Goals of the New Mortgage Bailout Program

As we have previously discussed, President Obama has recently unveiled a new mortgage bailout program. Its goal? To help many homeowners in this mortgage turmoil that has gripped the whole country.

With the former administration, several mortgage rescue plans came out under President Bush's administration. However, the problem mortgages continued to rise. They were hoping the mortgage crisis would bottom out, but we have yet to see a bottom in the housing market. The problem with the mortgage bailout under the prior administration is that a lot of homeowners were excluded out of that plan. The plan was set to modify homes of individuals who might have been able to qualify for a refinance, but many opted for a loan modification instead. Many homeowners did not qualify.

The new plan is expected to take this mortgage rescue plan to the next level. It is believed to be the plan that will allow the market to bottom out which will stable the housing market, in turn which stabilize our economy, start creating new jobs and boost our economy. Under the new homeowner affordability and stability plan, eligible borrowers who are on time with their payments, but have been unable to refinance due to their home value eroding, may now have an opportunity to refinance into a new 15 or 30 year fixed rate mortgage loan. Fannie Mae and Freddie Mac will be allowing refinancing of loans that they hold or that are have been mortgage backed securities.

The following are goals of this new program:

• Help credit worthy borrowers who have been committed to paying their mortgages with affordable payments for the rest of their loan. Individuals with high interest, or if they had a teaser rate that will now be increasing might see a big difference in their house payment if they were to refinance. For those submitting a loan application, they will get a "Good Faith Estimate" which will include their new mortgage payment amount, the interest rate, and the total payment over the life of the loan. That homeowner can now use that "Good Faith Estimate" to compare it with what they are paying now and if it makes sense they can go with that option or stick with their original mortgage.
• Provide help with an affordable fixed rate mortgage. Every loan refinanced under the plan will have either a 15 or 30 year mortgage option with a fixed rate interest. Which ends up giving the borrower tremendous savings over the life of the loan. This plan will not reduce the total amount owed on the loan.
• Encourage borrowers to work towards maintaining ownership of the property. The plan will give incentive payments as a borrower makes there modified payments on time. This reduction will accrue on a monthly basis and will be applied directly to the mortgage.

Advantages to Pricing Your Home Correctly

A few days ago, I discussed how to properly price your home correctly. Today I want to talk about the advantages to be gained from this.

Here are some of the advantages for pricing your property correctly:

• A property usually gets the most attention just after it is placed on the market. If it is priced competitively it will most likely get the most attention.
• Real Estate sales agents are drawn to properties that are priced competitively and you will have more showings. More showings equals better opportunities to sell.
• If a property is priced competitively there is usually less negotiation on the price.
• Competitive pricing will attract more qualified buyers
• Besides correct pricing there are other things you can do to help sell your property. Creative marketing can help distinguish your property from all the other available properties, and in today's buyer's market, you want to stand out from the crowd.

Price Your Property to Sell!

If you really want to sell your property when you put it on the market there are some things you must know. For example, the most important thing is the actual current market value of the property.

Follow these instructions and you can appraise your own property and come up with a figure that's accurate within a couple of percentage points.

1. Find and call at least three local realtors and tell them you're thinking about selling your property. Ask the agents to make a comparative market study of your property. Tell them to include every sale in your market area that compares to your home or property. They'll call you back later and want to set an appointment to deliver the information and tell you about their company and ask you to list your property with them.
2. Make an appointment and let them make their presentation, then ask them to leave all the information on the property analysis and their company, so you can study it and make a decision.
3. Once you have information from all three realtors, lay it out on a table and create a work sheet. List each of the Sold properties on a separate line, with their selling price per square foot on the far right. Don't include the active listings that are up for sale, because they aren't relative to your study in determining the value of your property. Hold on to the information, active listings will be important later in determining the price you wish to ask for your property, because active listings will be the properties you are competing with. In other words, you will be competing for the buyers that are available in the current market who will be looking at other listed properties.
4. Add up the column on the right and divide the results by the number of properties on your list. Multiply this number by the number of square feet in your home, and the result should be the current value of your property, within a percent or two. The number you arrive at may be lower than you are comfortable with, and in some parts of the country it's a shocking reality.

If you are going to put your house on the market and want to sell it you must be competitive. More than ever you will have strong competition such as from properties that have been foreclosed on for default on loans and taxes. These homes are often priced below the market for quick sales. You are in competition with other property owners who are selling their properties to avoid foreclosure and these are often priced below the market. There isn't nearly as much demand as there is product. In other words, there are a lot of homes/properties for sale now, making it a "buyers market."

So there you have it: a simple approach to pricing your home correctly.

Stay tuned for my next blog where I explore the advantages of pricing your home to sell.

Qualifications for the Mortgage Bailout Plan

In previous blogs, I have discussed the two parts of President Obama's new mortgage bailout plan: The loan modification plan and the loan refinancing plan.

I have decided that I would like to break down what qualifes you and what doesn't for each of these components.

Option Number 1: Loan Modification

Qualify

• Have payments of more than 31% of pretax monthly income and can prove hardship.
• Occupy a single-family home
• Can prove the home is a primary residence
• Have an unpaid principal balance of $729,750**
• Make all modified payments over a trial period of three months or more.

