Making Home Affordable

FHA Loan Requirements: Can FHA’s New Loan Requirements Be The US Housing Market’s Lifesaver?, by Stockmarketsreview.com

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With the new, recently announced changes to FHA Loan Requirements, homeowners are expected to overwhelm FHA Lenders, in the new year, hoping to see if they qualify for the new program. As a government home loans program designed specifically to give renewed hope to those residing in “underwater” properties, homeowners are rallying to see if they qualify. Both the Making Home Affordable program and the FHA’s refinancing programs will be nuanced to allow FHA lenders to provide FHA mortgage loans that will potentially forgive at least 10% of the existing mortgage’s principal balance. These newly generated FHA Loan Requirements are creating quite a buzz amongst homeowners worried they could lose their homes down the road. It’s critical to understand that these mortgages are for property owners currently paying down a subprime or conventional mortgage loan. The property must have a current valuation that’s lower than the property owners current loan(s). Approved applicants must owe a minimum of 15% more on the residence than its current market value. You may wish to get out your loan calculator and see where you stand. These new FHA mortgage programs provide aid to those who qualify with a potential 10% reduction on their home loan(s). But, these programs are only available to those who are still current on their home payments. Given the thousands of homeowners who were advised to become delinquent so that they would be considered for a loan modification by their lender, the pool of candidates who might make the cut is the big question. In addition to these stringent qualification requirements, the borrower must currently show a credit score of at least 500 and the property must be the homeowner’s primary residence. Yet, another potential obstacle is that these FHA Mortgages featuring these FHA Loan Requirements are to be offered to those not already holding an FHA loan. Again, only those with non FHA subprime or conventional mortgages will be seriously considered as applicants. The program is being offered for a limited time only and ends December 31st, 2012. How Homeowners with FHA Loans Must Be Proactive If They Believe They Might Default. Preventing Foreclosure or Short Sale Requires Immediate Interaction With FHA Counselors. Know that once you acquire an FHA mortgage, that the rules regarding homeowners who have defaulted are much stricter than a non-FHA home loan. Once you’ve missed a payment on an FHA mortgage, given the FHA’s Loan Requirements, it’s critical to initiate contact with your lender immediately. Once certain deadlines are missed, there is nothing either your lender or the FHA can do to stop you losing your home to foreclosure. The rules regarding loan forbearance are completely different for FHA mortgage holders. As soon you become even one day late on your mortgage, this time line kicks in. The FHA has laid out very specific steps that are important for the homeowner, to initiate, to successfully stop foreclosure. As mentioned, you should immediately contact your lender. It’s also a critical to contact the nearest FHA/HUD counselor. Negotiating your situation within the FHA’s default regulations could help give you a better shot at keeping your home, in spite of the late of missed mortgage payments. Taking action is the most important thing a homeowner who has fallen behind, can do. Thousands of homeowners have thrown up their hands and resorted to wishing. But, problems will simply not resolve themselves on their own. This can result in a disastrous result. The minute you know you’ve got a problem, contact your FHA counselor and your lender. Being aggressive has never meant more. An FHA mortgage holder who has missed the first payment wait. Contacting an FHA housing counselor can definitely help prevent the situation from worsening. FHA/HUD housing counselors can be sourced using the HUD Government Website. Once an FHA home mortgage loan holder has missed four or more payments, the clock may have run out regarding their ability to work out a foreclosure avoidance strategy with their lender, regardless of having an FHA/HUD counselor’s assistance. If nothing has been negotiated by the time the 4th mortgage payment is late or unpaid (Or, if the homeowner has been sent a Demand Letter, that deadline has already passed,) the property is assigned to the lender’s legal department and the foreclosure process is initiated. Many homeowners are fairly confused about the rules regarding repossession laws and repo houses, given the rapid changes in the laws over the last few years. Furthermore, the homeowner is responsible for all the fees related to the delinquency and foreclosure process and may find bankruptcy to be their only remaining source of debt relief. As many property owners have found, the process, regardless of foreclosure moratoriums or investigations by government officials, often ends up with their home sold at auction. Some are fortunate to receive a cash for homes or “Cash For Keys” offer from their lenders. (Another incentivized government program.) Others merely find themselves escorted from their homes by U.S. Marshalls, willing to use deadly force to insure their removal. Norma J. Wheeler is a realty, foreclosure and short sale specialist who writes about programs designed to help struggling homeowners. She is a contributing editor at http://savemyhousenow.net/ as well as an avid blogger. Check out her recent article regarding FHA Loan Requirements for struggling homeowners at: http://www.scribd.com/doc/456534/Fha-Loan-Requirements-New-Loan-Requirements-Fha

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Loan Modifications Are Getting Better, thetruthaboutmortgage.com

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It appears as if more recently completed loan modifications are performing better than their predecessors, according to the latest Mortgage Metrics Report from the OCC.

More than 90 percent of loan modifications implemented during the second quarter of 2010 reduced borrowers’ monthly principal and interest payments, while 56 percent reduced payments by more than 20 percent.

And that focus on sustainable and affordable monthly mortgage payments resulted in lower post-modification delinquency rates (much lower than that 75 percent re-default rate we we’re worried about).

Six months after modification, roughly 32 percent of the modifications made in 2009 were seriously delinquent or in somewhere in the foreclosure process, compared with more than 45 percent of loan mods made in 2008.

And the performance of modifications made this year suggests the trend is continuing.

At three months after modification, just 11 percent of the 2010 modifications were seriously delinquent, compared with 20 percent of modifications made last year and 32 percent of 2008 modifications.

HAMP Modifications Outperforming Other Loan Mods

Nearly all modifications made under the Making Home Affordable program (HAMP) reduced borrower principal and interest payments, and 78.9 percent reduced monthly payments by 20 percent or more

HAMP modifications made during the quarter reduced monthly mortgage payments by an average of $608, while other loan mods reduced payments by just $307 on average.

As a result, HAMP modifications implemented through the first quarter of 2010 had fewer re-default rates than other modifications implemented during the same period.

At six months after modification, 10.8 percent of HAMP modifications made in the fourth quarter of 2009 were 60 or more days delinquent, compared with 22.4 percent of other modifications made during that quarter.

Similarly, 10.5 percent of HAMP modifications made in the first quarter of 2010 were 60 or more days delinquent three months after modification, compared with 11.6 percent of other modifications.

So perhaps HAMP ain’t so bad after all…and maybe loan modifications actually do work.