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Fannie Mae, Freddie Mac Offer Troubled Home Owners New Foreclosure Alternative
April 9, 2013
Fannie Mae and Freddie Mac will offer a new, simplified loan modification program to help troubled borrowers avoid foreclosure and stay in their homes.
Beginning July 1, borrowers who are at least 90 days delinquent on a Fannie Mae- or Freddie Mac-guaranteed mortgage will be allowed to lower their monthly payments and modify their mortgage without having to fill out financial or hardship documentation.
Fannie Mae and Freddie Mac guarantee about half of U.S. home mortgages.
Most foreclosure avoidance programs, including the federal government’s Home Affordable Modification Program (HAMP), make you fill out financial forms documenting your income, expenses, and employment. Troubled borrowers say their lenders often lose that paperwork, while lenders often claim borrowers aren’t completing the paperwork.
The new Streamlined Modification Initiative program would also:
- Lower your interest rate close to current rates.
- Stretch out your mortgage to 40 years.
Those two changes will reduce the typical program participant’s monthly payment by about 30%.
If you owe more than your home is worth, you also won’t have to pay interest on as much as 30% of your outstanding mortgage amount.
Once you’re in the program, you’ll then have to make three on-time trial payments at the new rate. Do that and your mortgage will be permanently lowered under the new Streamlined Modification initiative.
If you opt for the program, you’ll be encouraged to document your income and financial hardship. That’s because the traditional foreclosure avoidance programs will likely net you a better deal.
The program, which expires Aug. 1, 2015, is open only to home owners with loans owned or guaranteed by Fannie Mae or Freddie Mac.
If you qualify for the program, your lender must offer it to you. If you think you qualify and aren’t automatically offered the program, you can call your lender to ask about the program after July 2013.
To qualify:
- You must be at least 90 days delinquent, but no more than 24 months delinquent.
- Your mortgage loan amount divided by the current value of the property must be greater than or equal to 80%.
- Your mortgage loan has to be a first mortgage.
- You can’t have been 60 days late on a prior loan modification payment, or have failed at two or more prior modification plans.
- You must have gotten your loan more than a year ago
To see if your mortgage is backed by Fannie or Freddie, go HERE
Nondelinquent Borrowers Soon to Be Eligible for Short Sales
October 30, 2012
This is HUGE and a potential solution for homeowners who have been struggling but still making their payments.Mortgage giants Fannie Mae and Freddie Mac have issued new rules, which will take effect Nov. 1, that will allow short sales for underwater borrowers who have never missed a mortgage payment. Previously, Fannie and Freddie allowed only home owners who had missed payments to qualify for a short sale.
Eligible borrowers under the new rules will need to show a hardship to qualify for a short sale, however. Hardships may include unemployment or a death of a spouse.
Inman News points out one potential flaw to the new rule, however: The nondelinquent home owners who undergo a short sale will likely take just as big a hit to their credit score than if they had missed loan payments and gone into a foreclosure.
“Under current national credit reporting practices, those nondelinquent borrowers are likely to be treated the same for credit scoring purposes as severely delinquent owners who go to foreclosure after months of nonpayment, or who simply toss back the house keys and walk away in strategic defaults,” writes Ken Harney for Inman News.
Credit agencies use no special coding to indicate that a short sale was without delinquency. Therefore, home owners could see their credit scores drop 150 points or more after the short sale.
However, officials at the Federal Housing Finance Agency, which oversees Fannie and Freddie, told Inman News they are “in discussions with the credit industry” to explore ways to fix the credit score problem for those who haven’t missed a payment but undergo a short sale.
Source: “Damage to Credit Scores Could Trip Up New Fannie, Freddie Short Sale Program,” Inman News (Oct. 23, 2012)
If you would like more information on this or a private consultation to determine if you are eligible for a short sale, please contact me at 508-784-0504 or amymullen@remax.net. For more information online: www.dontforeclosenow.com
Freddie Mac Announces Up to 12 Month Forbearance for Unemployed
January 11, 2012
Freddie Mac and Fannie Mae postponed foreclosures through the holidays but things are back on schedule now. Freddie Mac has announced a forbearance if the home owner is unemployed. This video explains how to obtain that:
Not sure if Freddie Mac owns your loan – visit their site here: https://ww3.freddiemac.com/corporate/
If you are struggling with your mortgage or know someone who is, please find out all your options. This site will give you several different options depending on where you are in the foreclosure process: www.dontforeclosenow.com
Fannie and Freddie Won’t Evict Foreclosed Home Owners During Holidays
December 3, 2011
Fannie Mae and Freddie Mac won’t evict families from their homes during the holidays, but will continue to process foreclosures.
Lending giants Fannie Mae and Freddie Mac won’t evict foreclosed home owners between Dec. 19 and Jan. 2, the lenders said in releases Thursday,December 1st.
Notices of default, notices of auction sale, and foreclosure auctions will continue normally. But borrowers whose homes have been sold at auction or taken back by the government-owned mortgage agencies will be allowed to stay in their property through the holidays.
