Mha Borrower Presentation Long English 090909

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From a Sept. 2009 Making Home Affordable meeting where a rep from the U.S. Treasury went more in depth on the HAMP and HARP programs along with representatives from Freddie and Fannie

From a Sept. 2009 Making Home Affordable meeting where a rep from the U.S. Treasury went more in depth on the HAMP and HARP programs along with representatives from Freddie and Fannie

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  • 1. Making Home Affordable
  • 2. This overview will provide:
    • Background
    • Program Explanation & Features
    • Frequently Asked Questions
    • Modification Success Story
    • How to Get Started
    • Beware of Rescue Scams
    • Additional Resources
    July 2009 | Making Home Affordable
  • 3. Background Homeowner Affordability & Stability Plan Making Home Affordable Program Home Affordable Refinance Home Affordable Modification The Administration’s Plan Program for Homeowners Programs Available
  • 4. Home Affordable Refinance Program (HARP)
    • Purpose
      • Gives borrowers the opportunity to refinance into more affordable loans at today’s lower rates
      • Only for borrowers with Fannie Mae or Freddie Mac loans
    • Scope
      • Estimated millions of borrowers are eligible
  • 5. HARP Eligibility Criteria
    • Borrower –
    • Owner-occupant of a 1-4 unit property
    • Is current on the mortgage
    • Has reasonable ability to pay new mortgage payment
    • Loan –
    • Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac
    • Amount of first mortgage does not exceed 125% of property’s current market value
    • Refinance will improve the long-term affordability or sustainability of the loan
  • 6. How does HARP differ from other refinances?
    • No equity requirement
    • No combined loan-to-value requirement
    • MI flexibilities for loans with higher LTVs
    • Faster to qualify and may be less expensive to process
    • Limited cash-out to cover closing costs only; no debt consolidation
  • 7.
    • First, determine basic eligibility using tools on
    • www.MakingHomeAffordable.gov
    • Borrowers may contact their current mortgage lender or any mortgage lender approved by the investor - subject to LTV limitations:
        • If the amount owed on your first mortgage is equal to or less than 105% of the current market value, you may work with your existing mortgage lender or any GSE-approved mortgage lender
        • If the amount owed is greater than 105% and does not exceed 125% of the current market value, please contact your existing mortgage lender
    How does a borrower apply for HARP?
  • 8. Home Affordable Modification Program (HAMP)
    • Purpose
      • Modifies loans of qualifying at-risk borrowers to achieve affordable payments
      • Allows borrowers to keep their homes
      • Reduces impact of foreclosure on communities
    • Scope
      • Estimated millions of borrowers are eligible
  • 9. HAMP Eligibility Criteria
    • Borrower –
    • Owner-occupant of 1-4 unit property
    • Has reasonable ability to pay modified mortgage payment
    • Has a financial hardship and is delinquent or at risk of imminent default
    • Loan –
    • Amount owed on first mortgage is equal to or less than $729,750
    • Mortgage was originated on or before January 1, 2009
    • First mortgage payment (PITI + homeowner association/ condo fees) must be greater than 31% of borrower’s gross income
  • 10. Determining Imminent Default
    • Borrowers who are current on their loans but are struggling to make payments may also be eligible for HAMP if they:
      • Have a documented hardship – decrease in income, increase in expenses, facing interest rate increase within the next four months, etc.
      • Do not have sufficient savings or other liquid assets to make future payments
  • 11. Modification Process
    • Your Mortgage Lender or Counselor…
      • Determines if borrower meets minimum eligibility criteria
      • Obtains borrower income and debt information
      • Calculates borrower’s target modified payment to reach debt-to-income ratio of 31%
  • 12. Know Your Debt-to-Income (DTI) Ratio
    • Front-End DTI Ratio
      • Used to determine whether your monthly mortgage payment is “affordable”
      • Calculated by dividing your current monthly mortgage payment by your gross monthly income
    31% DTI
  • 13. Modification Process - Continued
    • Your Mortgage Lender…
    • Performs these steps in order to reach target modified payment
        • Step 1 : Capitalizes outstanding debt, escrow advances and out-of-pocket servicing expenses (no late fees allowed)
        • Step 2 : Reduces the interest rate to as low as 2%
        • Reduced rate remains fixed for 5 years and increases 1% per year thereafter to market interest rate at the time of modification
        • Step 3 : Extends loan term up to 40 years
        • Step 4 : Defers a portion of the principal, interest-free, until loan is paid off
  • 14. Modification Terms
    • Taxes and insurance must be escrowed
    • Accrued interest and expenses will be added to the amount due - all late fees will be waived
    • No modification fee can be charged
    • Pending foreclosure sales must be postponed during evaluation & trial periods
    • Borrowers must be truthful
    • Borrowers with high overall debt must agree to seek free counseling
  • 15. Know Your Debt-to-Income Ratio
    • Back-End DTI Ratio
      • Used to determine how much of your income is needed to pay off all of your debts
      • Calculated by dividing your total monthly debt payments by your gross monthly income
    Need Assistance? HUD-approved housing counselors are available to assist you. The service is free and available 24/7. 1-888-995-HOPE
  • 16. Second Mortgage Lien Modification Program
    • Purpose
      • Modifies 2 nd mortgages of qualifying at-risk borrowers to achieve affordable payments on both mortgages
      • Incentives encourage participation from all parties
