Make sure you checked out part one of this article: Obama administration Kicks off Mortgage Modification Conversion Drive
The Mortgage Modification Conversion Drive will include the following:
- Servicer Accountability. As part of the Administration’s ongoing efforts to hold servicers accountable for their commitment to the program and responsibility to borrowers, the following measures will be added:
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- Top servicers will be required to submit a schedule demonstrating their plans to reach a decision on each loan for which they have documentation and to communicate either a modification agreement or denial letter to those borrowers. Treasury/Fannie Mae “account liaisons” are being assigned to these servicers and will follow up daily as necessary to monitor progress against the servicer’s plan. Daily progress will be aggregated by the end of each business day and reported to the Administration.
- Servicers failing to meet performance obligations under the Servicer Participation Agreement will be subject to consequences which could include monetary penalties and sanctions.
- The December MHA Servicer Performance Report will include the data on permanent modifications as well as the number of active trial period modifications that may convert by the end of the year if all borrower documents are successfully submitted, sorted by servicer and date.
- Servicers will be required to report to the Administration the status of each modification to provide additional transparency about situations where borrowers face obstacles to moving to the permanent phase.
- Web tools for borrowers. Because the document submission process can be a challenge for many borrowers, the Administration has created new resources on www.MakingHomeAffordable.gov to simplify and streamline this step. New resources include:
- Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps;
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- Comprehensive information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and a new instructional video which provides step by step instruction for borrowers;
- A toolkit for partner organizations to directly assist their constituents;
- New web banners and tools for outreach partners to drive more borrowers to the site and Homeowner’s HOPETM Hotline (888-995-HOPE).
- Engagement of state, local and community stakeholders. Through the conversion drive, the Administration is engaging all levels of government – state, local and county – to both increase awareness of the program and expand the resources available to borrowers as they navigate the modification process.
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- HUD will engage staff in its 81 field offices to distribute outreach tools. HUD will also encourage its 2700 HUD-Approved Counseling Organizations to distribute outreach information to participating borrowers.
- By engaging the National Governors Association (NGA), National League of Cities (NLC) and National Association of Counties (NACo) the Administration is connecting with the thousands of state, local, and county offices on the frontlines in large and small communities across the country who are hardest hit by the foreclosure crisis. These offices will now have the tools to increase awareness of the program, connect with and educate borrowers and grassroots organizations on how to request a modification and take the additional steps to ensure they are converted to permanent status; and serve as an additional trusted resource for borrowers who are facing challenges with the program.
- In partnering with the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, state regulators will now have enhanced tools to assist borrowers who are facing challenges in converting to a permanent modification and to report to the Administration on the progress and challenges borrowers and servicers are facing on the ground. Regulators will also be empowered to work directly with escalation and compliance teams to ensure that HAMP guidelines are consistently applied.
More information about the Obama Administration’s mortgage modification program can be found at www.MakingHomeAffordable.gov.
Make sure you checked out part one of this article: Obama administration Kicks off Mortgage Modification Conversion Drive
Tags: government regulation, Home Affordable Modification, loan modification
December 28th, 2009 at 1:27 pm
Hi, I was recently approved for the loan mod program…. but after receiving paperwork it looks like a balloon payment is due after 40 years… The bank said I could loose my home if it is not paid in full, that worries me becuase I will be on a fixed income at that time. Is the loan mod program set up to help me or help me loose on the end?? Please explain…
Todd Reply:
January 22nd, 2010 at 11:21 am
This is a typical arrangement for a loan mod. Most people only keep their mortgages for 5 – 7 years, though, so you shouldn’t have to worry about that 40 year balloon payment. If you sell (which it doesn’t sound like you plan to), you’ll have to pay the balloon payment then. If you refinance (which you probably will and should at some point in the future), you’ll have to pay the balloon payment too. but your home will hopefully be worth enough that you’ll have the equity to pay for it.
I hope that made sense…please ask more questions if it didn’t!
December 28th, 2009 at 3:29 pm
Adriane,
You mentioned that you were recently approved, what are the conditions of your approval? Typically what happens is as follows: The original loan docs remain the same, e.g.Loan Amount $200K Interest 6% Term 30yrs and Payment $1199.10. let us say Property was refinanced or purchased using either ARM 5/25 or 7/23 or OPTION ARM,say 1% of Loan Amount Minimum Paymt of $643.28 per month is allowable until 10% above loan amount is reached then loan recasts to original loan conditions. Now the property is below market value then one panics because the loan is adjusting and seeks a loan modification. Bank allows you a loan off modification if you have the ability to pay in the future. So they give you lower payment for over 1,3 or 5years. Lower payment is manifested by lower interest rate , say, 2% – so your paymt is $605.65 for say 5years (due to your current hardship) and computed for 40years.
Now the agony starts: Difference between ($1199.10-$605.65= $593.45) is
added to back of your original loan termed at 40 but due in 30years, this is accumulated as a baloon payment at the end of agreed upon term. I hope this explanation helped you a little. However, there is a ray of hope – if all the numbers are available for perusal I can give you a free analysis report showing you a method where you can pay your home sooner rather than term even on your fixed income. Loan modifications are set up to show good faith as far as the bank is concerned however they want their loan to be a performing asset. Even on this small amount the banks are making money. They can not take away your house, depending what state you live (Deed or Mortgage State), mortgage state takes longer to foreclose on than the deed state. Hope this helps.