The new foreclosure prevention plan announced today will require the mortgage companies participating in the Obama Administration's existing foreclosure prevention program to consider slashing the amount borrowers owe.
The new effort is designed to help two groups:
1. Borrowers who owe more on their loans than their houses are worth.
Nearly 15 million homeowners fall into this category, according to Moody's Analytics. About 10 million of them owe at least 20 percent more than their house's current value.
These people would be helped in either of two ways: Their mortgage companies can cut the total amount they owe on their mortgage. Or they can refinance into loans backed by the Federal Housing Administration, which insures loans against default. The FHA will get $14 billion in incentive money from the federal bailout fund.
2. Unemployed borrowers.
People receiving unemployment benefits would see their mortgage payments drop to no more than 31 percent of their monthly income -- but only for three to six months. That's intended to give homeowners more time to find a job. Once they do, they may qualify for a loan modification that would permanently reduce their payments.
It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans.
The plan will also allow lenders to refinance mortgages that are under water with a new loan backed by the FHA. Lenders will have to reduce the first mortgage by at least 10 percent. And the total mortgage debt cannot exceed 115 percent of the current value of the home.
The current HAMP program to prevent foreclosures has failed to make a dent in the problem. Only 170,000 homeowners have completed loan modifications out of 1.1 million who began the program over the past year.
Administration officials played down any notion that the new plan would solve the foreclosure epidemic. About 6 million homeowners have missed at least two months of payments.
Diana Farrell, a White House economic adviser, said the plan won't prevent most of the 10 million to 12 million foreclosures expected over the next three years. Doing so, she said, "wouldn't be fair, it would be too expensive and we probably wouldn't succeed in any case, because many people got into homes that they simply cannot afford."
The administration also stressed that the plan won't aid investors, speculators or "Americans living in million-dollar homes or defaulters on vacation homes."
_______________________
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Friday, March 26, 2010
Thursday, March 18, 2010
Mortgage Loan Compliance | CoreLogic’s New Fraud Figures
First American CoreLogic analyzed 80 million loans provided through its "Mortgage Fraud Consortium" and identified trends, according to reports. Nationwide, one in every 200 funded residential loans is fraudulent, according to new figures released by First American CoreLogic.
The company's findings will come out at the end of this month, meanwhile the firm has released some key findings, including figures showing that the fraud rate has been decreasing since 2007 and is now about 25% lower than when it peaked in the third quarter of that year.
Since then, lenders have been more aggressive in curtailing mortgage fraud.
"In 2010, 2011 and 2012 you won't see nearly the amount of (fraud) reports that you're seeing today," said Tim Grace, senior vice president of fraud analytics. The states with the highest number of fraudulent loans were California, Florida, Georgia, North Carolina and South Carolina.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
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The company's findings will come out at the end of this month, meanwhile the firm has released some key findings, including figures showing that the fraud rate has been decreasing since 2007 and is now about 25% lower than when it peaked in the third quarter of that year.
Since then, lenders have been more aggressive in curtailing mortgage fraud.
"In 2010, 2011 and 2012 you won't see nearly the amount of (fraud) reports that you're seeing today," said Tim Grace, senior vice president of fraud analytics. The states with the highest number of fraudulent loans were California, Florida, Georgia, North Carolina and South Carolina.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
Call Today 1-866-966-6615 or Visit www.ml-compliance.com
Tuesday, March 9, 2010
Mortgage Loan Compliance | FHA Reverse Discrimination
David Stevens, The Federal Housing Administration Commissioner, wants the nation's largest loan originators to loosen their underwriting standards, allowing more minorities to qualify for government-backed single-family loans.
The commissioner noted that FHA is taking several steps to reduce default risk. But the agency does not want to raise the FHA 3.5% downpayment requirement to 5%, despite congressional pressure. "If we had increased the downpayment to 5% we would severely impact the ability of a good family" to buy a home, he said.
In 2008 many top ranked lenders voluntarily imposed a minimum 620 credit score as subprime borrowers rushed to refinance into FHA loans. Commissioner Stevens told minority real estate professionals that the lenders' action has improved the performance of FHA loans and reduced defaults.
However, the commissioner now wants lenders to consider borrowers with lower FICO scores. "The one thing I will tell you, the difference in approval rates for African-Americans and Latino borrowers between 580 and 620 is significant," Mr. Stevens said.
The FHA commissioner made his comments at a recent conference on minority home ownership.
Back to business as usual.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
Call Today 1-866-966-6615 or Visit www.ml-compliance.com
The commissioner noted that FHA is taking several steps to reduce default risk. But the agency does not want to raise the FHA 3.5% downpayment requirement to 5%, despite congressional pressure. "If we had increased the downpayment to 5% we would severely impact the ability of a good family" to buy a home, he said.
In 2008 many top ranked lenders voluntarily imposed a minimum 620 credit score as subprime borrowers rushed to refinance into FHA loans. Commissioner Stevens told minority real estate professionals that the lenders' action has improved the performance of FHA loans and reduced defaults.
However, the commissioner now wants lenders to consider borrowers with lower FICO scores. "The one thing I will tell you, the difference in approval rates for African-Americans and Latino borrowers between 580 and 620 is significant," Mr. Stevens said.
The FHA commissioner made his comments at a recent conference on minority home ownership.
Back to business as usual.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
Call Today 1-866-966-6615 or Visit www.ml-compliance.com
Wednesday, March 3, 2010
Mortgage Loan Compliance | Republicans View On HAMP - "Failure"
Representatives Jim Jordan, R-Ohio and Darrell Issa, R-Calif., claim the Obama administration's Home Affordable Modification Program is "misguided" and hundreds of thousands of borrowers in HAMP payment trials will never qualify for a permanent modification.
"Money that could have been spent on affordable rental housing is instead being spent on mortgage payments when many of these homeowners have little hope of permanently keeping their homes," Rep. Jordan said.
The HAMP loan modification program is a "failure" that is hurting more homeowners than it is helping, according to a report issued by Republicans on the House Oversight and Government Reform Committee.
The congressmen offer few suggestions for improving HAMP but press the Treasury Department to release more information about its net present value test, which is used to evaluate mortgages for a modification.
"If the secret NPV test underestimates the re-default rate, servicers will grant too many futile modifications," the report says. Committee Democrats have opened a HAMP investigation and have raised similar concerns about the NPV test.
Separately, a public opinion poll commissioned by the National Association of Home Builders shows that 65% of homeowners believe the government needs to do more to keep families from losing their homes.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
Call Today 1-866-966-6615 or Visit www.ml-compliance.com
"Money that could have been spent on affordable rental housing is instead being spent on mortgage payments when many of these homeowners have little hope of permanently keeping their homes," Rep. Jordan said.
The HAMP loan modification program is a "failure" that is hurting more homeowners than it is helping, according to a report issued by Republicans on the House Oversight and Government Reform Committee.
The congressmen offer few suggestions for improving HAMP but press the Treasury Department to release more information about its net present value test, which is used to evaluate mortgages for a modification.
"If the secret NPV test underestimates the re-default rate, servicers will grant too many futile modifications," the report says. Committee Democrats have opened a HAMP investigation and have raised similar concerns about the NPV test.
Separately, a public opinion poll commissioned by the National Association of Home Builders shows that 65% of homeowners believe the government needs to do more to keep families from losing their homes.
_______________________
Mortgage Loan Compliance® | The Forensic Loan Audit Company
For A Limited Time Order A $59 Rapid Report Forensic Audits Or A $295 Certified Forensic Compliance Audits.
Call Today 1-866-966-6615 or Visit www.ml-compliance.com
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