Fannie Mae Implements Deed for Lease (D4L) Program

November 8, 2009

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In Announcement 09-33, Fannie Mae introduces the Deed for Lease Program (D4L) under which qualifying homeowners (or their tenants) facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender (DIL).

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under D4L, borrowers transfer their property to the lender by completing a DIL, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A D4L property that is subsequently sold includes an assignment of the lease to the buyer.

Summary

  • With the D4L program, servicers should follow their regular process – in accordance with Fannie Mae’s workout hierarchy – in considering a borrower for a DIL.
  • If a borrower is eligible for a DIL (as determined by the servicer), the servicer should notify Fannie Mae if the borrower may also be eligible for the D4L program based on an initial screen of predetermined eligibility criteria.
  • Fannie Mae, or its designee, will take the steps necessary to further verify the property and borrower eligibility, determine the rental rate, and, if appropriate, execute the lease agreement.
  • To qualify for D4L, the occupant of the property must have the ability to pay market rent (not to exceed 31% of his or her monthly gross income).
  • The D4L agreement will be contingent on successful completion of the DIL.

Process

  • D4L includes certain responsibilities and requirements for servicers, borrowers, Fannie Mae and property managers (as designated by Fannie Mae). These are detailed in Announcement 09-33. Servicers should also refer to the Interim Instructions for Servicers document. Once automated system enhancements are in place, the automated process will replace the Interim Instructions for Servicers. Fannie Mae will notify servicers when these enhancements are available.

Documentation

Servicers must use the following documents when participating in the D4L program:


Freddie Mac Door Knocking Delinquents

October 4, 2009

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Freddie Mac has contracted Titanium Solutions, a third-party servicer, to go to the homes of delinquent borrowers to get the missing information and documentation necessary to start three-month long trial repayments under the  Home Affordable Modification Program (HAMP).

“By meeting with our borrowers, one on one, Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods,” said Ingrid Beckles, Freddie Mac senior vice president, default asset management.  As a fraud prevention measure, Titanium representatives will not be allowed to accept mortgage payments or any other money from borrowers, Freddie Mac said. Representatives will also carry a copy of the solicitation letter the borrower initially received from their servicer, which contains unique information about the borrower’s loan.

In addition to the door-to-door campaign, Freddie Mac sends representatives to foreclosure mediation events put on by the Treasury Department and has hired Home Retention Services, a subsidiary of Stewart Lender Services, to process the backlog of modification applications from distressed borrowers with Freddie Mac mortgages. Home Retention Services will assess the eligibility of delinquent borrowers with Freddie Mac-owned mortgages for Home Affordable Modifications or other possible workouts and process borrower financial information for the servicers’ review and approval. While the new initiative will supplement the capacity of participating servicers to process loan modifications, Beckles emphasized that “borrowers should continue to call their servicers first to determine the best solution for their situation.”

Potentially eligible borrowers identified by a participating Freddie Mac servicer will receive a letter from Freddie Mac asking them to call Home Retention Services using a proprietary toll-free number. The letters will be specially formatted and include unique borrower PIN numbers to protect borrowers from counterfeits produced by fraud artists.

Home Retention Services will work with the borrower, assess their eligibility for a Home Affordable Modification, complete the documentation and income gathering processes, and advise the borrower of their proposed modified payment. Home Retention Services will forward the completed package to the servicer for final approval. The borrower’s Home Affordable Modification trial period begins once the servicer approves the modification and receives the borrower’s check for the new monthly mortgage amount.

Home Retention Services will also advise borrowers of other Freddie Mac workout options if they don’t qualify for Making Home Affordable.


eModifyMyLoan Offers Affordable Help

September 20, 2009

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eModifyMyLoan gives you the tools you need to handle the loan modification process directly with your lender from the comfort of your home, without hiring an expensive modification company. Simply fill out the online form and then e-mail, fax, or print out and deliver your eModifyMyLoan package to your lender for consideration.

Why Pay a Loan Modification Company Thousands of Dollars When You Can Do it Yourself?

Struggling to make your mortgage payment? Then negotiate a lower payment with your lender. With eModifyMyLoan, you can create a complete loan modification package for your lender in less than an hour. YOU DON’T PAY UNLESS YOU ARE 100% SATISFIED. IF YOU’RE NOT COMPLETELY SATISFIED, THEN IT’S FREE.

