W ell, it’s a popular topic these days. The Wall Street Journal has another article in today’s edition about more help coming to homeowners. Fannie Mae and Freddie Mac are reported to be streamlining the modification of loans for people more than 90 days behind in mortgage payments , potentially affecting hundreds of thousands of borrowers. This is seen as a move that could further encourage private lenders to follow suit. this voluntary plan would attempt to modify loans so monthly loan payments are 38% of monthly income, a couple points lower than CitiMortgage’s goal of 40%. Borrowers whose loans were bundled and sold as securities will still have a difficult time getting modifications since it can be tough to identify investors holding a specific loan. This is another issue that’s currently being addressed.
To qualify for this program, borrowers must currently live in their home, not be in bankruptcy proceedings, and owe more than 90% of the value of their home. I’m frequently asked why lenders would modify loans and approve shorts sales (these are home sales where the net sales price after all closing costs are paid is less than what’s owed on the property). LPS Applied Analytics estimates losses from foreclosure average 44% of the loan amount , an increase from 29% a year ago. This is a strong motivator that lenders and investors are realizing in deciding to pursue modifications.
While we’re seeing the foreclosure rates among Denver homes and Denver condos, many areas of the country are still being hit hard by this crisis.
While Congress and the federal government are looking to stop foreclosures, I’d like to see a plan on how to help consumers that have already been affected by foreclosure before government intervention began. I’m a non-interventionist and definitely have issues with some people being helped and others not since all taxpayers are picking up the tab.
Stay tuned to our website this as we roll out more information on options and solutions to avoid foreclosure along with detailed information on short sales.
