Latest Refinancing Program for Struggling Homeowners

17 11 2011

The federal government on Tuesday announced the nitty-gritty details of its revamped refinancing program to help homeowners who are current on their loans but can’t take advantage of low interest rates because they owe more on their homes than they are worth.

The Federal Housing Finance Agency acknowledged that the 894,000 mortgages refinanced under the Home Affordable Refinance Program had not lived up to the Obama administration’s expectations.

The reworked effort certainly will attract the attention of homeowners in hard-hit housing markets. But not every consumer with an upside-down mortgage will qualify, and it remains to be seen how many mortgage lenders will participate.

QUESTION: Who may be eligible?

ANSWER: The program is only eligible to borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who have 20 percent or less equity in their homes. To check if either Fannie or Freddie backs a mortgage, go to or The only loans eligible are those that were backed by Fannie Mae and Freddie Mac before May 31, 2009.

Q: When can applications be submitted, and when does the program end?

A: The program begins Dec. 1 but some participating lenders may not be ready to take applications that soon. The program ends Dec. 31, 2013.

Q: Can borrowers apply at any lender?

A: Yes. Participation is voluntary for lenders, but one key component of the reworked program is designed to make lenders more comfortable with writing a new loan on an underwater property. Going forward, a HARP lender is not considered responsible if a loan it refinances goes bad because of mistakes in the original purchase loan. The change was considered critical to attracting lenders to the program and fostering competition among lenders for business. However, lenders still have underwriting guidelines to follow.

Q: What if I missed one mortgage payment?

A: The agencies don’t want to see any delinquencies in the most recent six months, but a borrower can be 30 days late on one payment in months seven to 12 of the past year.

Q: What kind of extra fees are tacked onto the loans?

A: For loans that amortize in 20 years or less, all fees related to the riskiness of the loan have been eliminated. For loans that amortize in more than 20 years, fees are capped at 0.75 percent of the loan amount.

Q: What are the maximum loan-to-value ratios?

A: For 30-year, fixed-rate loans, there is no maximum LTV ratio. For fixed-rate loans of more than 30 years and less than 40 years, the maximum LTV is 105 percent.

The maximum also is 105 percent for adjustable-rate loans with an initial fixed period of 5 years or more and terms up to 40 years.

Q: Can a borrower refinance from a 30-year to a shorter-term loan, even if it means increasing the monthly payments?

A: Yes. In fact, the government is encouraging that because interest rates are usually lower on shorter-term loans and it allows the borrower to increase equity in their homes at a faster rate.

But to qualify for a shorter-term loan under the program, the borrower has to meet additional criteria, like having a credit score of at least 620 and must have a debt-to-income ratio of no more than 45 percent.

Q: Can lenders solicit my business?

A: Yes. If lenders advertise the program to potentially eligible borrowers with loan-to-value ratios of 80 percent or more, they have to advertise it for both Fannie and Freddie-backed loans.

Source: Florida Realtors

U.S. Foreclosure Activity Hit 7-Month High in October

13 11 2011

New data shows more U.S. homes entered the foreclosure process in October than in the previous month, with Florida, Pennsylvania and Indiana registering among the largest monthly increases.

Some 77,733 properties received an initial default notice last month, up 10 percent from September, according to foreclosure listing firm RealtyTrac Inc.

The number of homes scheduled to be auctioned or repossessed by lenders also posted monthly increases.

All told, notices of default, scheduled auctions and bank repossessions – warnings that can eventually lead to a home being lost to foreclosure – hit a seven-month high in October.

The numbers are further evidence foreclosure activity is picking up.

The activity slowed a year ago after problems surfaced with the way many lenders were handling foreclosure documentation, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing. Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

But banks appear to be moving past those problems now and starting to tackle a swelling backlog of homes with mortgages that have gone unpaid – something that lenders are seeing more of as the economy struggles and unemployment remains high.

The rate that homeowners were 60 or more days late on their mortgage payment rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion.

The credit reporting agency said 5.88 percent of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82 percent in the second quarter of 2011.

The number of U.S. homeowners underwater on their mortgage, or who owe more than their homes are worth, represents another potential source of trouble for lenders.

