Need Mortgage Refinance

The numbers, as expected, continue to rise and the information released through April 2010 is that almost 300,000 borrowers have now been granted permanent home loan mortgage modifications. The median for payment reduction is still sitting around 36% which is, in real money, a saving of about $500 per month. This is the same as was reported on the last press release. The big change is really the number of borrowers converting to permanent home loan mortgage modifications with over 68,000 converting during April which is 13% more than in March.

There are some rule changes that new applicants should be aware of which actually come into effect on June 1st. Servicers now require upfront documentation before they can initiate new trial modifications and in practice that means they have been making that request since March 2010. The treasury is monitoring service performance to ensure the borrower demand is met and that modification requests are reviewed in a timely manner. This contradicts most reports from real people on this aspect of the HAMP service where the biggest complaints have been of slow responses and lost paperwork.

Servicers are stating that the most common causes of cancellations include missed trial payments and incomplete or unverifiable documentation. So you can see that getting the documentation in up front for verification should improve the efficiency of the service and ensure eligibility before the process is initiated. As for missed payments, well that is why this criteria was introduced, people have to demonstrate that they can meet the new payments before a permanent loan modification is offered.

There are statistics now available that show servicers who started trials with verified documents generally posted higher conversion rates. This is as opposed to accepting stated incomes, i.e. those that relied on the borrower to disclose their income and didn’t verify the accuracy of those statements before starting the process of loan modification. The figures for the 4 largest servicers using stated income as a basis for trial starts is a less than 30% conversion rate.

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The numbers are still going up with the latest figures on the Home Affordable Modification Program (HAMP) now stating that more than 170,000 permanent modifications have been passed on to homeowners. This means they are guaranteed lower payments for the next 5 years and the average saving per month is still sitting at around $500 dollars (36% saving on before modification payments) giving a cumulative saving of around $2.7 billion.

The number of permanent modifications that have been approved by the servicers but are still waiting to be accepted by the borrowers has also risen to 91,800 from the previously reported figure of 76,000. The number of homeowners that have received offers for trial modifications is still around the 1.3 million mark which is around 34 to 45% of the final goal which needs to be reached by the end of 2012. A further 72,000 trial modifications commenced in February.

The cancellation figures are pretty low, for modifications converted to a permanent status only 0.9% have been canceled and for all modifications started the number is 8.2%.

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The Home Affordable Modification Program (HAMP) appears to be working, the latest press releases are again showing that more home owners have been offered and accepted permanent modifications to the tune of around 116,000. This does not include a further 76,000 that have received offers and just need to sign on the dotted line.

The press release states that in January the number of permanent modifications nearly doubled over the previous month and that over one million trial modifications have started from a total of around 1.3 million that have been offered. Once the trial period is passed the loan modifications are then converted to a permanent arrangement so the number of permanent modifications is set to rise significantly, assuming people get through the trial period.

So, based on this information, the news coming from the Home Ownership Preservation Office is that the Home Affordable Modification Program (HAMP) is doing its job. Struggling families are getting the help they need, they are paying less each month for their mortgages and there are signs that the housing market is beginning to stabilize.

Of course HAMP is just one part of the stimulus package and it was further stated that with all the other initiatives being progressed i.e. support for lower mortgage rates, access to credit, tax credits for home buyers and so on, that more than 4 million have refinanced their home mortgages to more affordable levels. They also state that interest rates are at a record low and that home prices and home sales are on the rise again in an economy that is growing.

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To be eligible for the loan modification program under Obama’s new stimulus package the criteria included the maximum loan amount for a single unit which was set at $729,750.

Recent information now states that the maximum loan amounts for 2, 3 and 4 unit homes has been set as follows: -

• $934,200 for a 2 unit home
• $1,129,250 for a 3 unit home
• $1,403,400 for a 4 unit home

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The first thing your loan servicer will do to see if you are eligible for the loan modification program is establish if the loan you have meets the terms for loan modification and if it does:

They will ask about your current income, what assets you have, if any, and any ongoing expenses. What they want to know is whether you will be able to make any new payments that will be due after loan modification by understanding your specific circumstances. Anything you tell them will eventually need to be supported by documented evidence i.e. tax returns, pay stubs etc.

They will also need to establish that your monthly first lien mortgage repayment does not exceed 31% of your gross monthly income.

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Obama’s government has come up with home refinance stimulus package and loan modification programs to help all the needy owners in avoiding foreclosure. This program is designed specifically for all the borrowers who are facing financial hardships as they are not in a condition to repay the loan. The home refinance stimulus package and loan modification would cover as much as 9 million mortgages and the government would spend $75 billion for helping the homeowners.

Obama’s Stimulus Package has 2 main components:

1. Refinance

2. Loan Modification

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If you are looking to get a home mortgage loan modification that allows you to take advantage of Obama’s new stimulus package you will need to understand the rules that have been applied to know whether you actually qualify for this type of loan modification.

The first general rule is that you should be struggling to make your mortgage payments if you are meeting your mortgage payments comfortably then you are not going to qualify. So what exactly do the stimulus package rules say for loan modifications: -

• You have to be in residence of a single family home
• Your total repayments including capital repayments, interest, tax and insurance must be more than 31% of your gross income (from March 2008)
• Your mortgage balance must not exceed $729,750 for a single unit but for multiple units the amount can be up to $1,403,400 for the maximum 4 units
• Your mortgage pre-dates the 1st of January 2009

What you should also know: -

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Wells Fargo Loan Modification & the Obama Federal Program
By Susan V. Gregory

A Wells Fargo loan modification is easier now for distressed borrowers with the Obama federal plan. This government loan workout offers the opportunity for millions of homeowners to reduce their interest rate and achieve a low affordable monthly mortgage payment. Do you know how to apply for a Wells Fargo loan workout using this plan?

Even if you have already applied for a Wells Fargo loan modification and been turned down, or are still awaiting your answer, you can ask to be considered for the Obama federal government plan. The approval guidelines are strict, but if you know a little bit about how to complete your paperwork properly, you could have a good chance of getting:

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