Principal Reduction Alternative applications for Underwater FHA mortgages

A year and a half after the unveiling of Home Affordable Mortgage Plan (HAMP) and the federal government finally reacted to the significant number of underwater mortgages (distressed mortgages worth less than the unpaid balance). It is referred to as the Principal Reduction Alternative (PRA) aspect of that same Home Affordable Mortgage Plan legislation.

No one expects this program to save much of anything in the mortgage mess; mostly because we’ve all watched HAMP languish in lack of attention and enforcement by the Treasury Dept. Help for underwater mortgages was due when HAMP was passed. Waiting a year and a half to react adds insult to injury. However, the opportunity for an FHA borrower to resolve the underwater portion of their mortgage does exist. It behooves the borrower to get the REST Report to twist the arm of their sure-to-be reluctant servicer/lender to follow HAMP guidelines.

The Federal Housing Administration (FHA) began offering new government-insured mortgages to rescue underwater borrowers yesterday, but the new Short Refinancing program may face as many limitations as earlier programs designed to aid the still sputtering housing market. The Treasury Department set aside $14 billion in Troubled Asset Relief Program (TARP) funds to encourage mortgage servicers to support write-downs of second mortgages and to provide coverage for a share of potential losses on these new loans, according to HUD.

The combination of TARP dollars and the FHA insurance means the new lenders will have a loan backed by the U.S. for up to 97.75% of the home value. Under the program, eligible borrowers can receive an FHA-insured loan if the lender or investor writes off the unpaid principal balance of the original first-lien by at least 10%. To be eligible for the new loan, the homeowner must be underwater but still current on the mortgage, which cannot be already insured by the FHA. A credit score of 500 or better is required. The new refinanced loan must have a loan-to-value ratio of no more than 97.75%. After receiving the new refinancing through the program, the borrower’s combined loan-to-value ratio on the re-subordinated mortgages cannot exceed 115%. The new FHA mortgage can only be used to refinance the unpaid principal balance on the first lien.

The REST Report uses the same software the banks use to calculate all of the ratios referred to above. The REST Report is proving to be invaluable in any foreclosure defense; with or without legal counsel. The courts are recognizing the REST Report as a fail proof tool to force lenders into good faith mortgage modification negotiations with distressed mortgage owners. It basically means beating beating your lender with their own stick.

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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.

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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Originally posted 2010-09-08 15:33:15. Republished by Blog Post Promoter

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