Hello Friends, In this issue I will continue last week’s discussion on the refinance loan programs that allow home owners to refinance with little equity, no equity, or even negative equity in their properties. Last week I went into some details regarding the Home Affordable Refinance Program 2.0, HARP 2.0, and I have been closing these loans with very few hiccups for many of you, reducing your rates down to around the 4s (APRs around 4.25%) for no points. Some of you are getting this refinance while being as much as 300% upside down in the equity in your properties and this program has helped on primary residences, second homes, and rental properties.
There is another option for those of you who are underwater on your equity where Fannie/Freddie are not the investor on your current mortgage. On 2/9/2012, the National Mortgage Settlement Agreement was announced that was an agreement reached between the five largest institutional lenders in the U.S. and the Federal Reserve as well as a large number of state’s Attorney Generals. This settlement provides billions of dollars to help modify the mortgages of home owners who are current on their mortgages where the mortgage balance is greater than the 80% of value needed for a conventional
(continued from front page) mortgage refinance, and where neither Fannie nor Freddie are the end investor of the mortgage. Those five institutional lenders are Bank of America, Chase, Citi, GMAC/Ally, and Wells Fargo. If your mortgage is not with Fannie/Freddie and is with one of these five lenders, you may qualify for the modification program that will continue for the next three years.
Unfortunately, there is no way to force the modification from the consumers’ end at this point. According to the National Mortgage Settlement website, www.nationalmortgagesettlement. com, these lenders are working to identify which borrowers can qualify for the new modification program and those borrowers will be contacted by the lenders directly if they qualify.
I have personal experience with this as my current loan on my primary residence is with GMAC and I am upside-down on my equity. It took me an entire morning of calling through to various GMAC-owned or affiliated entities before I came to the final conclusion that GMAC would identify borrowers who qualify for the program by September of this year. There was no way for me to force the paperwork from my end, even though I clearly qualify for the program based on the guidelines that I confirmed over the phone with GMAC. I will continue to follow up with them bi-weekly until September, at which time I will start pushing them more aggressively to get this done. I have no confidence that anything that I do will force the modification and I don’t want to go late on my payments to force the modification, because this program requires the borrower to be current on their mortgage. This program is likely to not help all borrowers who can qualify for it since there is a limited pool of funds that these lenders have agreed to commit towards the program, while there are likely to be many more borrowers that qualify for these funds than there are funds committed.
While the government has again pushed the banks to do something to help borrowers out of foreclosure, the banks continue to not do enough to bring the new programs to market leaving many borrowers out in the cold and perpetuating the foreclosure mess that we have been in for over the past four years.
These five lenders also committed to pay some small restitution to home owners who foreclosed on mortgages held by these five lenders. These lenders, who were identified as being part of the robo-signing fiasco, have committed to paying $1.5 billion to $750,000 homeowners who foreclosed between January 1st 2008 and December 31st 2011. This meager payout of $2,000 will not do anything to help the borrowers’ credit or ability to take out a mortgage in less than 4-7 years after the foreclosure. The only good part in taking the $2,000 is that a borrower who agrees to take their part of the settlement can still continue to dispute the foreclosure or to sue the lender who foreclosed on them despite accepting these meager funds. This part of the settlement seems to be a form of punishment for the banks that created documents through the foreclosure process that were not properly notarized, thereby fast-tracking the foreclosure process in a way that was illegal. It seems to me that $2,000 per borrower is not nearly enough retribution for this type of criminal behavior. The banks, whose lobby in Washington spends the most money of any other lobby group, continue to get sweetheart deals from the government and it is all too obvious why that is.