Mortgage Loan Compliance | Home Affordable Program Fallout

A Treasury Department report issued today said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July। That means nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out according to statistics. In total about 48 % of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.

Many homeowners have complained that program is a bureaucratic nightmare। They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork repeatedly.

The banking industry said borrowers weren't sending back their paperwork। They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments। Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period.

Approximately 421,804, or 32.3 percent of those who started the program, have received permanent loan modifications and are making their payments on time.
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Mortgage Loan Compliance | New FHA Refi Rules

To help underwater homeowners, the Federal Housing Administration’s new policy makes an exception for conventional borrowers who want to take advantage of a new FHA Short Refinance program — which requires the loan holder to write down the value of the loan by at least 10%.

For short refinances, the Combined-Loan-To-Value (CLTV) is 115%. FHA issued mortgagee letter (2010-23) for the FHA Short Refinance program last Friday. The new refi program goes into effect September 7, 2010.

FHA reserves the highest CLTV for streamline refinances of existing FHA borrowers. For a streamline refi, the maximum CLTV is 125%.

The previous Bush administration dropped FHA's CLTV restrictions entirely in 2007 to allow lenders to refinance strapped subprime borrowers. Now the Federal Housing Administration is clamping down on refinancing where a second lien is involved.

The maximum combined loan-to-value ratio for a rate-and-term refinance will fall to 97.85% starting September 7 compared to the current "unlimited" LTV.

On cash-out refinances, the maximum CLTV is 85%, according to Mortgagee Letter 2010-24, which was issued on Friday. "This Mortgagee Letter eliminates the unlimited CLTV ratio" that was first introduced in 2007, FHA said.

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Mortgage Loan Compliance | Freddie and Fannie Double Dip Bailouts

The government rescued McLean, Va.- based Freddie Mac and sibling company Fannie Mae from the brink of failure nearly two years ago. Both Fannie Mae and Freddie Mac have both lost tens of billions of dollars during the past two years and both are asking the government to prop them up again.

Last week, Fannie Mae requested $1.5 billion after posting a loss of $3.13 billion, or 55 cents per share, in the second quarter.

Freddie Mac said Monday it lost $6 billion, or $1.85 per share, in the April-to-June period. The company is required to pay a 10 percent annual dividend to the Treasury Department on money it has received from the government. That made up $1.3 billion of the company's second-quarter losses.

Freddie Mac is losing money from bad loans it backed, many of them before the housing market went bust. It had $118 billion in bad loans at the end of June, up from $103.4 billion at the end of last year.
Freddie Mac owned more than 62,000 foreclosed properties in June, up from about 35,000 a year earlier.

Still, the two companies are taking different approaches to their situations. Fannie Mae sounded optimistic about its future. Freddie Mac offered a more tempered view. The new request means they have needed $148.2 billion to stay afloat, about $63.1 billion of which is being used by Freddie Mac.
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Mortgage Loan Compliance® The Forensic Loan Audit Company

Get The Facts, Audit Your Loan, and Protect Your Rights!

Call Today 1-866-966-6615 or Visit www.ml-compliance.com