe more than what your house is worth and are
between 5 to 10 years for your equity to grow again to break a even
point. . you should consider a short sale
if you CAN NOT MAKE YOUR MORTGAGE PAYMENTS . .
If modification is
not a choice for you. . of course a short sale should be your next
Lenders are now
willing to negotiate with buyers willing to buy at a discount by taking
on the principal
A Short Sale helps
them avoid having another foreclosure on their record. . and they know
they FORECLOSE their property . .they will take probably LESS money
short sale offer.
The Realtor negotiating
your short sale should amplify this point with proof of comparables to
Your mortgage holder
is only interested in one thing. . where are they going to lose the
amount of money?. .SHORT SALE
for those homeowners that have Jumbo loans
this new program will not include you. . at present in Maryland
a Jumbo loan is considered to be anywhere between $271K
range. Depending where you live. As an
example in Washington County Maryland t$271K is the limit of a
. in Montgomery
The White House Forum here
information about Short
Sales in Maryland
Herboso has earned his CDPE certification to help Distressed
Home Owners in Maryland
, DC and Virginia.
If you feel that you may need a short sale, call Fernando at
Fernando’s eBook about
SHORT SALES HERE
Herboso & Associates