The two companies own about half of all mortgages, Fannie Mae spokesman Andrew Wilson said. Home owners in the midst of the foreclosure process can check to see whether Fannie or Freddie own their loans at fanniemae.com/loanlookup or freddiemac.com/mymortgage.
Home owners who have been foreclosed, but who still live in their houses, will receive notices from Fannie or Freddie if the lenders are involved.
This is good for home owners because it allows more time for a short sale. A short sale allows the home owner to end the process with dignity and possibly remove all of the remaining mortgage balance. I recently stopped a foreclosure auction on a Freddie Mac loan with a 13 day short sale approval. There is still time! Visit this page to review your options: avoid foreclosure.
New Refinance Program Targets ‘Underwater’ Owners Current on Payments
November 30, 2011
This seems like big news! I was just reading this article from Orlando which is a very hard hit area of the country.
“Starting Thursday, home owners with “underwater” mortgages can apply for a new Fannie Mae and Freddie Mac refinance program geared for pretty much everyone who owes more on a home than it’s worth.
Matt Hamilton has dutifully paid the loan on his Maitland house and a Longwood rental condo, but until now he could not refinance them to obtain more affordable interest rates because the properties are financially underwater.
Starting Thursday, Hamilton and many of the other quarter-million Orlando-area residents with “underwater” mortgages can apply for a new Fannie Mae and Freddie Mac refinance program geared for pretty much everyone who owes more on a home than it’s worth — including landlords and second-home owners.
“It’s been difficult because I’m so far in the hole that no one wants to refinance me,” said Hamilton, a product developer for Longwood-based Onlinelabels.com. “But if you look at my payment history, I am a safe risk.”
The federal government’s previous foreclosure-prevention efforts, such as the Home Affordable Modification Program (HAMP), lowered the interest rates on mortgages of home owners at risk of foreclosure because they had lost income. But the new Home Affordable Refinance Program (HARP) is seen as a possible game changer even for home owners who are underwater but who have stayed employed and continue making their payments.
Home owners who have missed mortgage payments in the past six months need not apply. And not all the details — such as loan limits — have been disclosed yet. But this is one of the first refinance programs that doesn’t require an appraisal to determine the value of the house.
“It’s a reward for the responsible borrower who swallowed a bitter pill but still kept moving,” said Travis BeMent, mortgage-loan originator for Home Loans Today of Orlando. “There’re a lot of people out there ready to pounce on this.”
The HARP application process begins Thursday, just as new reports show that more than half of the mortgaged homes in Metro Orlando are saturated with more debt than they are worth. In all, 254,146 mortgaged homes in the four-county metro area are in that situation, according to a report released Tuesday by the mortgage-research company Corelogic.
Even though Orlando has a greater share of underwater homes than Florida overall or the nation as a whole, the percentage of “negative-equity” houses in the metro area actually decreased slightly during the third quarter: 51.6% of the mortgaged homes in Orange, Seminole, Osceola, and Lake counties were worth less than their loans in the July-through-September period, down from 53.1% in the second quarter.
About 44% of the mortgaged houses in Florida, and 22% of those in the nation, were underwater in the third quarter, according to Tuesday’s report.
Many of those mortgages were sold to home owners who purchased at the peak of the market in 2006-07, when sales prices were double what they are today and when interest rates ranged from 5.7% to 6.5%, according to the Orlando Regional REALTOR® Association. Today, interest rates on a 30-year mortgage are less than 4%.
One cautionary note about HARP: Interest rates could change by the time a qualified property owner’s refinancing application is processed, BeMent said. Fannie and Freddie are not expected to have the ability to process the new loans until as late as next March.
But HARP, he noted, also offers a break to home owners who want to refinance for 15 or 20 years instead of 30 years. To qualify, an owner must have a mortgage backed by Fannie Mae or Freddie Mac and will likely need a credit score of at least 620.
Orlando lawyer Jeremy Sloane hasn’t missed any payments on a rental home he owns in east Orange County’s Avalon community, but he still loses money on the property every month because the mortgage he took out in 2006 far exceeds the rent he collects, now that prices have collapsed. He said he has already talked to FBC Mortgage about the new federal refinancing program.
“At the end of the day, I don’t think it’s anyone’s responsibility but myself to make the payments, but the frustrating part was that other people have been able to get out of their situation and not take a loss,” Sloane said. “This program will hopefully make it a lot more palatable renting out that house and not taking a loss.”
By Mary Shanklin, The Orlando Sentinel, Fla.”
I have also found this article on SmartMoney (http://www.smartmoney.com/spend/real-estate/sizing-up-harp-20-1322685479452/) that has a great, quick write-up of the refinancing limitations. The guidelines prevent anyone who has been behind in their payments over the past six months from applying and you have to have a credit score of at least 620. If you are looking for other options, they do exist. This page will give you a full list of options for distressed homeowners – avoid foreclosure. If you would like some help reviewing these options, a private meeting is available to you.
Real Estate and *stuff * 