March 24, 2010

Short Sale Prior To Default?

Hello Paul, I just approved for mortgage modification. However, it is not the Obama plan. I am paying about 48% of my income toward mortgage. It is not realistic number. My new trial period starts April 2010. I have gave a lot of thought. I thinking about just leaving the property by using short sale. Can I request a short sale whiling I am in new trial modification? Or do I need to default again and request Short Sale? Any advice would be help.

Jonah (more…)

BofA Principal Reductions

Filed under: Mortgage

Reuters – Bank of America will on Wednesday announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home’s value or are battling ever-expanding “negative amortization” loans.

According to a summary of the program obtained by Reuters, Bank of America pledged to offer an “earned principal forgiveness” of up to 30 percent in two stages. The lender will first offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years, provided they stay current on their payments.

The forgiveness can allow a homeowner to bring the loan value back down to 100 percent of the home’s value over five years, according to the plan, confirmed by sources close to the matter.

The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal to tackle the thorny issue of preventing foreclosures when home values drop well below the amount owed.

A Bank of America spokesman declined comment.

Announcement of the program in Washington comes as U.S. lawmakers and housing advocates are becoming increasingly vocal about the need for principal writedowns in order to save homes on a large scale. Amid stubbornly high unemployment, homeowners are seen as more likely to simply abandon an unaffordable mortgage when they have no equity or are deep “underwater” on the loan.

The U.S. Treasury’s mortgage modification program has largely relied on reducing interest rates, and has been criticized for failing to address a steep and painful reduction in home values.

The announcement also will come two days after two Washington state residents sued Bank of America for allegedly reneging on a promise it made to modify troubled mortgages when it took $25 billion in taxpayer bailout money.

The lawsuit alleged that the lender has “seriously strung out, delayed and otherwised hindered” modifications because it had financial incentives to do so.


Under the plan, Bank of America also will slash the principal balance on the worst of the high-risk mortgages written during the height of the housing boom, the so-called “payment option” adjustable rate mortgages that had a negative amortization feature that allowed the principal balance to grow.

On such loans that are delinquent and in danger of imminent default, the lender will announce that it will cut principal to as low as a 95 percent of the property’s value.

Bank of America lender also will expand its modification program to consider payment reductions on prime hybrid adjustable rate mortgages that have floating interest rates after two years and will extend its National Homeowner Retention Plan by six months until the end of 2012.

The bank expects to be operationally ready to start the earned principal reduction plan in May. It plans to identify mortgages that may be eligible for these programs and proactively contact homeowners to request documents to verify eligibility. (Additional reporting by Joe Rauch in Charlotte; Editing by Lincoln Feast)

March 19, 2010

HAMP Audit

Filed under: Loan Modification

HousingWire – Neil Barofsky, special inspector general to the Troubled Asset Relief Program (TARP), initiated an audit of the Home Affordable Modification Program (HAMP), according to a letter from Barofsky’s office to Sen. Jeff Merkley (D-Ore.).

The US Treasury Department allocated $75bn from TARP to fund HAMP when the program launched in March 2009. Through February, those 113 servicers provided more than 170,000 permanent modifications. Critics of the program point out that the numbers are far short of the 3-to-4m target set by the Obama Administration last year and claim the program doesn’t address key difficulties for troubled loans.

The move for Barofsky to conduct the audit came after he received a letter from Merkley, addressing concerns over the program’s formula for the Net Present Value of a troubled loan. The NPV refers to the value-to-date of a cash-generating investment, such as a mortgage. When a borrower falls behind on the payments, the investor or servicer generates an NPV for the loan “as-is” or if it is modified. If the NPV of modified loan is higher, the modification is said to be “NPV positive.”

Under HAMP guidelines, if the loan is “NPV postive” after modification, the servicer must provide the workout if it is to receive the incentive payment.

Barofsky’s audit will investigate whether or not the servicers are correctly applying the NPV test under the program and how much the Treasury is doing to ensure cooperation. Barofsky will also look at how servicers are communicating to borrowers when their NPV test fails and how they identify any other options for borrowers.

The House Committee on Oversight and Government Reform, also began an investigation of HAMP in February on concerns of the “effectiveness and efficiency” of the program.

March 11, 2010

Real Time Problems

Filed under: Florida,Foreclosure

I lost my Florida home to foreclosure 2/5/10.  On 3/8/10, I received a letter from “Real Time Resolutions” indicating they now have servicing rights to our mortgage loan with a payoff amount of $153,443.21.  Do I have any recourse?

Milinda (more…)

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