About Government Refinance and Home Purchase Programs

See an article on the subject over at HousingWire.

If Ocwen services your Fannie/Freddie loan and you are in need of a loan modification your chances of obtaining it from them just went up.

There was some pretty good advice in the advice section of CNNmoney.com recently. Here is the excerpt:

Question 1. My husband went to company who claims they work with the mortgage company and negotiate on your behalf “for a fee.” They claim we as homeowners cannot do this on our own. Now I am beginning to think we made a very big mistake. — Worried in Florida

Unfortunately, it sounds like you’ve been conned.

First of all, if you need to modify your mortgage or you’re having trouble making your monthly payments, your first phone call should be to your lender. These days lenders are instituting their own modification programs for troubled borrowers. You should not pay a “fee” to any company that says it can negotiate with your mortgage company.

My advice: call your lender and explain your situation.

The government also has its own mortgage modification program that lenders are signing onto. For information go to makinghomeaffordable.gov. In the meantime, report the company that you’ve been using to your local Better Business Bureau and give a call to your local state Attorney General.

Any loan modification company that tells you that you must pay just to seek a loan modification is lying. Our advice regarding loan modifications is always the same: Contact your lender yourself and seek a loan modification. That is free and it has worked for many people.

The problem is that too often lenders reject such requests after repeated attempts. People who have been turned down in their loan modifications often come to us asking what they can do next. While there are too many shady loan modification companies popping up these days, there are legitimate loan modification companies out there as well that might be worth talking to in such situations. The legitimate companies we are aware of give free evaluations to people and offer money back guarantees to clients for whom they cannot secure a loan modification. Further, many of these companies also have divisions or partners that help people repair damaged credit and repaired credit can often qualify the client for a refinance rather than a loan modification.

If you need are in trouble and need a loan modification and have contacted your lender and have made no progress, you can contact us and we can refer you to a reputable loan modification or credit enhancement company.

The Obama loan modification program is making progress. Yesterday six lenders/servicers were officially announced as participants. The lenders are:

— Chase Home Finance (a unit of J.P. Morgan Chase), which could receive up to $3.5 billion.

— CitiMortgage (a unit of Citigroup), which could receive up to $2 billion.

— Wells Fargo, which could receive up to $2.9 billion.

— GMAC Mortgage, which could receive up to $633 million.

— Saxon Mortgage Services, which could receive up to $407 million.

— Select Portfolio Servicing, which could receive up to $376 million.

Here are some further quotes from a Washington Post article on the subject:

Together, the lenders could be eligible for up to nearly $10 billion in incentive payments for helping troubled borrowers save their homes by agreeing to lower the payments to affordable levels. The administration has said the program, launched last month, could help as many as 4 million homeowners stay out of foreclosure.

The six firms are the first of what government officials expect to be many lenders to join the program.

There was an insightful column over in The Detroit News recently. Here are some highlights:

Good things come to those who wait, and if you’ve been waiting to refinance your mortgage, this is about as good as things are going to get.

Thanks to the Federal Reserve acting to push down rates on consumer loans, the 30-year fixed mortgage rate has dropped to historic lows. Two weeks ago, according to Fannie Mae, the rate bottomed at 4.78 percent, the lowest in the history of Freddie Mac’s survey, which dates back to 1971.

By Thursday, mortgage rates nudged up a bit, to 4.87 percent, nationwide and in Metro Detroit.

There’s been some loose talk about 30-year mortgages falling to 4 percent, but this seems to be as far as home loans are going to drop, says Greg McBride, senior financial analyst at the consumer finance site Bankrate.com.

“If record low rates aren’t good enough for you,” he says, “I don’t know what is.”

The new head of HUD recently said that banks that receive government bailout money will be required modify more loans for troubled homeowners. Loan modifications have heretofore been entirely voluntary but it appears the federal government is further turning the heat up on banks to do more to help struggling homeowners. Here is an excerpt from a recent Bloomberg article on the subject:

April 9 (Bloomberg) — Banks receiving federal aid through the U.S. Troubled Asset Relief Program must also take part in the government’s mortgage modification initiatives, Housing and Urban Development Secretary Shaun Donovan said.