Why Choose eModifyMyLoan

If you are looking for a way to lower your monthly mortgage payments or avoid foreclosure through a short sale negotiation, you have three basic options:

  1. Pay a professional
  2. Research and submit the information yourself
  3. Use eModifyMyLoan to generate the required paperwork

Which Solution is Right for You?

Some consumers turn to attorneys or loan modification companies to help them through the process. On average, you can expect a $3,000 fee to process your paperwork, which will include creating the documents and representing you with the lender. There is no guarantee of success and many lenders do not treat the paperwork submitted by these organizations with any more priority than they do the documents submitted by individual homeowners.

Some consumers have opted to attempt the process on their own and have quickly become frustrated and overwhelmed. Because many lenders are swamped with phone calls regarding loan modifications and short sales, they often do not return calls from borrowers, even though they may be on the brink of falling behind on their payments. Some banks have limited days and hours of when you can call and request loan modification companies, while others prioritize their responses to only homeowners that are seriously delinquent or verging on foreclosure. As a result, if you are struggling financially but have not yet fallen behind on payments, you may never receive a return call.

The third option is to use eModifyMyLoan. With the online solution, you are guided through a series of questions to easily create the proper loan modification package and calculate the mortgage payment that you can afford. By supplying the lender with the complete eModifyMyLoan package with all of the necessary paperwork, including your personal finance statement and hardship letter, you increase your chances of more quickly achieving your goal of easing financial pressure. Cost to purchase is $129. Plus, it is backed by a 120-day guarantee.

Choose eModifyMyLoan today for an affordable way to undertake the otherwise daunting task of improving your financial situation with a loan modification or short sale.


Home Affordable Modification FAQs

June 8, 2009

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Can Making Home Affordable help me if my loan is not owned or securitized by Fannie Mae or Freddie Mac?

Yes. Making Home Affordable offers help to borrowers who are struggling to keep their loans current or who are already behind on their mortgage payments. By providing mortgage servicers with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?

No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because their mortgage payment has recently increased to a level that is not affordable. If you have had or anticipate a significant increase in your mortgage payment or you have had a significant reduction in income or have experienced some other hardship that makes you unable to pay your mortgage, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances.

I have a second mortgage. Am I still eligible?

Yes, but only the first mortgage is eligible for a modification.

How do I know if my servicer is participating? Are all servicers required to participate?

Servicer participation in the program is voluntary. However, the government is offering substantial incentives to servicers and investors, and it is expected that most major servicers will participate. Participating servicers will sign a contract with Treasury’s financial agent, through which they agree to review every potentially eligible borrower who calls or writes asking to be considered for the program.

What happens after five years?

If the modified interest rate is below the market rate, the modified rate will be fixed for a minimum of five years as specified in your modification agreement. Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the rate cap indicated in your modification agreement. The cap is equal to the prevailing market interest rate on the date the modification is finalized as published by Freddie Mac based on a survey of its customers. This cap means that your rate can never be higher than the market rate on the day your loan was modified. If the modified rate is at or above the prevailing market rate, as defined above, the modified rate will be fixed for the life of the loan.

Will the modified loan include property taxes and homeowners insurance?

Yes. The modification payment will include a monthly amount to be set aside (escrowed) to pay taxes and insurance when they become due. This escrow is required even if your prior loan did not include an escrow.

How low can my interest rate go?

Treasury is providing incentives to your investor to write the interest down to as low as 2%, if necessary to get to a payment that you can afford based on your income.

What happens if that is not enough to get to an affordable payment?

If a 2% interest rate does not result in a payment that is affordable (no more than 31% of your gross monthly income), your servicer will:

  • First try to extend your payment term. At the servicer’s option your payments could be extended out to 40 years.
  • If that is still not sufficient your servicer may defer repayment on a portion of the amount you owe until a later time. This is called a principal forbearance.
  • A portion of the debt could be also be forgiven. This is optional on the part of the investor. There is no requirement for principal forgiveness.

Could I end up with a balloon payment?

Yes. If your servicer determines that a principal forbearance is required to get your monthly payment to an affordable level, the amount of the forbearance, say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money. You would have a $20,000 balloon payment that had no interest and was not due until you paid off your loan, refinanced or sold your house.

What happens if I am unable to make payments during the trial period?

Borrowers who are unable to make three payments by the end of the trial period are not eligible for a Home Affordable Modification. However, you may be eligible for other foreclosure prevention options offered by your servicer.

