The $75 billion program pays lenders to modify the mortgages of troubled borrowers, typically lowering their payments by about $500 a month.

But so far, fewer than 200,000 borrowers have received a permanent change to their loans, according to Treasury Department data released Wednesday, a small fraction of the 3 to 4 million borrowers who government regulators initially said the program could help before it expires in 2012. That may not bode well for efforts to stabilize the housing market. Credit Suisse has estimated that 3.2 million foreclosures would have to be prevented this year for home prices to rise modestly.

“Clearly the numbers that were discussed by the administration set up an expectation that just don’t deal with the reality we’re in,” said John Courson, president of the Mortgage Bankers Association.

Administration officials have acknowledged that the program, known as Making Home Affordable, got off to a slow start and has yet to reach its full potential. Many lenders didn’t begin enrolling borrowers until last summer, months after the program was launched. By then, the primary cause of foreclosures had shifted from the risky mortgages that helped spur the financial crisis to rising unemployment. The latter is tougher to address because jobless borrowers often have little money with which to pay any type of home loan.

Through January, nearly a million borrowers had gotten at least some reduction in their mortgage payments as part of the program, but more than three-quarters have yet to win a permanent modification and must still prove they qualify, according to Treasury data. The program “is doing the job it was designed to do, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said in a statement. “Struggling families are receiving payment relief and the housing market is showing signs of stabilization.”

The unemployment factor

But the administration is facing demands to expand the program to help more unemployed borrowers, or to lower the loan balance of underwater borrowers — those who owe more than their home is worth. Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight and Government Reform Committee, has launched an investigation into the program. “While I applaud Treasury’s efforts, numerous concerns have been brought to my attention regarding the effectiveness and efficiency of the MHA program and the extent to which it has assisted struggling homeowners,” he wrote to Treasury Secretary Timothy F. Geithner earlier this month.

More than half of those who have received mortgage relief so far have said they needed it because they’ve lost their jobs or had their income drop for some other reason. But many unemployed borrowers can’t qualify for help because they don’t have enough income. Housing advocates argue that some of the billions of dollars set aside for the loan modification program should be diverted into short-term loans for these borrowers.

And underwater borrowers who have little chance of recouping the lost value of their homes need a more generous program, housing advocates say.

Changes to the program are possible, administration officials have said, but it is unclear how extensive they will be.

No appeals process

Another challenge for borrowers is that the program lacks a formal appeals process for those denied relief, leaving homeowners largely to work out problems on their own.

That has been the challenge for Alice Valentine, a Southeast Washington homeowner who had a decrease in income after a work-related injury. When she first sought a loan modification from Bank of America, she was told she qualified, Valentine said. But the promised forms she needed to fill out never arrived, she said.

“I never received anything in writing from them except for threatening letters,” Valentine said. “I have been getting nothing but the runaround.”

So she wrote to the White House instead. President Obama responded, offering encouragement. “The road ahead is difficult, but if we move forward resolutely, then I am confident we will overcome this crisis,” Obama wrote.

A Bank of America spokeswoman said the bank is following the program’s guidelines. “We apologize if there was any miscommunication. We would like to reevaluate her eligibility once her financial situation improves,” said spokeswoman Jumana Bauwens.

The program encourages lenders to modify mortgages by offering them a series of incentive payments. But these payments may not be enough to shift the financial calculations made by lenders before offering mortgage relief. “It is clear the incentives being paid are nowhere close to reimbursing the servicers for the cost and expenses that they are devoting to modifications,” said Courson of the Mortgage Bankers Association.

‘Set up to fail’

Some lenders have sold the loans they made to investors under contracts that restrict modifications. In addition, about 600,000 delinquent borrowers potentially eligible for the program can’t apply because their servicers have not signed up, according to Treasury data.

When Yvonne Gipson, 69, applied for relief on the loan for her Annapolis home last year, she was told by her mortgage servicer, PNC, that her loan had been bundled into a security with other loans by Goldman Sachs, she recounted. PNC informed her that the rules governing that security did not allow the loans to be modified, she said.

Instead, wanting to see her catch up, PNC suggested it could raise her monthly payments. The new payments would consume 66 percent of her income, more than double what would be offered under the federal program. “I was being set up to fail,” she said. “I am trying to do the right thing. I find the whole thing devastating.”

PNC declined to comment and Goldman Sachs said the loan can be modified.

