Obama Housing Plans: LTV without limits for ‘hardship’ cases only…rest of refis still hit 105% LTV max…

aww man! the LTV uncapped limits ONLY APPLY TO THE FIRST HALF OF THE PLAN, the one for those who prove ‘hardship’

The refis for the rest of Americans are STILL LIMITED TO 105% LTV ratios…since CA AZ NV FL have lost about 40% of their LTV ratios that pretty much leaves out MOST of the homeowners under water…the good news is if you lose everything they will help you, if you are working and struggling to hang on,…not so much….

So if you bought a McMansion in AZ with a no doc loan that is underwater $100,000 and your ARM is going to adjust Uncle Sam will bail you out. If OTOH you were ‘good’ in your 30 yr fixed and your  LTV has fallen off a cliff BECAUSE of the irresponsible yahoos who bought the McMansions you are SOL…..(caveat, since appraisals are not required under these refis with FAN FRED for the non hardship program, you MAY still be able to get refi’d to current rates  without being disqualified by being so far underwater)

Snoopy says BLEAH!

Breakdown:

The Obama administration Wednesday gave lenders a green light to begin modifying home mortgages under a new $75 billion program aimed primarily at people facing imminent financial hardship.

Unveiling eligibility guidelines for a foreclosure prevention plan first announced on Feb. 18, the U.S. Treasury said borrowers would be required to demonstrate hardship to their loan servicers, such as a job loss, reduction in income or a looming payment increase that cannot be met.

Here is where most America fits in:

The Treasury also announced that lenders on Wednesday could begin refinancing current mortgages owned or guaranteed by Fannie Mae or Freddie Mac on homes whose values have dropped.

This plan would allow homeowners to refinance at market rates with a loan-to-value ratio of up to 105 percent, rather than the normal Fannie/Freddie 80 percent limit.

Summary highlights:

Eligibility and Verification:

—Loans originated on or before January 1, 2009.

—First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.

—All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.

—Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.

—Incentives to lenders and servicers to modify at risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.

—Modifications can start from now until December 31, 2012; loans can be modified only once under the program.

Loan Modification Terms and Procedures:

—Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.

—Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPV test will compare the net present value of cash flows with modification and without modification. If the test is positive – meaning that the net present value of expected cash flow is greater in the modification scenario – the servicer must modify absent fraud or a contract prohibition.

—Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.

—Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).

—The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.

—The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.

—Servicers must enter into the program agreements with Treasury’s financial agent on or before December 31, 2009.

Payments to Servicers, Lenders, and Responsible Borrowers:

—The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.

—Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus “pay for success” fees on still-performing loans of $1,000 per year.

—Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.

—The program will provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.

—The program will include incentives for extinguishing second liens on loans modified under this program.

—No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasury’s financial agent.

—Similar incentives will be paid for Hope for Homeowner refinances.

Transparency and Accountability:

—Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.

—Servicers will be required to collect, maintain and transmit records for verification and compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.

March 4, 2009. Tags: , , , , , , , . Foreclosures, Housing, Obama Administration, Politics.

4 Comments

  1. carol meyer replied:

    please send me hardship program papers

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  2. carol meyer replied:

    Please send me the pages to pobox 1295
    bolton,NY 12814

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  3. Paul replied:

    I examined the housing plan and have posted how the NPV test in the plan is rigged to allow for significant indirect subsidies to homeowners who are signficantly underwater. Thought it might be of interest here:

    http://www.gopideas.com/~gopideas/page/npv-test-in-the-obama-housing-plan

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  4. affidavit of financial hardship | video and pics about affidavit of financial hardship replied:

    […] Obama Housing Plans: LTV without limits for ‘hardship’ cases only …—All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship. —Property owner occupancy status will be verified through …https://moderateinthemiddle.wordpress.comNJ HELOC Heaven: The Obama Housing Plan DetailsAmong the details, borrowers who want to qualify for the loan modification plan will have to provide proof of financial need and payment ability, including an affidavit of financial hardship, their most recent tax return and two pay …http://njhelocheaven.blogspot.comObama administration launches housing plan – Kansas City Star</p><p>The administration, launching what it calls the "Making Home Affordable" initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to …http://www.kansascity.com […]

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