How much will a modification cost me?

Borrowers who are behind on payments or at risk of imminent default often do not have cash to pay for the expenses of a loan modification. Borrowers who qualify for a Home Affordable Modification will never be required to pay a modification fee or pay past due late fees. If there are costs associated with the modification, such as payment of back taxes, your servicer will give you the option of adding them to the amount you owe on your mortgage or paying some or all of the expenses in advance. Paying these expenses in advance will reduce your new monthly payment and save interest costs over the life of your loan.

If you would like assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a counseling fee. Borrowers should beware of any organization that attempts to charge an upfront fee for housing counseling or modification of a delinquent loan, or any organization that claims to guarantee success.

Is housing counseling required under this program?

Borrowers, especially delinquent borrowers, are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options and to create a workable budget plan. These services are free. However, housing counseling is only required for borrowers whose total monthly debts are very high in relation their incomes. It is voluntary for other applicants.

When you apply for a Home Affordable Modification, your servicer will analyze your monthly debts, including the amount you will owe on the new mortgage payment after it is modified, as well as payments on a second mortgage, car loans, credit cards or child support. If the sum of all of these recurring monthly expenses is equal to or more than 55% of your gross monthly income, you must agree to participate in housing counseling provided by a HUD-approved housing counselor as a condition of getting the modification.

I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. Borrowers who make timely payments on their modified loans will receive success incentives. For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan. The incentive will be applied directly to your loan balance annually and over five years the total principal reduction could add up to $5,000. This contribution by the Treasury will help you build equity faster.

I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for a Home Affordable Modification?

No. For example, if you own a house that you use as a vacation home or that you 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 eligible. Only the mortgage on your primary residence is eligible. The mortgage servicer will check to see if the dwelling is your primary residence. Misrepresenting your occupancy in order to qualify for this program is a violation of Federal law and may have serious consequences.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on two, three and four unit properties are eligible as long as you live in one unit as your primary residence.

I owe more than my house is worth. Will a Home Affordable Modification reduce what I owe?

The primary objective of the Making Home Affordable Program is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Investors may, but are not required to, offer principal reductions. It is more likely that your servicer will use interest rate reductions in order to make your payment affordable.

I have an FHA loan. Can it be modified under the making Home Affordable Program? Are all loans eligible?

Most conventional loans including prime, subprime and adjustable loans, loans owned by Fannie Mae, Freddie Mac and private lenders and most loans in mortgage backed securities are eligible for a Home Affordable Modification. The Administration is working with the Congress to enact legislation that will allow FHA and VA to offer modifications consistent with Making Home Affordable in the near future. Currently loans insured or guaranteed by these agencies are being modified under other programs that also enable borrowers to retain homeownership.

How do I apply for a modification under the Making Home Affordable Plan?

If you meet the general eligibility criteria for the program, you should gather the financial documentation that your servicer will need to determine if you qualify. Once you have this information, you should call your mortgage servicer and ask to be considered for a Home Affordable Modification. The number is on your monthly mortgage bill or coupon book.

If your loan is current, please be patient as it may take some time before servicers are able to process all applications. However, servicers immediately can begin reviewing the eligibility of borrowers.

If you would like to speak to a housing counselor you can call 1-888-995-HOPE (4673). HUD-approved housing counselors can help you evaluate your income and expenses and understand your options. This counseling is FREE.

If you have already missed one or more mortgage payments and have not yet spoken to your servicer call them immediately.


How long will the Home Affordable Modification Program be available?

The program expires on December 31, 2012. Your trial modification must be in place by that date.

My loan is scheduled for foreclosure soon. What should I do?

Many servicers have made a commitment to postpone foreclosure sales on all mortgages that meet the minimum eligibility criteria for a Home Affordable Modification until those loans can be fully evaluated.

However, borrowers whose loans have been scheduled for foreclosure or any borrower that has missed one or more mortgage payments and has not yet spoken to their servicer should contact the servicer immediately. Borrowers may also contact a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).

Who is my “loan servicer? Is that the same as my lender or investor?

Your loan servicer is the financial institution that collects your monthly mortgage payments and has responsibility for the management and accounting of your loan. Your servicer may also be your lender, which means they own your loan, however, many loans are owned by groups of investors.

