On September 7th, the U.S. Department of Housing and Urban Development announced a new plan to help responsible homeowners who may be struggling with their mortgage payments. The goal is to assist nearly 4 million homeowners through the end of 2012. Here’s a summary of the program highlights of the FHA’s short refinance program:
- requires consent of all lien holders
- the existing loan must not be FHA-insured
- borrowers 1st lien holder must agree to write off at least 10% of the unpaid principal balance
- new FHA-insured loan must have an loan-to-value ratio of 97.75%
- combined LTV of all loans must be no greater than 115%
- homeowner must owe more on their mortgage(s) than their home is worth (being ‘underwater’)
- homeowner must be current on their existing mortgage
- homeowner must qualify for the new loan under standard FHA underwriting requirements
- the property in question must be the homeowners primary residence
- incentives will be provided to existing second lien holders who agree to full or partial lien extinguishments
- servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae on or before October 3, 2010
- participation is voluntary
You can also view the official press release by clicking here
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The HAMP lenders are expected to follow the Principal Reduction guidelines for HAMP-eligible mortgages after the first of the year. The REST Report will calculate PRA eligible mortgages using their software. The REST
Report v. 4.0 will hold mortgage servicers accountable in foreclosure court to those calculations.
Click for Information on the Do it Yourself Mortgage Modification
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