Despite its slow start, the federal program has established industry standards for the types of loan modifications borrowers should receive. So far, borrowers who receive loan modifications under the program are less likely to re-default than those who get help under other mortgage relief programs. About 25 percent of borrowers in the program were delinquent on their new lower payments, according to the Treasury Department, while about half of borrowers in other mortgage relief efforts fall behind again.

But more borrowers in the federal program could re-default later. More than 60,000 of the borrowers who initially enrolled in the program have already failed out.

Part of the problem is that the financial burden on many borrowers extends beyond their primary mortgage to other types of debt. The federal program focuses only on lowering the payments on a primary mortgage to affordable levels, or about 31 percent of income. But even after a modification, many borrowers still have high levels of debt, and federal regulators also want to bring down the payments for second loans, such as home-equity lines. Since announcing the expansion of the program to second liens last April, just one lender, Bank of America, has signed up.

Article Source: Washington Post

However, despite homeowners who are walking away from their underwater mortgage, many are just looking for help in their monthly mortgage payment. Homeowners feel that the value of their home is bound to rise again, so if they could just make their home mortgage payment more affordable at the present time the underwater status of their home wouldn’t be so bad.

The trouble with having an underwater mortgage is there are few refinancing options as banks are unwilling to refinance a home whose value is less than what is owed in the original mortgage. Refinancing may be an option for a select few homeowners with an underwater mortgage in certain circumstances, but most homeowners will need to look into a home loan modification.

The Making Home Affordable Program is about the only way to lower a mortgage payment on an underwater mortgage. Many of the nation’s top lenders are working with the program so if you are a homeowner with an underwater mortgage you may want to look into a home loan modification to help lower your monthly mortgage payments.

Article Source: Red, White, and Blue Press

“There’s a lot of interest in this program,” said Rod Petrey, president of the Tallahassee-based Collins Center for Public Policy, a nonprofit group that trains mediators and assigns them to cases. “We have a roster of hundreds of mediators, and they’re all hungry for more work.”

Chief Justice Peggy Quince issued the order to help handle Florida’s glut of foreclosures. With an estimated 465,000 cases clogging the court system, mediation may help resolve some cases early in the process.

The order applies to new foreclosure lawsuits and requires that homeowners of primary residences be given the opportunity to have their case go to mediation with a third-party. The goal is to work something out between the homeowner and the lender in order to avoid foreclosure.

Choosing a mediator will be up to a judge, although the borrower and lender can request one. Judges typically work with nonprofits, such as the Collins Center, to assign mediators to cases.

Mediators participating in this program will have to be certified by the Supreme Court and then participate in special foreclosure training. Mediation costs no more than $750, and about $350 of that typically goes to the mediator.

Although many mediators are attorneys, that is not a requirement under Florida law. Petrey said many mediators have backgrounds in personal finance, banking or social service.

The order is the result of recommendations made by a Supreme Court task force that studied the issue. As part of that study, the Collins Center handled mediation for three of Florida’s 20 circuit courts during a six-month period.

More than 20,000 mediations were referred to the center during that time, and only half of the homeowners chose mediation. Of those cases, mediators were successful in working out a deal with lenders and homeowners in about 65 percent of the situations.

Shari Olefson, a mediator and Tampa real estate lawyer with Fowler, White and Boggs, said she worries that too many inexperienced mediators will jump into the business.

“Having a mediator who knows what they’re doing is like having a judge who knows what they’re doing.”

Reporter Shannon Behnken can be reached at (813) 259-7804.

Article Source: TBO

If you are finding it very difficult to make ends meet financially and you can not make your monthly mortgage payment that a home loan modification might be right for you. Make sure to access the making home affordable website to find out much more information. There is quite a bit of information on this website so make sure to devote a significant amount of time.

There are several mortgage lenders that are having great difficulty getting home loans into modification. You will have to be very persistent with your lender and make sure you have all your documentation available and ready. One of the reasons the borrowers are finding it difficult to get mortgages modified is that they are not providing the proper documentation at the proper time.
Make sure to understand that this process is not easy. You’re going to have to submit several documents and you’re going to have to dig up some things that you have likely never done in the past. It is well worth in the long run as it is going to help you save lots of money and possibly even help you avoid foreclosure.

As stated earlier, you must be very persistent with this process and make sure that your lender knows just how badly you want this mortgage modified. If you just submit some documents and do not follow through there’s a good chance that your home loan modification will not go through. You need to take action and make sure that your modification gets completed.
If the current economy and your financial struggles have gotten you down make sure to check out the inspirational blog My Life After Retail. The blog is an account of the journey to find peace of mind and happiness in today’s society.