Traditionally, banks used money deposited in customers’ savings accounts to make loans. They held the loans, earning the interest as borrowers repaid over time. Banks were thus limited in the number of loans they could make because they had to wait to make new ones until savings deposits grew or existing borrowers repaid their loans. Many families who wanted to own a home were unable to do so because there was not a steady supply of money to lend.

Over time, banks started to turn loans into cash by pooling large groups of loans together to create mortgage backed securities that could be sold to investors such as pension funds and hedge funds. The investors get the right to collect future payments and the bank gets cash that it can use to make more loans. Investors hire loan servicers to collect payments and interact with customers.

If you have questions about your loan or you are behind on your payments you should call your loan servicer at the number on your payment coupon or monthly mortgage statement.

Why does my loan servicer have to ask the investor if they can do a loan modification?

If the organization that services your loan does not own it, your servicer may need to get permission from the owner or investor before they can change any of the terms of your loan. Generally, there is a contract between the servicer and the investor that states what kind of actions the servicer is allowed to take. Most of these contracts, called pooling and servicing agreements (PSAs), give the servicer a lot of leeway to make modification decisions, so long as the modification provides a better financial outcome for the investor than not modifying the loan.

What should I do if my servicer tells me that the investor is not participating in Making Home Affordable?

Borrowers should check first to see if their servicer is listed. If so, you should call your servicer back and ask to speak to a supervisor or you may contact a HUD-approved housing counselor for assistance. If your servicer or investor is not participating in the program, you should ask your servicer or a housing counselor about other workout options that may be available.

 


Helping Families Save Their Homes Act of 2009

May 31, 2009

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On May 20, 2009, President Obama signed the Helping Families Save Their Homes Act of 2009 into law.

The Helping Families Save Their Homes Act of 2009 is an important step towards stabilizing and reforming our nation’s financial and housing markets – helping American homeowners and increasing the flow of credit during these difficult economic times.  This legislation will strengthen our nation’s housing sector and facilitate the goals of the Administration’s Making Home Affordable Program by helping millions of American homeowners stay in their homes.

Before signing the bill, President Obama said the bill “expands the reach of our existing housing plan for homeowners with FHA or USDA rural housing loans, providing them with new opportunities to modify or refinance their mortgages to more affordable levels.”

Expanding reach of Making Home Affordable to help more homeowners

The deep contraction in the economy and in the housing market has created devastating consequences for homeowners and communities throughout the country.  Since January, the Administration has made significant progress in developing and implementing a comprehensive plan for stabilizing our housing market, the centerpiece of which is the Making Home Affordable Program (MHA). By reducing foreclosures around the country, the average homeowner could see their house price bolstered by as much as $6,000 as a result of this plan, and as many as 9 million homeowners may increase the affordability of their mortgages and avoid preventable foreclosures.

Improvements to Hope for Homeowners

The legislative improvements to Hope for Homeowners included in S.896 should significantly improve the ability of borrowers to benefit from the opportunities provided by Hope for Homeowners in the context of the Administration’s housing plan.  On April 28th, the White House announced new details describing how Hope for Homeowners will be strengthened as a part of the Administration’s Making Home Affordable Program.  Incentive payments will be available for successful Hope for Homeowners refinances and loan servicers will be required to evaluate all applicants for eligibility for Hope for Homeowners as well as the Home Affordable Modification Program.

Hope for Homeowners targets help to underwater borrowers, who often face heightened risks of foreclosure, by requiring principal write downs to help homeowners increase the equity they own in their homes.  The legislative modifications to the Hope for Homeowners program included in S.896 will ease restrictions on eligibility and enable refinancing of underwater mortgages for a greater number of borrowers.

Modifications to FHA and federally guaranteed farm loans

Legislative changes to FHA and federally guaranteed farm loans will facilitate cost-neutral loan modifications for federally guaranteed rural housing loans and FHA loans.  These changes will improve the Administration’s ability to provide assistance to responsible borrowers with federally guaranteed rural housing loans and FHA loans as part of the Making Home Affordable Program.

Establishes protections for renters and living in foreclosured homes

One of the often overlooked problems in the foreclosure crisis has been the eviction of renters in good standing, through no fault of their own, from properties in foreclosure.  To address the problem of these tenants being forced out of their homes with little or no notice, this legislation will require that in the event of foreclosure, existing leases for renters are honored, except in the case of month-to-month leases or owner occupants foreclosing in which cases a minimum of 90 days notice will be required.  Parallel protections are put in place for Section 8 tenants.

