The Federal Housing Administration announced this past Friday that distressed homeowners did not need to be behind in their mortgage payments to apply and be eligible for a mortgage modification under the Home Affordable Mortgage Plan, or HAMP. One more piece of proof that the federal government gets it. It may take months or a year or so to get it, but here is one step closer.
For almost a year now the banks have been getting away with telling distressed homeowners that they had to miss a few monthly mortgage payments to demonstrate ‘imminent default’ in qualifying for a mortgage modification. This was a mistake in the Home Affordable Mortgage Plan (HAMP) when it initially was enacted.
This has given lenders free reign to then have their foreclosure departments not communicate with their loss mitigation departments and foreclose on distressed homeowners while in mortgage modification negotiations. Miss a few payments, demonstrate imminent default as specified by HAMP, and the Foreclosure Dept. goes to work confiscating your home.
Those of us in the mortgage modification business sincerely hope this new FHA development brings a halt to this heart-breaking and all-too-often occurence. In fact, it has not. The Foreclosure Dept. and Loss Mitigation Depts. in the banks have yet to be held accountable for not communicating in a mortgage modification negotiation.
The nebulous ‘imminent default’ standard in qualifying for a mortgage modification in HAMP has been a huge sticking point since the passage and implementation of the Home Affordable Mortgage Plan, or HAMP, since last March.
The federal mortgage modification plan has always been designed to assist distressed mortgage holders to lower their monthly mortgage payments to 31 percent of their new monthly income. But banks have been allowed to use their own definition of ‘imminent default’ to lure these distressed homeowners into ‘imminent foreclosure.’
FHA Commissioner David Stevens specifically identifies mortgage loan servicers, who, as we all know, are the specific entities that benefit the most from foreclosures over mortgage modification and short sales.
The article quotes a housing counselor who is obviously well aquainted with the resistance on the part of banks to modify mortgages in a good faith manner. This free HUD counselor cites the ever-prevalent lack of transparency, read: obfuscation, of the lenders in processing mortgage modification applications. The combination of this ‘lack of transparency’ and lack of success of HUD counselors in getting mortgage modifications negotiated is a telling comment on the lenders’ reluctance and resistance in granting permanent mortgage modifications with a performance rate above the published dismal one percent accomplishment.
It is only the banks that see HAMP as a ‘last resort.’ Congress and the U. S. Dept. of the Treasury certainly did not see HAMP that way.
Debt-to-income ratios seem to be a significant problem in qualifying distressed homeowners for a mortgage modification. The REST Report, among other calculations, figures debt-to-income, as well as the uber-crucial Net Present Value for a distressed property.
The internet being what it is, certain search terms need to be empahasized so that you can find the best information. The REST Report is best classified as loan modification software, or mortgage modification software. It’s claim to fame is that you use it to calculate Net Present Value exactly the way the banks do, using the same software. It is best used as a do it yourself loan modification or do it yourself mortgage modification. For some reason, loan modification 2010 and mortgage relief 2010 are popular search terms.
This YouTube video says it all. Go here: How to Get A Beneficial Mortgage Modification Now Please ‘Like’ the video, will you? That makes it easier for others to find.
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