HAMP Changes 1/27/2012: Rental Properties Okay & Principle Reduced?-Update#2
Updated information from Housing Wire as of 5:00PM 1/27/2012;
The Treasury will also require servicers to factor in second liens and other obligations in the debt-to-income ratio calculation. Previously, if a borrower’s first-lien mortgage monthly payment was below 31% of the income, the borrower was deemed ineligible. Factoring other debts to the DTI evaluation will expand the pool of borrowers who could receive the assistance.
To combat blight, officials said they would also expand HAMP to investors who are renting properties to tenants.
The deadline for HAMP will be extended for an additional year through December 31, 2013.
The incentive to investors who agree to principle reductions is being tripled. The money is coming from Fannie mae and Freddie Mac, who have been given over 175 billion to date and with this announcement will likely need more.
The following is a written statement from Ed DeMarco the head of the Federal Housing Finance Agency which is in charge of Fannie and Freddie while they are Nationalized and owned by the US Tax Payers;
WASHINGTON (MNI) – The following is a statement from Federal Housing Finance Agency Acting Director Edward DeMarco regarding recently announced changes to the Home Affordable Modification Program, January 27:
“The Administration announced changes today to the Home Affordable Modification Program (HAMP). While HAMP has contributed directly and indirectly to widespread foreclosure prevention efforts, there are still many households struggling with their mortgage and other household debt.
Fannie Mae and Freddie Mac (the Enterprises) currently have 470,000 permanent HAMP modifications on their books but also have active another 530,000 non-HAMP modifications since 2009, or roughly 1 million total. The Enterprises have also completed 1 million nonmodification foreclosure prevention actions, ranging from forbearance plans to short-sales, for a total of some 2 million actions that have helped homeowners in trouble avoid foreclosure and, in most cases, keep their home.
In response to today’s HAMP announcement, FHFA is announcing the following with regard to Fannie Mae and Freddie Mac:
- Fannie Mae and Freddie Mac will extend their use of HAMP Tier 1 as the first modification option through 2013 in line with the Treasury’s HAMP extension.
- Fannie Mae and Freddie Mac will continue in their respective roles as financial agents for Treasury in implementing the changes announced today.
- The HAMP Tier 2 option is based on the Enterprises’ standard modification that FHFA announced and the Enterprises implemented last year under the Servicing Alignment Initiative. Therefore, Fannie Mae and Freddie Mac will not need to adopt further changes to be in alignment with HAMP Tier 2.
- FHFA has been asked to consider the newly available HAMP incentives for principal reduction. FHFA recently released analysis concluding that principal forgiveness did not provide benefits that were greater than principal forbearance as a loss mitigation tool. FHFA’s assessment of the investor incentives now being offered will follow its previous analysis, including consideration of the eligible universe, operational costs to implement such changes, and potential borrower incentive effects.”
** Market News International Washington Bureau: 202-371-2121 **
As soon as more news is available we will report it.
Is this a good program or not? I am unemployed and I need help
By not agreeing to principal reductions, FHFA and FNMA/FMHLC doom homeowners with underwater mortgages to be pinned into their homes for decades. FHFA knows, full well, that without meaningful principal reduction loan modifications, the real estate market will take decades to recover. The handwringing over ‘what will investors do’ if principal reductions are undertaken, by the GSEs, is nonsense. Investors got into the mortgage security market with ‘eyes wide open’, knowing full well there is ‘risk’ with any investment. Wall Street has received billions in bail out money! Beyond the $750 billion TARP bailout in November 2008, between August 2007 through April 2010, banks received more than an additional $13 billion dollars in secret federal loans undisclosed to Congress. All that money, flowed to the banks while the nation’s unemployment rate eclipsed 9%. FHFA needs to take a real hard look in the mirror and understand that principal forgiveness does and WILL provide GREATER benefits, to underwater mortgage homeowners, than principal forbearance. It does no homeowner any good to be pinned into a mortgage that has no chance of being satisfied or paid off, during the lifetime of the current owner. FHFA’s analysis is just plain WRONG! G-II Varrato II, Coldwell Banker Residential Brokerage / 602-796-5674