Don't Qualify

• Aren't about to default.
• Investor with a home that isn't owner-occupied.
• Have a home that is vacant or condemned.
• Have an unpaid principal balance of more than $729,750.**
• Have a mortgage packaged into securities whose rules explicitly forbid modification.
• Have loan officers who can't be reached or are unwilling to consider modification.

Option Number 2: Loan Refinancing Plan

Qualify

• Have loans owned or guaranteed by Fannie Mae or Freddie Mac.
• Are current on mortgage payments.
• Can prove the ability to afford the new mortgage.
• Mortgage balance of no more than 105% of the current estimated home value.

Don't Qualify

• Have loans owned or guranteed by a company other than Fannie Mae or Freddie Mac.
• Have been more than 30 days late on a payment during the previous 12 months.
• Can't afford the new mortgage debt.
• Home value has fallen so far that the loan is more than 105% of the home's worth.

**For a first lien on s one-unit home

Sell Your Home Fast!

mailto:arestivo@financeyourhome.com
(845) 896-5760

Making Homes Affordable Plan Part II

A few days ago, I wrote the first of two parts on the Homeowner Affordability & Stability plan that was released by the Obama administration on Wed March 4th. As we know, it contains two major parts that will have an impact on assisting homeowners with a troubled mortgage situation. The first part of the plan is a modification program that Servicers will offer to borrowers with high debt-to-income ratios or who are at risk of foreclosure. The second part of the plan which I am blogging about today, is a refinance program for existing Fannie Mae or Freddie Mac loans.

1st Metropolitan Mortgage CEO, Daniel Jacobs and others are still assessing the details of the Homeowner Affordability & Stability plan to determine our next steps, but in the mean time we are trying to provide a summary of its major points so that it might help other to better understandable it.

So here we go:
The second part of the plan is a refinance program for existing Fannie Mae or Freddie Mac loans. Fannie Mae is offering two different programs:

1. The Refi Plus Program that requires the servicer of the loan to be the originating lender.
   
2. The DU Refi Plus Program (DU is the Automated Underwriting System for Fannie Mae) that allows any lender using DU to originate the loan as long as the existing loan is a Fannie Mae loan.
   

Freddie Mac requires the servicer of the loan to be the originating lender. Some specifics of the program are:

• Existing mortgage must currently be a Fannie or Freddie loan.
• Existing loan may not be considered ineligible (must get an Approved/Eligible from DU).
• Ineligible loans include existing mortgage loans that received a DU Expanded approval (EA).
• Maximum LTV for 1-2 unit properties is 105% and require an appraisal.
• Maximum LTV for 3-4 unit properties is 80% and also require an appraisal.
• No maximum CLTV.
• Existing mortgage must be current and have acceptable mortgage payment history. No minimum FICO score is required although borrower must meet bankruptcy and foreclosure requirements. In addition, borrower must demonstrate credit worthiness.
• Rate and term refinance only (No Cash Out) - purchase money seconds MAY Not be included.
• Loan level price adjustments (points) will apply (determined by credit score on credit report)
• MI required (same coverage factor of existing loan) for mortgage loans that had original LTV’s greater than 80%.
• DU Refi Plus must receive Approve/Eligible and will not be available until April 4. Income and employment verification is required.
• Refi Plus is a manual underwrite and requires verbal verification of employment. Lender must determine that the borrower has a reasonable ability to repay the mortgage based on current information provided by borrower.

There it is in a nut shell. I feel this part of the plan stands a chance to actually help those who have good credit and have little to no equity in their property. This offers a second option, to use FHA, which will allow a borrower to go to a 96.5% LTV on a No Cash Out Refi.

Information on the New Presidential Making Home Affordable Plan

I have been asked many questions about President Obama's Homeowner Affordability and Stability Plan, and would like to share some information regarding the plan and how it will work. Like many government programs and documents, the plan may be hard to understand sometimes. Let me break it down for you:

President Obama's Homeowner Affordability and Stability Plan can help you refinance your home, 105% of its value.

The program is broken doen into two (2) areas:

1. The Home Affordable Refinance
2. The Home Affordable Modification

The Home Affordable Refinance

Qualifications:

• If the home you want to refinance is your primary residence,
• The loan on your home is controlled by Fannie Mae or Freddie Mac (it must be a conforming loan — you can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie)
• If you’re current on your mortgage payments (meaning you haven’t been more than 30 days late on your mortgage in the last 12 months)
• If you have sufficient income to support a new mortgage….. then, you might qualify.

It gets a little more complicated however: You can’t be too far underwater on your mortgage (owe more than the home’s market value) to qualify for the refinance.

What Do I Need to Provide?

• If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:
• Your monthly gross (before taxes) income of your household, including recent pay stubs.
• Your last income tax return.
• Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
• Account balances and minimum monthly payments due on all your credit cards.
• Account balances and minimum monthly payments for all your other debts, like student loans or car loans.

How Will They Decide What My Home is Worth Today?
This part of the Obama housing plan has not been released yet. It’s possible that lenders are expected to use their traditional procedures, but it hasn’t been officially stated.

When Will This Help Me? When it comes to refinancing under the Making Home Affordable plan, patience is going to be a virtue. With so many homeowners in some sort of distress (one in six American homeowners has negative equity, and foreclosures and home values fell 11.6% nationwide last year), there is likely to be a flood of applications and queries for lenders.

What If I Don’t Qualify to Refinance?
Don't give up. You may still qualify for other programs.