The Obama Administration announced additional assistance last week for underwater and unemployed homeowners, saying the foreclosure crisis has shifted from volatile subprime loans to "hardworking" people. The enhancements are to the Home Affordable Modification Program (HAMP) and are to provide additional resources for struggling homeowners.
As you might expect there are some good ideas and some bad ideas, depending on your own personal situation and viewpoint. The actual program and assistance is most likely weeks and or even months away from starting
It allows more borrowers to qualify for modification through HAMP, and help borrowers move to more affordable housing when modification is not possible. The program is for borrowers, who continue to struggle and are unable to complete a loan modification.
The soaring unemployment rate is the main reason people are losing their homes, and this program has Temporary Assistance for Unemployed Homeowners While They Search for Re-Employment. Homeowners who still don't have jobs after the three- to six-month forbearance period will be considered for a modification or another alternative to foreclosure, such as a short sale.
The unemployed homeowners can receive up to six months of cut-rate mortgage payments, while as much as $3,000 in relocation assistance will go to borrowers who ultimately cannot afford to stay in their homes.
Some of the Alternatives program will be doubled and incentives will be increased for mortgage servicers and lenders in hopes to raise participation level to assist homeowners as well as encourage the mortgage servicers to write-down mortgage debt as part of a HAMP loan modification.
The plan will also allow some underwater borrowers who can prove financial hardship to refinance through the Federal Housing Administration with lower interest rates and principal reductions.
On a National level approximately 24 percent of home loans, or 11.3 million homes owe more than they are worth, having negative equity. The plan won't assist investors and speculators or "Americans living in million dollar homes or defaulters on vacation homes," an administration fact sheet said.
<!--RA-->"This will focus on affordability and foreclosure prevention for responsible homeowners, who, through no fault of their own find themselves in a situation of negative equity," said FHA Commissioner David Stevens.
Homeowners across the nation are desperately in need of reliable information and straightforward assistance to cope with financial strains that have the risk losing of their homes to foreclosure. It's important to note that many people now offering modifications are unqualified and unscrupulous.
In order to obtain a successful mortgage modification and avoid being a victim of a mortgage modification scam:
1. Always try to contact your lender directly. Be very persistent. Don't give up!
2. Hire an experienced local real estate attorney if you cannot get your lender to work out a suitable modification for you.
3. If you hire a modification company, require written references from modification service providers.
4. Make sure you verify they have proper licensing in your state, if not or unlicensed, move-on quickly, do not hire them.
5. You need to ask for Verification of their modification success rates and make sure this information is in writing.
6. Contact the local better business bureau. Check for complaints.
7. Avoid paying upfront fees to anyone except an attorney, although some attorneys may start without upfront fees.
8. Never sign documents or agreements unless you completely understand what you're signing. Never sign over a deed giving up title to your home without first consulting an attorney and never use a Power of Attorney.
9. Always request for the written policy regarding refunds or money back guarantees.
10. Compare and shop around and always watch out for excessive or hidden fees.
It is important to note that institutions don't commit fraud, lenders don't commit fraud, companies don't commit fraud - people commit fraud.
We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.
It starts with me.
It starts with you.
It starts with us...
If you are a victim or know of a fraud happening of this type and want to file a complaint, please submit information to your local FBI office. You may also file a complaint with HUD-OIG at www.hud.gov/complaints/fraud_waste.cfm or by calling HUD's Hotline at 1-800-347-3735.
Michael S. Richardson
Director/Mortgage Fraud Services
www.mortgagefraudsolutions.com
Author of "An American Epidemic, Mortgage Fraud a Serious Business"
Follow me on Twitter "FocusonFraud"
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