Obama Housing Fix Update

This is an update to my first article on Obama’s Housing Fix. On March 4th the government passed a housing bill aimed at reducing the number of foreclosures by helping homeowners lower their monthly payments through loan modifications and refinances.

Some banks and servicers are up and running with the new programs and some are still updating their systems to implement the changes. There are still portions of the bill that companies are waiting for clarification on. It may take a few more weeks for these companies to be ready to start taking applications for refinances and modifications. Just be patient. In the meantime the government has created a website that you can go to : http://makinghomeaffordable.gov/ . This website can help you figure out if you will qualify for the new programs that are being put into place.

Just because some of the banks or servicers are not completely ready to take on this program does not mean that you can’t call them. If your bank or servicer is not ready to start taking application they are most likely taking down names and numbers of the customers that call them to ask about the program. Then once they have the program in place they will return these customer’s calls.

The good news is that the four largest servicers in the country have agreed to participate in the program – Wells Fargo, CitiBank, JP Morgan Chase and Bank of America. This is huge! This means that most of the other banks will likely follow their lead. So help for you could be on the way!

A brief overview of the program is below – this was also in my first article:

Loan Modifications:

Mortgage companies will be reviewing requests from current customers who need to lower their monthly mortgage payments. The goal is to reduce your front end debt ratio to 31%. Your front end ratio is your first mortgage payment(principle, interest, taxes, insurances, mortgage insurance) divided by your gross monthly income. If your current front end raio is higher than 31% then the mortgage compnay will try a number of things to to reduce your monthly payment until it reached 31%.

1. They will reduce your interset rate to a low as 2%...if your front end ratio is still to high then
2. They will increase the term of your loan up to 40 years...if your front end ration is still to high then
3. They will defer some of the principle on your loan to the end of your mortgage term. This will create a balloon payment at the end of your mortgage term...if the front end ratio is still too high then
4. They can do priciple reduction on your loan. This means they will waive some of the balance on your loan. This principle reduction will not have to be repaid.

Mortgage Refinances:
The people who qualify for this will be:

1. Loans closed before January 1st, 2009
2. Owner occupied properties3. Loan to value of 105% or lower - the big change is here. Most people only qualify for a better rate if they are at 80% of lower right now.

Both of these programs offer incentives to the mortgage companies to participate in the program as well as incentives to the homeowners who keep their payments current.You can read some other articles regarding this reform at http://money.cnn.com/2009/03/04/news/economy/guidelines/index.htm

Check out details of the new program at http://www.treas.gov/initiatives/eesa/

If you need help with a refinance or a purchase check out www.thebriteway.com and give us a call.

Happy Monday Everyone!