Posted on October 26, 2011 by Lisa Magill

Relief for Underwater Homeowners - HARP Modifications

FHFA, Fannie Mae and Freddie Mac Announced Changes to the Home Affordable Refinance Program (HARP) to Help Borrowers that Owe More Than the Fair Market Value of the Home. 

Refinancing is practically impossible if you owe more than the current fair market value of the property.  You either need enough cash to absorb the difference or you need to qualify for one of the relief programs.  HARP is a refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other benefits of refinancing the loan. 

The Federal Housing Finance Agency says there is no longer a maximum LTV (loan-to-value) limit for borrower eligibility when the new loan is a fixed rate mortgage.  There is a limit of 105% if the borrower chooses an adjustable rate mortgage, but why would they with today's historic low rates?  Some of the refinancing costs have been eliminated altogether and others have been reduced.  This is a great opportunity for those who managed to keep up with mortgage payments.  Reducing the monthly mortgage payment will help with other financial obligations like community assessments.

This program is only available if the loan was sold to Freddie Mac or Fannie Mae prior to May 31, 2009 and the property is the borrower's primary residence.  Banks are not required to participate since this program is voluntary.  If your current lender doesn't offer HARP modifications, you can contact one of the lenders that participate in the program to request refinancing.

For more information, watch this video featuring Edward J. DeMarco, the acting director of the Federal Housing Finance Agency:  http://youtu.be/-4rflnD-qm8 

 

 

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Posted on September 19, 2011 by Lisa Magill

Fannie Mae Annouces it "Know Your Options" Awareness Campaign

Struggling with mortgage payments?  If so, look for information from Fannie Mae before giving up.  The Fannie Mae "Know Your Options" campaign uses TV spots to reach struggling borrowers, encouraging them to visit KnowYourOptions.com and call a toll-free phone number. Fannie Mae volunteers will use the information provided by callers to document and route their cases to Fannie's Mortgage Help Centers or other resources for assistance.

The site contains useful information for homeowners whether you want to stay in your home or not. The site explains options regarding:

  1. Refinance
  2. Repayment Plan
  3. Forbearance
  4. Modification
  5. Deed-for-LeaseTM
  6. Military Forbearance
     

Short sales are addressed.  Fannie explains that a Short Sale is also known as a pre-foreclosure sale.  Selling 'short' means selling your home for less than the balance remaining on the mortgage.  Users can learn whether they qualify for the Home Affordable Foreclosure Alternatives Program (HAFA) which offers short sale and DIL options or other government programs.  Short sales are generally beneficial to community associations.  Past due payments add to association coffers and new homeowners bring life back in to the community.

The site also warns distressed homeowners about possible scams.  HUD-approved housing counseling agencies are available to help you negotiate with your lender or loan servicer. They do NOT charge a fee.  Users are encouraged to call 1-888-995-HOPE (4673) for free housing counseling before signing any documents, diverting mortgage payments or paying for credit counseling services.
 

Community associations suffer when their homeowners are struggling financially.  Not only do assessments fall by the wayside, but there are other impacts. Properties are usually not maintained as well i.e. the lawns grow taller and develop weeds, shrubs and plantings grow out of control (in some cases reducing visibility at intersections and creating 'dark' spots) and roofs become black with mold, all of which decrease property values and home enjoyment.   Hopefully your homeowners can take advantage of some of the options available to improve their financial situation and then pay their assessments!

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Posted on February 20, 2009 by Becker & Poliakoff

The Short-Pay Solution

There are several programs available to homeowners that will avoid the loss of their homes through foreclosure such as repayment plans, forbearance plans and loan modifications.  “Short Sales” have also become a popular solution to avoid foreclosure but “Short-Pay” solutions are emerging as the best option available to help families keep their homes, lower their mortgage payments, and avoid foreclosure even when the homeowner owes more than their homes are worth! 

What is a Short-Pay?
A Short-Pay, or also known as a short-refinance, is a transaction, where a current lender agrees to accept less than the full amount owed to them.  This process is similar to a short sale but, instead of selling the home to a third party, the homeowner keeps their home by refinancing with a new lender with a new loan based on the current market value of the home.  The Short-Pay allows the homeowner to keep their home, and avoids a foreclosure or possible bankruptcy.

Why a Short Pay?
Homeowners that want to keep their homes, but don’t have sufficient equity to refinance their loan through conventional methods, should use the Short-Pay option as a tool.  The lender considering the Short-Pay would have to be willing to accept a short payoff on the existing loan or hold a second mortgage to make up the difference needed to payoff the existing mortgage at the home’s value, and the homeowner must qualify for the new loan. 

Throughout 2008, many lenders were reluctant to approve a Short-Pay, holding fast to their traditional notions that a homeowner shouldn’t “benefit” or be able to continue to own the property if the lender is paid less than they are owned on the debt, but as the economy continues to spiral downward and the record number of foreclosed homes (REOs) entering the market, we are seeing a heightened interest from lenders.  Although a Short-Pay may not be an ideal situation for some lenders, it may be the best and, quite frankly, the only alternative in many cases.  The existing lender may net significantly more funds than they would though a Short Sale or through a distressed sale in a declining market after protracted foreclosure proceedings.  More importantly, the community and the real estate market in general will benefit from not having to endure the negative impacts associated with an additional foreclosure.

Who should use a Short-Pay?
Homeowners that are experiencing financial challenges where a default on their loan obligations may be imminent, are “upside down” on their homes (meaning they owe their lenders more than their homes are worth!), have not been late on their mortgage payments and otherwise qualify for an FHA loan refinance (maximum loan amount for Broward, Palm Beach and Miami-Dade Counties is $345,000 starting January 1, 2009) based on the current market value of their homes, should contact us immediately to see if a Short-Pay is a viable solution.

Contact
Alejandro E. Jordan, Esq. [BIO] of Becker & Poliakoff, P.A. at 954-364-6067 or at ajordan@becker-poliakoff.com for more information.  
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