Author: Mike Garner Source: Subprime Blogger

Let me know what you think

Florida’s courts are trying to cope with more than 290,000 foreclosure cases.

“What this court system has is virtually a tsunami of these filings,” said Justice Barbara Pariente.

Most on the high court’s Task Force on Residential Mortgage Foreclosures recommended mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate.

The high court did not immediately act on the proposal.

“The data that the banks have says the earlier in the process you get into mediation, the better and more likely you are to resolve the case,” said the task-force chairwoman, Circuit Judge Jennifer Bailey of Miami. She argued for a statewide managed mediation system.

Minority members said mediation should be offered only if ordered by a judge, and the costs — an estimated $750 per case — should be split 50-50 between lenders and borrowers.

Chief Circuit Judge Lee Haworth of Sarasota said borrowers who have the means to pay should have “skin in the game.”

The Florida Bankers Association supports that option. Without making a financial commitment to the mediation process, borrowers may try to use it to delay foreclosure, association lawyer Virginia Townes said.

“If the borrower is mediating in bad faith or is really not available or able to engage in a meaningful mediation, then we’ve wasted the court’s time,” Townes said.

Bailey said the value of getting the cases decided sooner will outweigh the lenders’ upfront costs. If loans can be restructured through mediation, those costs would be included and be paid by the borrowers.

Rebecca Storrow, alternative-dispute-resolution director for the 15th Circuit Court in Palm Beach County, argued for the traditional court-ordered mediation system. She said it is working well in her system and is cheaper than the task force’s proposal.

The justices also heard arguments on proposed emergency rule changes.

One would require lenders to verify they hold mortgages before going forward with cases. Many lenders initially say they have lost the note, which can result in wasted court time because the notes are found in nearly every case, Bailey said.

She said the rule would tell lenders to double-check before filing. Townes argued it would be a costly and needless step.

The other contested rule would require lenders to get a court order to cancel a foreclosure sale. Now all they have to do is not show up at the sale.

Article Source: http://seattletimes.nwsource.com/html/realestate/2010269707_realforeclosurecases15.html

The new program, at least in concept, is simple. If your home is in (or headed for) foreclosure and you don’t qualify for a rescue in the form of a refinance or a loan modification under other federally-subsidized programs, you can deed your home to your lender and then lease it back. This will save the lender the cost of a foreclosure — maybe $2,000 to $4,000 — and, according to Fannie Mae’s public relations department, help stabilize home prices and minimize neighborhood deterioration caused by vandalism of and theft from vacant homes. The leaseback can be for up to a year, with possible renewal options after that. Rent will be at a market rate.

Whether Deed-for-Lease will have much of an impact remains to be seen. To qualify, a borrower will first have to jump through numerous hoops associated with the deed-as-alternative-to-foreclosure part of the program. (See Fannie Mae Servicing Guide, Part VII, Section 506.) If the borrower makes it past that, and is in fact interested in a leaseback, a Fannie Mae representative then will contact the borrower, visit the property, and evaluate both. If, after this evaluation, the lights are still green, a lease will be signed and the loan servicer will complete the process of obtaining a deed to the property.

For the lights to go green, numerous conditions must be met, to wit:

• The loan must be a first-
mortgage loan. If there is a second mortgage on the property, the second mortgage lender will have to release its lien.

• The borrower must either occupy the property as a primary residence (no Beaver Creek ski condos here) or have leased the property to someone else who occupies the property as a primary residence.

• The market rent the borrower will pay can’t exceed 31 percent of the borrower’s verifiable income. In addition to paying rent, the borrower must be able to — and willing to — cover the cost of regular maintenance during the term of the lease. (This strongly suggests that borrowers who are in foreclosure because they no longer have an income will not qualify for the program.)

• The borrower must have made at least three payments on the loan in question, and can’t have more than 12 payments past due.

• The leaseback must not cause a violation of zoning or homeowner association rules. The property must be in reasonably good condition. The number of occupants at the property must be appropriate for its size.
Special rules apply if there are pets.

• There can be no signs of illegal activity at the property and all occupants older than 18 must undergo a satisfactory background check. This includes clearance from the Office of Foreign Assets Control. (Apparently Fannie Mae, which has not had good press in recent years, does not wish to be accused of harboring terrorists.)

