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Good Afternoon!  This is Connie Saunders with the Foreclosure Freedom Network Show.  I work all over the Country with people in trouble on their home mortgages to help them get them into loan modifications or refinances and every week I have a half hour show to keep you updated on what is happening in this industry and how to pull yourselves up by your own bootstraps and get out of any trouble you are in on your home loan!

Keep in mind that these shows are all stored on Pod casts on the KCAA Radio website which you can listen to anytime or you can download these and keep them on your computer for further study or share them with your friends! Rather than taking questions directly on the show, please email them to me and I’ll try to cover these in the next show or even have you on as a guest if you like!  My email address is connie@foreclosurefreedomnetwork.com.  You can also go to www.kcaaradio.com , where the icon pointing to our website is on their main page or you can select the Thursday Show Schedule and find our library of Pod casts.

Today’s show is covering the subject:

Current workout solutions and how to find the one for you!

There are many possible workouts, such as loan modifications and refinances out there now for people in trouble on their home mortgages.  How do you know which one is right for you?  Can you trust the negotiator assigned to you by your lender to ‘help’ you?  Not with Over 50% of all modifications failing so far!

You’re right, you can’t.  Your best guarantor of success is yourself, so get out your pens and paper and take some notes!

Let me begin by listing out some of the key workout products out there today.

