The Federal Housing Finance Agency (FHFA), which took control of Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) in September, together with Hope Now, the coalition of lenders, servicers, investors and community groups, designed the plan to help some of the most at-risk homeowners, writes NC Real Estate Blog.
Help for Freddie, Fannie Loans On The Way, Should It Be?
Seattle PI writes:
“It will reduce payments to no more than 38 percent of a household’s monthly gross income by reducing the interest rate, extending the life of the loan, deferring payment on part of the principal, and customized steps, if needed.
To encourage participation, the government will pay servicers $800 for each loan modified through the program. To be considered for the program, borrowers should contact their loan servicers.
To qualify for this program you must:
# have missed at least three payments
# have loans for at least 90 percent of the home’s value
# live in the home as a primary residence
# and not have filed for bankruptcy
About 3.3 million mortgages were at least 90 days behind on their payments or in foreclosure at the end of June, equaling about 7.3 percent of all mortgages nationally, according to the most recent data from the Mortgage Bankers Association. In Washington, just over 34,500 loans, 2.9 percent of the total, were severely delinquent or in foreclosure.”
3.3 MILLION mortgages were at least 90 days behind! That’s a staggering number. I’m not sure of the details of the program, maybe I haven’t searched enough for it yet, but I’ve yet to see exact timelines on where the 90 day limit is imposed.
What if you were only 70 days behind and considering making a payment to get you out? I wonder if it may entice people that are able to pay but just haven’t to stick around for a bit longer to take advantage of the deail.
I’m not saying it is a bad deal for them, they were 70 days behind anyway, but might be costing the government via people that are going to just let their payments slide to get the help.
“Borrowers should not have to fall 90 days behind on payments before they get help, agreed Erik Hand, president of John L. Scott Real Estate’s Response Mortgage Services.
Overall, however, the program should stem foreclosures, even among owners owing more than their homes are worth, Hand said. “I do believe that once they get to that manageable payment they will want to stay in their home and stay current.”
While the program would slow the number of foreclosure homes hitting the market, the lack of principle reductions could keep many borrowers from taking part, said Don Riley, executive vice president for Windermere Services, in Seattle.
“It’s definitely a good first piece to helping the families that are on the verge of losing their homes right now,” he said.
Borrowers who are not delinquent enough for the new program have other options, the Federal Housing Finance Agency noted in a statement. It said that, while the program does not include a moratorium, qualified borrowers could have foreclosure sales suspended.”
Do your homework and you won’t have to be in the situations in the first place. If you make 20k a year and are getting sold a 500k house, do the math, there are plenty of sites online that will try to hammer out what you can and cannot afford.
Reported by Mib Smarter Money.