If you think the Deed-for-Lease program might be of benefit to you, contact your loan servicer. Information about Deed-for–Lease can be found at Fannie Mae’s Web site, www.fanniemae.com; search for “deed for lease.”
—
Jim Flynn is a private attorney at Flynn Wright & Fredman LLC in Colorado Springs. The firm primarily represents clients in the real estate, financial services and small-business sectors. Reach him at jtflynn@fwflegal.com.

Article Source: http://www.gazette.com/articles/new-75512-foreclosure-association.html

The first wave of foreclosures in Northern Colorado struck people who were in bad mortgage products: subprime mortgages and adjustable-rate loans that buyers couldn’t pay even if they still had jobs.The next wave is hitting now, according to officials from agencies who help people facing foreclosure.

Those homeowners are falling behind for other reasons — they have lost their jobs, or the jobs they depended on when they received their mortgages are producing far less income.

Lending officials and organizations that can help homeowners facing the prospect of foreclosure held an open house of sorts Saturday at The Ranch, offering counseling to those who see trouble ahead in their financial future.

“Getting lenders here was key,” said Sara Gilbert, executive director of Consumer Credit Counseling in Fort Collins.

She said the number of clients served by her agency has increased by 33 percent in the past year, and she sees that second wave of foreclosures holding steady, at least.

By noon, about 40 property owners had taken advantage of the resources available to help forestall foreclosure, and another group had learned more about programs that can help homeownership.

Among the sponsors for the event was the Colorado Division of Housing, which also is a sponsor of the Colorado Foreclosure Hotline.

Ryan McMakin, communications specialist for the agency, said the foreclosure crisis is now starting to hit counties smaller than Larimer, such as Morgan and Teller counties, which will lead to higher numbers being announced soon.

“Statewide it’s going to be a big quarter (for foreclosures),” he said.

Article Source: http://www.reporterherald.com/news_story.asp?id=25731

With the present economic downturn costing many hard working people their jobs the reality that the housing market crisis could be around for a long time is setting in. Job loss can be the preliminary event in a sequence that leads to foreclosure. Although the conventional belief is that the end result of falling behind on your home loan payments is foreclosure and eviction there are some strategies available to the beleaguered homeowner facing the wrath of their lender? Foreclosure prevention is not a myth, it is tried and tested, and it works.

The reality of foreclosure is that most homeowners unwittingly assist the bank in the foreclosure process. The initial reaction when the bank starts calling is to hide and hope that they go away. The bank won’t go away; money is their business and their only concern. There is nothing personal they don’t hate you they just want to exercise the default option in the mortgage, recoup their funds and get on with their business of lending money to credit worthy borrowers.

The trouble with the banks business plan is that today’s credit worthy borrower is tomorrow’s unemployed defaulter. Very few borrowers enter into a mortgage contract with a lending institution with the intention of going into default and eventual foreclosure, eviction and possible homelessness.

The best advice that can be given to a person who finds themselves in the foreclosure is to consciously take control of their situation. If one decides to let events take their course the foreclosure process will most probably be finalized in as little as 180 days from the initial default. 180 days translates into six months which is not a long time for a family whose bread winner is out of work and whose finances are depleted.

The worst thing to do is nothing. Merely submitting an answer to the banks complaint to the foreclosure court will most probably add another 6 months onto the process. This is valuable extra time for a family trying to prepare for fiscally for the future. Foreclosure prevention translates into holding off the lender for a period of time allowing the homeowner to adequately prepare for the future.

It is true that is a small number of cases the banks so mishandle the foreclosure process that they end up paying large damage awards to the homeowner but in most cases the plan is to delay the process for the maximum amount of time possible to allow the homeowner to move on with their lives in a financially stable way.

Delaying the foreclosure process allows a homeowner time to get a new job which might allow them the possibility of qualifying for a loan modification program which would allow them to prevent the foreclosure and stay in their home long term.

The homeowners who are most successful in fighting foreclosure are surprisingly enough the ones who are willing to fight. Access the situation. Access the options and go for it.

Foreclosure prevention is a very real option for a homeowner who is willing to become involved in the events of their life. A 180 day or 6 month foreclosure timeframe can very easily be drawn out to a 24 month or 2 year. The foreclosure prevention plan allows homeowners the time to rearrange their finances which in turn may allow them to refinance through a loan modification program or to move out in their timeframe with finances for a healthy fiscal future.