As of June 30, some 22.5 percent of all U.S. homes had a mortgage that was underwater, according to CoreLogic. That’s 10.9 million properties. Another 2.4 million borrowers had less than 5 percent equity in their home, the firm said.

Industry experts say a housing market turnaround isn’t likely to occur as long as there remains a glut of potential foreclosures hovering over the market, so October’s increase in foreclosure activity means a potentially faster revival for housing.

In some states, the number of homeowners put on notice by banks for missing payments far exceeded the national average for October.

Florida posted a 28 percent jump in October from September in homes receiving an initial default notice. Pennsylvania saw a 50 percent increase and Indiana registered a 61 percent gain, according to RealtyTrac.

In some cases, though, government intervention is slowing lenders down.

Take Nevada, where a law went into effect Oct. 1 requiring that foreclosure documents must be filed in the county where a property is located and a lender must provide a notarized affidavit detailing their legal right to proceed.

Despite registering a 34 percent drop in foreclosure activity overall, Nevada still registered the highest foreclosure rate in the nation for October, with one in every 180 households receiving a foreclosure-related notice, RealtyTrac said.

In all, 230,678 U.S. homes received a foreclosure-related warning last month, up 7 percent from September, but down nearly 31 percent from October 2010.

Foreclosure auctions rose 8 percent from September, but climbed by more than 35 percent in several states, including Florida, Minnesota and Illinois.

Lenders took back 67,624 properties in October, up 4 percent from the previous month, but down 27 percent from a year earlier.

Bank repossessions increased by a far larger margin in several states. In Oregon they climbed 45 percent, while in New Jersey they posted a 48 percent jump. Indiana registered a 73 percent increase.

Source: The Associated Press

Florida Housing Assistance Program for Unemployed Homeowners

13 11 2011

Florida continues to operate a federally funded program to help at-risk homeowners facing foreclosure following unemployment. However, a handful of Florida companies may claim they represent the Florida Housing Finance Corporation’s Hardest Hit Fund (HHF) when they do not.

The FHFC website specifically lists seven companies NOT associated with the program: Mader Law Group, Attorneys Legal Network, The Law Center, NOVA Debt, National Loan Restructuring and LMPrep LLC Hardship Center.

In February 2010, the U.S. Treasury created the “Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets”. It allocated funds to 18 states and the District of Columbia to assist in foreclosure prevention efforts. A total of $7.6 billion has been allotted for this fund; Florida’s total amount is more than $1 billion.

The Florida Housing Finance Corporation administers the state’s HHF fund under the following programs:

• Unemployment Mortgage Assistance Program (UMAP). UMAP provides up to six months of mortgage payments (with a cap of $12,000) paid directly to a mortgage lender to assist unemployed/underemployed borrowers with their first mortgage until they can resume full payments on their own.

• Mortgage Loan Reinstatement Payment (MLRP) Program. MLRP can be used to make a delinquent mortgage current (up to $6,000) for a homeowner who has returned to work or recovered from underemployment/underemployment.

For additional information on the HHF program and to apply, visit

Florida’s Existing Home and Condo Sales Rise in 3Q

13 11 2011

Florida’s existing home and existing condo sales continued to show gains in third quarter 2011 compared to the same period a year earlier, according to the latest housing statistics from National Association of Realtors.

Existing home sales rose 12 percent in 3Q 2011 with a total of 46,759 homes sold statewide; during the same period the year before, a total of 41,728 homes changed hands according to Florida Realtors. Statewide sales of existing condos in the third quarter rose 13 percent compared to the year-ago sales figure.

Florida’s existing-home median sales price continued to stabilize and remained level at $136,000 for the three-month period; in 3Q 2010, it was $135,900. The median is a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for existing condo sales, 20,383 units sold statewide in the third quarter compared to 17,980 units in 3Q 2010 for a 13 percent increase. The statewide existing-condo median sales price was $89,600 in the third quarter; a year earlier, it was $83,700 for a 7 percent increase.

Mortgage rates continued to hover around historical lows in the third quarter. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.31 percent in 3Q 2011; one year earlier, it averaged 4.45 percent.

Source: National Association of Realtors and Florida Realtors

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