Denied Federal Mortgage Aid, Homeowners Seek Alternatives

Friday, Jun 18th, 2010
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Denied for Federal Mortgage Aid, Homeowners Seek AlternativesBy Stella M. HopkinsRISMEDIA

June 18, 2010--(MCT)--Allison Rinehart's best hope for saving her home isn't the massive federal effort to stem foreclosures.She's been denied, possibly in error, for that plan so she's banking on an alternative mortgage modification to keep her Charlotte townhouse."This is the only thing my daughter and I have," said Rinehart, who is 45. "I am a single parent, no child support, working as many jobs as I can take on."The taxpayer-funded Home Affordable Modification Program, or HAMP, is the centerpiece of the nation's foreclosure prevention effort. But it doesn't work for many people.For example, Bank of America estimated in April that more than half its 1.44 million delinquent mortgage customers weren't eligible for HAMP. Wells Fargo says about 80 percent of its roughly 500,000 modifications are non-HAMP. Combined, the two banks serve nearly 40 percent of U.S. mortgages.HAMP also has seen a surge in homeowners failing the three-month trial period, and a decline in new trial enrollments. Critics blame servicers for the declines, saying they're doing a poor job and unfairly bouncing people from the program. Servicers acknowledge there were problems, especially early on. They also say homeowners aren't complying with payment agreements or document requirements.Whatever the reason, the problem isn't going away. The number of struggling homeowners nationwide is expected to remain high because job growth remains sluggish and millions of people are out of work. That means alternative modifications are likely to become even more important tools for preventing foreclosure."The goal is just to get to affordability ... whether that happens through a modification through HAMP or outside of HAMP," said Tom Goyda, a Wells Fargo spokesman.There are many reasons property owners can't qualify for the federal program.For example, they might have refinanced or bought after HAMP's Jan. 1, 2009, cutoff. They might not meet income or debt requirements. HAMP modifications, subsidized by taxpayer dollars, also aren't available for investment property, vacation homes and high-end homes.In April, Bank of America finalized more than 23,000 HAMP modifications and had more than 210,000 in the pipeline. The Charlotte bank also has been averaging about 13,000 alternative modifications a month this year, said spokesman Dan Frahm. Most are for customers with mortgages issued after the cutoff or above the HAMP limit or on properties that aren't their principal residence."HAMP is at the center of our modification efforts at Bank of America," Frahm said. "It's also important to recognize that no one solution or program can address the ... issues facing homeowners, who are experiencing hardship as a result of prolonged recessionary impacts."President Barack Obama announced the HAMP program in February 2009, well into the financial crisis. Prior to that, lenders and mortgage servicers were already doing modifications so it's natural there are more of those. Many HAMP applicants also are still working through the slow, cumbersome process.Servicers participating in HAMP must first consider homeowners for loan aid under that program. If that doesn't work for customers, servicers can consider them for their own programs.Goyda said Wells is doing alternative modifications for about 60 percent of customers who reach HAMP's trial phase but don't ultimately qualify. About 10 percent find other solutions, and the balance are probably headed for foreclosure.Of HAMP, he said: "It's only one part of our overall efforts to help customers find affordability."Consumer advocates, while sharply critical of mortgage servicers for poor modification service, generally endorse HAMP's intent and its standardized approach."It's a useful template," said Julia Gordon, senior policy counsel with the Center for Responsible Lending in Washington. "It's by no means some kind of gold standard."For example, a recent HAMP change eliminates unemployment benefits as a qualifying source of income for modifications."That's just crazy," she said.Gordon cautiously welcomes alternative plans because they can potentially help more people. She's concerned homeowners won't have a consistent way to know what's available and how to qualify. She and others have seen instances where payments are actually higher under non-HAMP plans — not a workable solution for a struggling borrower.She also frets about the lack of federal oversight for in-house plans. The U.S. Treasury oversees HAMP, but has been criticized for not penalizing servicers for mistakes.Gordon urges people to review any modification offer carefully. What's the new payment? Has the principal been reduced if the loan balance exceeds the value of the house? How long does the modification last?"It is conceivable you could have a proprietary product that's better," she said.Under HAMP, the government pays servicers and homeowners for successful modifications. For homeowners who make all their payments on time, that can amount to $5,000 paid toward their loans.Those incentives aren't available under alternative plans.Al Ripley, with the nonprofit N.C. Justice Center, has been critical of HAMP's cumbersome nature. He's also concerned about the lack of consistency and transparency in alternative plans. He says all servicers should be required to disclose their guidelines and processes for all modifications."It would be very helpful for homeowners to have more predictability when applying for a modification," Ripley said.Allison Rinehart's budget was tight in late 2004 when she paid about $136,000 for her Charlotte townhome.She put $4,000 down on the home and took a 30-year mortgage at nearly 9 percent. Her monthly payments were $1,111. Rinehart and her daughter, Sydnea, now 15, got by on the roughly $30,000 a year Rinehart made as a longtime, self-employed hairdresser and middle-school coach.Last spring, she noticed business dropping off more sharply as her clientele struggled in the downturn. In July, she asked for a modification from Select Portfolio Servicing, the Utah firm handling her mortgage. She received an unusually speedy offer of a trial plan, which is supposed to last three months.Rinehart was told to make the first payment on Sept. 1 at her original amount. Subsequent trial payments were cut to $685. She made those payments through March, when she received a letter saying she was denied a HAMP modification. Soon after, she contacted McClatchy Newspapers."This has caused me sleepless nights, depression and anxiety," said Rinehart, who also works in her church's office and has been a nanny. "My 15-year-old doesn't know whether or not she will have her home the next day or not because of this."SPS offered another trial, with monthly payments at an even lower $456. Rinehart started the payments in April but worried it was a delaying tactic and she'd be denied again. Meanwhile, she received notices from SPS saying that to keep her house she had to repay the thousands of dollars that hadn't been paid during the trials."It really scared me," she said. And angered her. If she had the money, she wouldn't have asked for help."It was a slap in the face."In May, McClatchy Newspapers began contacting SPS, asking about Rinehart's case. After several weeks of messages and e-mails, the company said it would send Rinehart a response.In that letter, SPS said Rinehart didn't qualify for HAMP because she failed to send documents by a certain date. Rinehart said that's not true, that she has copies and certified mail receipts proving she sent everything requested, on time.The May 27 letter, which Rinehart provided the newspaper, confirmed Rinehart made the first two trial payments. The letter said once she made the third payment, due last week, "SPS will complete the modification process and you will receive the final modification agreement which requires your signature."Once this is received, SPS will permanently modify the terms of your note and bring your account current."Her June payment cleared her bank shortly after the 1st of the month. On June 10, she arrived home to find the promised paperwork. She believes that happened only because she went public.Last week, she was reviewing the papers and reflecting on what sustained her."I relied on my faith."(c) 2010, The Charlotte Observer (Charlotte, N.C.).Distributed by McClatchy-Tribune Information Services.