    • Scope
      • Estimated that up to 50% of at-risk borrowers with 1 st mortgages have 2 nd mortgages
  • 17. Second Mortgage Lien Modification Program - Continued
    • A 2 nd mortgage lien may be eligible when…
        • The mortgage lender is a participant in the Second Mortgage Lien Modification Program under HAMP
        • Borrower’s corresponding 1 st mortgage is modified through HAMP
        • Mortgage originated on or before January 1, 2009
    • 3 rd and/or 4 th mortgage liens are not eligible
  • 18. Second Mortgage Lien Modification Program - Continued
    • May only be modified once
      • No fee charged to modify
    • Borrower must provide consent to share their 1 st mortgage lien modification data with the 2 nd mortgage lender if the lenders are two different parties
  • 19. Borrower Incentives
    • No cost for modification
    • Borrowers can receive principal reductions for making HAMP payments on time
      • Incentives can equal up to:
        • $1,000 per year for five years for 1 st mortgage
        • $250 per year for five years for 2 nd mortgage (if applicable)
      • Incentives add up monthly and are allocated once a year to reduce borrower’s unpaid mortgage principal balance
    • With no extra effort, borrowers increase the equity in their homes
    • However, if borrower defaults on their 1 st or 2 nd modified mortgages, then no additional incentives will be allocated
  • 20. Frequently Asked Questions
    • Question:
    • Is housing counseling required under Making Home Affordable?
    • Answer:
    • For a Home Affordable Modification, you must agree to obtain counseling from a HUD-approved housing counselor if your back-end DTI is at or above 55%.
      • Counseling is optional if your back-end DTI is under 55%
      • HUD-approved housing counseling is free
  • 21. Frequently Asked Questions
    • Question:
    • How can I find a HUD-approved housing counselor?
    • Answer:
    • Online:
      • Select “Find a Counselor” on the Making Home Affordable website, www.MakingHomeAffordable.gov
    • By Telephone:
      • Call 1-888-995-HOPE (4673)
  • 22. Frequently Asked Questions
    • Question:
    • Can you explain how my payment can be modified to 31% DTI?
    • Answer:
    • Following Treasury’s guidance, the mortgage lender must:
      • Reduce the interest rate to as low as 2%
      • If necessary, extend the loan term to 40 years
      • If necessary, defer a portion of the principal, interest-free, until the loan is paid off
      • Principal forgiveness is allowed but not required
  • 23. Frequently Asked Questions
    • Question:
    • Is the modified payment permanent?
    • Answer:
    • It depends on the interest rate.
      • If the new rate is higher than the market rate at the time of origination, the rate is fixed for the life of the loan.
      • If it’s lower, the rate is fixed for 5 years. After that, it can increase by 1% per year, but only up to the market rate at the time of origination. It will never go higher.
  • 24. Frequently Asked Questions
    • Question:
    • Are mortgage lenders required to participate?
    • Answer:
    • If you have a Fannie Mae or Freddie Mac loan, yes.
    • For other loans, participation is optional. However, significant financial incentives are being provided to encourage participation by
      • Borrowers
      • Mortgage Lenders
      • Investors
  • 25. Modification Success Story
    • “ Nick” in Northern, VA
    • Reason for default:
      • Serious illness in family
      • Family member died
      • Employer reduced salary
      • Increased medical expenses
  • 26. Modification Success Story
    • Payment: $1,877
    • Interest Rate: 6.50%
    • Term, in Months: 324
    • Months Delinquent: 10
    • Payment: $1,214
    • Interest Rate:
      • First 60 Months 2.00%
      • Final Rate 4.85%
    • Term, in Months: 326
    • Amt Capitalized: $18,772
    Before Monthly Savings for 60 Months $663 Savings During First Year $7,956 After
  • 27. Getting Started Easy-to-Use Main Navigation for Homeowners to Quickly Find Information
    • On the Home Page, consumers can access:
    • Spanish Content
    • 1-888-995-HOPE (4673)
    • Beware of Scams
    • Information Video
    • Helpful Links in Footer
    Sample Home Page Access Checklist to Prepare Borrowers to Speak with their Mortgage Lender or Counselor
  • 28. Determine Basic Eligibility Homeowners can find out if they may be eligible for Home Affordable Refinance or Home Affordable Modification by clicking on each button and answering several questions.
    • Homeowners can learn about:
    • Home Affordable Refinancing
    • Home Affordable Modification
    • Consumer FAQs
    • Beware of Foreclosure Scams
    Sample Eligibility Page
  • 29. Contact Your Mortgage Lender
    • On the Contact Your Mortgage Servicer page:
    • List of participating mortgage lenders and their contact information
    • Link to Hope Now website
    • Link to Modification and Refinance pages
    • Link to Understanding Your Mortgage
    Link to Hope Now website for additional list of mortgage lenders and their contact information. Participating mortgage lenders contact information shown here. Sample Contact Your Mortgage Servicer Page
  • 30. Beware of Rescue Scams
    • Beware of any company that promises:
      • That it’s safe to skip your mortgage payments
      • That walking away from your house won’t affect your credit
      • They will buy your house and sell it back to you later
      • A specific result, for a fee
    There is never a fee for getting information about the Making Home Affordable program from your mortgage lender or a HUD-approved housing counselor.
  • 31. Additional Resources
    • For Immediate Borrower Assistance:
      • Call 1-888-995-HOPE (4673)
    • Find a HUD-Approved Housing Counselor:
      • Visit www.MakingHomeAffordable.gov
    • Find Your Mortgage Lender’s Phone Number:
      • Refer to your monthly mortgage statement, or
      • Look up on www.MakingHomeAffordable.gov