The U.S. is “going to require as a condition of participation in TARP going forward that banks do participate in” the Obama administration’s Making Home Affordable plan, Donovan said in an interview on Bloomberg television today. The requirements would apply only to banks taking new TARP money in the future, not those that have previously taken aid, Melanie Roussell, a HUD spokeswoman, said in an interview.

President Obama wisely counseled Americans to look into refinancing now while the federal government is still working hard to push mortgage interest rates to historic lows. Here is a quote from an AP article on his remarks:

Declaring “good news” in the midst of an economic meltdown, President Barack Obama on Thursday urged families to take advantage of near-record low mortgage rates by refinancing their home loans. “We are at a time where people can really take advantage of this,” Obama said, seated with a handful of homeowners who have already lowered their bills.

But he also warned people to watch out for scam artists, cautioning, “If somebody is asking you for money up front before they help you with your refinancing, it’s probably a scam.”

Rates on 30-year mortgages inched upward this week but remain near the lowest level in decades, allowing borrowers with strong credit and stable jobs to save money if they refinance.

The average rate on a 30-year fixed-rate mortgage rose to 4.87 percent this week, up from 4.78 percent last week, Freddie Mac reported Thursday. That was the lowest in the history of the survey, which dates back to 1971.

If you think a refinance would be useful to you, fill in the contact form in the sidebar and one of our refinance specialists will be in touch with you soon to go over your situation and get an estimate to you.

As we have noted here in the past, there are a lot of shady companies popping up these days claiming to be offering loan modifications. The problem with some of these companies is that they collect a few thousand dollars up front and too often fail to deliver any loan modification at all. The Obama administration is working to clamp down on these scams. See an LA Times article on today’s announcement here.

The best way to avoid being scammed is to work with your mortgage company to get a modification yourself. There is no charge to work directly with your own company.

If that approach fails though there are legitimate loan modification companies out there though. We even recommend such companies to people when their own efforts come up short. The key is to be sure you work with a company that actually has a track record of successfully modifying loans, has real attorneys who have helped with modifications before, and most importantly has a written money back guarantee if they are unable to secure a loan modification.

Nobody should be surprised but a study that came out recently showed that loan modifications that keep payments the same or result in higher payments end up going badly. By contrast, loan modifications that reduce monthly payments by more than 10% have a much higher chance of working. See some useful graphs here. Let’s hope lenders are paying attention.

The LA Times recently published a useful article on the new Obama loans that are set to go live this month. Here are some excerpts:

Here’s how it works. In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home’s value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.

As of this month, that has changed. Through June 2010, borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinances for up to 105% of a home’s value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify.

A new report came out today announcing that the US lost another 660,000+ jobs in March. The jobless total is at more than 13 million now. Every time someone loses a job another home is potentially in jeopardy of foreclosing. Every time another home forecloses all of the homes nearby fall in value.

If you still have a job, still have some equity in your home, and are interested in taking advantage of the record low mortgage interest rates available now contact us in the sidebar.

See the post over at Housing Wire here. It sounds like a housing price recover will trail a jobs recovery by several months.

Once again, if you have enough equity in your home to refinance still, you might want to contact us about it sooner rather than later. Rates are at lows not seen in decades and you might not have enough equity later on.

There are lots of ways to measure this but the report in the AP this morning said that home prices in Jan. 09 were nearly 20% than home prices in Jan. 08. Here is a excerpt:

The Standard & Poor’s/Case-Shiller index of home prices in 20 major cities tumbled by a record 19 percent from January 2008. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4 percent, also a new record.

All 20 cities in the report showed monthly and annual price declines, with 13 posting new annual records. Prices dropped by more than 10 percent in 14 cities.

With housing prices likely to drop further and mortgage rates the lowest since the 1950s, now is the time to look into a refinance. Contact us in the sidebar if you think you are a candidate for a government-backed refinance.