1. Hope 4 Homeowners (or H4H) Refinance.  H4H came became effective October 1, 2008, however, according to CNN on March 25th only one person has avoided foreclosure with this loan product as of yet.  That’s a bit of an exaggeration as we have been able to help several people to get a temporary forbearance program pending the lenders rollout of the H4H program.  By rollout is meant having all the loan officers in place to administer the program, produce the forms, detail the rules and guidelines and ensure its success.  We have applications in, but because the product hasn’t rolled out with the lenders these applications are in limbo.  So my advice is not to lose any sleep over getting onto this wagon but if you want this product certainly get your application in for it now.
2. Obama’s Homeowner Affordability and Stabilization Plan is starting now to roll out, however many of the troubled loans aren’t yet qualified for it.  If the loan wasn’t purchased by Freddie Mac or Fannie Mae, their lender/servicer must sign up for them to qualify for this. It’s that simple.
   -         To find out if your home mortgage is owned by Freddie Mac you can go to their website http://www.freddiemac.com/ and in the left hand column click on the blue “Self Service Lookup” link midway down the page just under the Question “Does Freddie Mac Own Your Mortgage?”
   -         To find out if your home mortgage is owned by Fannie Mae, go to their website at www.fanniemae.com and on the right hand bar click on the box “Does Fannie Mae Own Your Mortgage?”
   -         If Freddie or Fannie own the primary loan you qualify for this assistance if you need it and the lender agrees to assist.  Several large lenders are also signing up, including Chase, Wells, WAMU, B of A, Countrywide, Citibank and others!
   -         The lender, to participate in this program, must first bring your first mortgage debt (PITI) down to 38% of your income.  After this the government will split the final 7% reduction with the lender; to bring the monthly loan payments down to 31% of your monthly income.
   -         This is done first by calculating payments with a mortgage calculator for the full principal balance of the loan over a 40 year amortized time period with various interest rates inserted, added to the monthly prorated property taxes and monthly Homeowners Insurance.  Once this exact interest rate brings the 40 year mortgage payments down to 31%, the goal has been met.  Again the government splits the final 7% reduction with the lender.  .  The lowest interest used is 2%.  Once the 31% is reached the calculation is noted down and used as the basis for the loan modification.
   -         If stretching the loan over 40 years and reducing interest to 2% won’t bring the Principal, Interest, Property Taxes and Home owners insurance payments down to 31% then the principal will need to be reduced.  Any reduction in principal is split with the government from 38% down to 31%, government guarantees 3 ½% and the lender covers the balance and this is of the first mortgage only.
   -         To calculate your current Front End DTI ratio you need only take your monthly mortgage payment (including monthly Principal and Interest, prorated monthly Property Taxes and Insurance and Association Fees) (PITIA) and divide it by your monthly gross Household income.  Insurance here does not refer to Mortgage Insurance.We’re taking a short break and will return shortly to the Foreclosure Freedom Network show!Hi again, we’re back from break and I’ll continue to detail the current workout programs out there today.
3. The FDIC’s Chairwoman, Sheila Bair has enacted her proposal for mass loan modifications for troubled borrowers over the past few months.  “Mod in a Box” Road Map made available to Institutions FOR IMMEDIATE RELEASE.  This agency oversees Fannie and Freddie with the streamlined modification program, but also have helped failing mortgage lenders, such as Indy Mac and Citigroup in helping homeowners who don’t qualify for the streamlined modification program.  This program modifies loans and provides a government guarantee against default.  The monies for this are taken from the 700 billion financial industry bailout monies.  Citigroup must start modifying loans in accordance with Bair’s guidelines.  This plan was put into action at IndyMac last year and 7,500 loans were modified as of mid-December 08.  Loan terms could be extended with this as long as 40 years.  For this plan the floor on interest is set at 3% for five years before increasing at an annual rate of 1 percentage point until it hits the prevailing market rate.  Each loan would be tested to see whether it was more beneficial to modify or to foreclose.  The test was to determine Net Present Value (NPV) against anticipated Foreclosure Recovery.  All loans passing the Net Present Value test Must be Modified.  On these the government would share up to 50% of the losses if a borrower who had been helped ended up in default anyway.  Also FDIC would pay loan servicers who process mortgages $1000 for each re-worked loan.  So far of all the plans, this has had the most success and is able to be implemented rapidly with nearly instant pre-approval and lender cooperation, but the key here is that the lending institution must be playing ball with FDIC, most being ‘too large to fail’.   You can, by the way, go to the FDIC web site to search their Databases of Thrift and Lending Institutions to see if any have been taken over and the new contact information.
4. DU Refi Plus is a loan product which came out in December but has been recently modified to conform with the Stimulus Package concept.  Key advantage is obtaining a Refinance into a Fixed Interest Rate 40 year loan at new all time low interests available today, if qualified and qualifications are fairly simple.
   -         One’s loan must be a Fannie Mae loan and must be current to qualify.
   -         Credit reports and appraisals are not used for refinances done by qualifying homeowners.
   -         Beginning May 2^nd Loans will be refinanced up to a maximum Loan to Value of 105% but no maximum Combined Loan to Value, meaning the 1^st mortgage is 105% or less of current value and no control is put on amount of 2^nd or HELOC.  .
   -         All existing subordinate financing must be resubordinated to maintain first lien priority of new Refi loan.
   -         No new subordinate financing may be obtained as part of the transaction.
   -         Limited cash out ($2,000 or 2%)
   -         1-4 unit primary residence, second home or investment property up to 4 unit are eligible.  High balance mortgage loans are eligible.  Manufactured housing, PUD and Condo and cooperative Projects are eligible.-         New mortgage may not pay off subordinate financing.
   -         Borrowers closing costs can be rolled into the loan amount.
   -         Mortgage Insurance matching that of existing loan must be obtained and lender is encouraged to obtain the amount of coverage that will be the least expensive to the borrower.
5. Then there is the Reverse Mortgage!  This is a refinance of the home for seniors who have home equity but need the financial break on monthly expenses.  It’s an FHA loan and does require special Mortgage Insurance.  If you have home equity and are a ‘senior’ a moderate to low fixed interest loan is put into place instead of the existing mortgage and attached to this can be a line of credit; releasing some of the home equity in the property (needed margin and closing costs of the loan is about 25%).  The obligation to repay the loan is deferred until the owner dies or the home is sold.  It doesn’t matter if the owner lives to 150, they can remain in the property without making mortgage payments until they die.  Heirs are not penalized having to do short sales if the current value of the home has declined below principal balance of the note.  Once sold the principal is repaid provided it exists in escrow but if the money doesn’t exist at sale, such as with home depreciation, it need not be repaid.  This is the risk taken.  If one is in trouble with mortgage payments and has equity, the reverse mortgage could be the answer.
6. Chase, have targeted over a hundred billion in mortgages to be modified, reaching out to their portfolio with prequalified modification terms.  They also held off on foreclosures while this was rolling out.  It also extended its modification programs to WAMU and EMC (Acquired with the Bear Stearns acquisition).  They added more modification choices, eliminating negative amortization altogether while making the home more affordable for the borrower long term.  They have established 24 new regional counseling centers to provide face to face help in areas with high delinquency rates and added 300 more loan counselors, bringing the total to over 2,500.  They have created separate and independent review to examine each mortgage before sent to foreclosure.  For more information, including finding out if there is a new office opened up close to you, go to www.chase.com.  Our experiences with Chase have been very favorable towards resolution, though sometimes it took a long time before they approved action, they have seldom pounced irrationally when there was a better option available.
7. Bank of America is now receiving special Treasury, FDIC and Federal Reserve assistance with 20 Billion in TARP funds and other adjustments in Liquidity Guarantee’s.  They are slow to act but have something they call Project Lifeline, an outreach to homeowners facing losing their home, being 90 days late on mortgage payments or more.   They share participation in this with other key contributors to Hope Now Alliance, the organization helping lenders with consultants to answer questions and steer them in the right direction for resolution of their loan situation.  This includes Wells Fargo, Citigroup and Chase).  This program is targeted for all loans, not just sub prime.  Key objective is to stop the clock on foreclosure long enough to complete the loan modification.
8. Many other lenders have followed suit offering workable solutions to troubled homeowners, though the amount of assistance varies from case to case.
9. Up until now, the most common ‘loan modification’ really wasn’t one.  It was simply putting interest and late payments at the tail end of the loan or similar ‘workout’ which leads to higher payments on an immediate basis.  This kind of loan mod is rarely workable and comprises about 50% of the loan modifications issued to date.

To learn more about how to do your own loan modification, go to my Blog at www.foreclosurefreedomnetwork.com and click on Blog on the left silde bar.  Here you can listen to all the Radio Shows and can also look at several videos on this subject and other key articles which can help you through the many details in ensuring you get a sustainable workout!  Have a great day and tune in next week!  Remember to put blue skies in your future!!

Connie Saunders
Foreclosure Freedom Network
10718 Nassau Ave
Sunland, CA 91040
(877) 333-4506 Office
(800) 616-4255 Cell
(888) 291-1887 Fax
http://www.foreclosurefreedomnetwork.com/