Hope For Homeowners or Loan Modification

Is Hope for homeowners another Hopeless program?

What are your view on it Paul?

Should the government take a cut on your equity increase/ Sounds like a loan shark scenario

Please comment

William

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Hello William,

It’s too early to tell.  At this point my inclination is to believe that servicers will be more apt to offer loan modifications than short refinances under the Hope For Homeowners program.

Read: Loan Modification or FHA Refinance?

Here’s more food for thought.  When IndyMac was taken over by the FDIC, the FDIC implemented the following new guidelines (IIRC) for IndyMac loan modifications with the objective to modify the loans to a housing-payment-to-income (HTI) ratio of 38% given the following (in this order):

1. lower the interest rate to the current Freddie Mac survey rate for fixed rate mortgages
2. then, if needed, lower the rate as low as is necessary but no lower than 3% and step it up by 1% each year until it reaches the FHMLC survey rate
3. if that doesn’t get down to a 38% HTI, then recalculate using a 40 year term 
4. if that doesn’t get down to a 38% HTI, then offer a principal forbearance (not a principal reduction).  They simply make the principal forbearance payable at zero interest at the end of the loan term as a balloon.

So if the above is any indication of how these loans will be dealt with then there is more hope for principal forbearance under a loan modification then there is for a short refinance under Hope For Homeowners.

Thanks for the questions and hope this helps.

Paul