Establishes right of a homeowner to know who owns their mortgage

Often mortgage loans are sold and transferred a number of times.  Borrowers often have difficulty determining who owns their loan, and who to contact with questions, problems or complaints about their loan.  This legislation requires that borrowers be informed whenever their loan is sold or transferred, so that they will always know who owns their loan.


Making Home Affordable Plan

May 23, 2009

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The Obama Administration has introduced a plan to try to stabilize the housing market called the Making Home Affordable (MHA) Plan. Through this plan, up to an estimated 7 – 9 million American families may be eligible to refinance or modify their loans to a payment that is affordable now and into the future.

Under this plan, there are two programs:

  • Home Affordable Refinance Program
  • Home Affordable Modification Program

Home Affordable Refinance Program

The Home Affordable Refinance Program gives up to an estimated 4 – 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. 

Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

Will the Home Affordable Refinance Program help me?

Eligible borrowers who are current on their mortgages but have been unable to take advantage of today’s lower interest rates because their homes have decreased in value may now have the opportunity to refinance. Through the Home Affordable Refinance Program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

How do I know if I am eligible?

You may be eligible if:

  • You are the owner occupant of a 1 – 4 unit home
  • The loan on the property is owned or securitized by Fannie Mae or Freddie Mac (If you don’t know, click here)
  • At the time you apply, you are current on your mortgage payments (current means that you haven’t been more than 30 days late on your mortgage payment in the last 12 months or if you have had the loans for less than 12 months, you have never missed a payment)
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house (You may be eligible if your first mortgage does not exceed 105% of the current market value of your home. For example, if your property is worth $200,000 but you owe $210,000 or less on your first mortgage, you may be eligible. The current value of your property will be determined after you apply to refinance)
  • You have income sufficient to support the new mortgage payments, and
  • The refinance improves the long term affordability or stability of your loan

You may also take the Eligibility Test to determine if you qualify.

How do I apply for a Home Affordable Refinance?

You should call your mortgage servicer or lender and ask about the Home Affordable Refinance application process. The number is on your monthly mortgage bill or coupon book.

Note: Please be patient. Lenders and servicers are implementing the program now and there might be a slight delay before they are ready to process all applications. In the meantime, it will help your lender and speed up the application process if you gather some information and documents before you call.

APPLICATION CHECKLIST:

  • Information about your mortgage such as your monthly mortgage statement and
  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources
  • Your most recent income tax return
  • Information about any second mortgage or home equity line of credit on the house
  • Account balances and monthly payments on all your other debts such as student loans, car loans, personal loans, etc.

Home Affordable Modification Program

The Home Affordable Modification Program will reduce monthly payments on existing first lien mortgages for up to an estimated 3 – 4 million at-risk homeowners.

Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

Will the Home Affordable Modification Program help me?

If you can no longer afford to make your monthly payments, you may qualify for a loan modification to make your monthly payments more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have missed 1 or more payments may be eligible.

How do I know if I am eligible?

You may be eligible if:

  •  Your home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill)
  • Your home must be a single-family 1 -4 unit property (including condominiums, cooperatives, and manufactured homes affixed to a foundation and treated as real property under state law)
  • Your home must not be vacant or condemned
  • First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) that is equal to or less than:
  • 1 unit properties = $729,750
  • 2 unit properties = $934,200
  • 3 unit properties = $1,129,250
  • 4 unit properties = $1,403,400
  • Your mortgage must have originated on or before January 1, 2009
  • Have a mortgage payment (including taxes, insurance, home owner’s association dues) that is more than 31% of your gross monthly income (If you are uncertain, click here)
  • Have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses

You may also take the Eligibility Test  to determine if you qualify.

Note: Eligibility requirements are simply government guidelines. Guidelines may change, and lenders make exceptions, if it is in their best interest to do so.  In other words, homeowners should not count themselves out.  If they are having trouble making their house payment, they should explore the loan modification option.  Sometimes, the only way to determine whether you qualify is to apply.

How do I apply for a Home Affordable Modification?

You should call your mortgage servicer or lender and ask about the Home Affordable Modification application process. The number is on your monthly mortgage bill or coupon book.

Note: Please be patient. Lenders and servicers are implementing the program now and there might be a slight delay before they are ready to process all applications. In the meantime, it will help your lender and speed up the application process if you gather some information and documents before you call.

APPLICATION CHECKLIST:

  • Information about your gross monthly  (before taxes) income, including recent pay stubs, if you receive them or documentation of income you receive from other sources
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on your house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans, car loans, personal loans, etc.
  • A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable

Note: Many lenders have made a committment to delay foreclosure on all loans that meet the minimum eligibility criteria for a home affordable modification

Free Counseling Help

There are two options for free counseling help:

  • Contact me via email freezeforeclosure@gmail and we’ll set up a time to talk.
  • If you don’t feel comfortable talking to me then another free resource is to contact a HUD-approved housing counselor. They provide the same advice I do. The only difference is who you feel more comfortable working with.

What to expect?

Either the housing counselor or I will talk to you about your situation and help you decide what mortgage options are best for you. We will explain what documents you will need to provide to your mortgage company. We can also help you make a budget so that you can meet your monthly mortgage payment and other expenses. There is no charge to work with either one of us.

Before you call 

Gather the following documents:

  • Information about your gross monthly  (before taxes) income, including recent pay stubs, if you receive them or documentation of income you receive from other sources
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on your house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans, car loans, personal loans, etc.
  • A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable

Immediate Assistance

If you are delinquent on your loan payments and need immediate assistance, call myself at 571-249-4357 or 888-995-HOPE (4673)


What’s More Damaging To Your Credit: A Short Sale Or A Foreclosure?

May 12, 2009

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According to Gerri Willis, Money magazine contributing writer and host of CNN’s “Your Bottom Line,” a short sale in which you negotiate with the bank to sell your home for less than you owe on your mortgage, will have a dramatically negative affect on your credit.

That said, if you’re underwater on your mortgage and you need to move, a short sale is a better option than foreclosure. Going through foreclosure will make it very difficult for you to get a loan for at least three to five years; if you’ve done a short sale, you may be able to qualify for a new mortgage within two years.

BOTTOM LINE:  Choosing a short sale over foreclosure is difficult. Both take a bite out of your credit rating. But one is easier to recover from.


The Homeowner Affordability & Stability Plan FAQs

February 26, 2009

The Homeowner Affordability and Stability Plan is part of the President’s broad, comprehensive strategy to get the economy back on track. The plan is suppose to help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.

More information can be found on the example sheet which will show you what options might be available to you, depending on the circumstances of your mortgage.

Disclaimer: This post is adapted from Treas.gov. We do not own this information. It is made available freely to the public. It is recommended that you consult a professional for loan advice.

Borrowers Who Are Current on Their Mortgage:

What help is available  for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability & Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15-year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000or less you may qualify. The current value of your property will be determined after you apply to refinance.

How do I know if I am eligible?

Complete eligibility details will be announced on March 4, 2009 when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history.  The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

I have both a first and second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market value should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment, and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing option may not be right for you.

What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15-year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

Will refinancing reduce the amount I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loaned is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

What should I do in the meantime?

You should gather the information that you will need to provide your lender after March 4, 2009 when the refinance program becomes available. The includes:

  • information about the gross monthly income of all borrowers including your most recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent income tax return
  • information about any second mortgage on the house
  • payments on each of your each credit cards if you are carrying balances from month to month
  • payments on other loans (i.e. student loans, car loans, etc.)

Borrowers Who Are at Risk of Foreclosure:   

What help is available for borrowers who are at risk of foreclosure either because their they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives o modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

Do I need to be behind on my mortgage payments to be eligible for modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

How do I know if I qualify for payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income;  and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on the y0ur financial situation and detailed guidelines that will be available March 4, 2009.

I don’t live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on the house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3, and 4 unit properties are eligible as long as you live in one unit as your primary residence.

I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for modification.

I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and, at your lender’s discretion, modifications may include upfront reductions of your loan principal.  

I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for 5 years can have up to $5,000 applied to reduce their debt by the end of that period.

How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee.

Is my lender required to modify the loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

I’m already working with my lender/housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time.  Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4, 2009, they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, 2009, when the modification program becomes available. The includes:

  • information about your gross monthly income of your household including any recent pay stubs if you receive them or documentation of income you receive from other sources
  • your most recent tax return
  • information about any second mortgage on the house
  • payments on each of your credit cards if you are carrying balances from month to month
  • payments on other loans (i.e. student loans, car loans, etc.) 

My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility.  We support this effort.


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