NEW IHFA Loan Program

Idaho Housing and Finance Association launches new lending option
by Jennifer Gonzalez
Published: June 7th, 2010
There’s a new mortgage option for first time homebuyers in Idaho. The Idaho Housing and Finance Association (IHFA) has just launched the Affordable Advantage Loan, through its IdaMortgage program.
According to IHFA’s President and Executive Director Gerald Hunter, “It offers another affordable lending option for low to moderate income homebuyers across the state.”
Some of the features of the Affordable Advantage Loan include a low cost, 30-year fixed interest rate, as little as $1,000 needed from the borrower to close, and no mortgage insurance required.
“This IHFA exclusive financing option is a great tool for homebuyers as the housing market in Idaho continues its recovery,” Hunter said.
Interested homeowners are able to check their eligibility status for an IdaMortgage loan by checking out www.IdaMortgage.com. If they qualify, they can be referred to a local lender who will assist with the loan process.

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Fannie Shortens Wait for Some Distressed Borrowers to Get New Loans

Friday, April 16th, 2010, 3:46 pm
Fannie Mae (FNM: 1.21 -2.42%) announced it is reducing the wait time for some borrowers between when they complete a short sale or deed-in-lieu of foreclosure transaction and when they can obtain a new mortgage.
Previously, a borrower was required to wait four years before getting a new mortgage, or two years if their home sold in a short sale. Under the new guidelines, a borrower that previously completed a deed-in-lieu of foreclosure transaction can get a new mortgage in two years, provided the borrower has a 20% down payment.
If the borrower has a 10% down payment, the wait period is still four years. In some extenuating circumstances, the wait period can be reduced to two years with a 10% down payment for deed-in-lieu of foreclosure, but not for short sales.
Fannie Mae’s Desktop Underwriter (DU) origination software will be updated in June to reflect the new deed-in-lieu of foreclosure policy, but not short sales, as the software cannot at this time determine whether a borrower participated in a short sale.
Originators are required to manually underwrite mortgages after the waiting period if the borrower previously completed a short sale. This new policy is effective for manually underwritten mortgage loans with application dates beginning July 1, 2010.

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OUTDOOR DINING ROOM

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Hidden Trouble for Homebuyers

Learn how to spot trouble before you buy a home House hunting is exciting. It's easy to get caught up comparing floor plans and front yards—envisioning a new life in a new place. But house hunting is serious, too. Try these tips to spot telltale signs of trouble. Outside Before a house goes on the market, most sellers will catch up on home maintenance projects like cutting the lawn and painting the front door and trim, so you'll need to look past the curb appeal. Problems in any of these areas can cost thousands of dollars to repair or replace:
Check the roof for curled or missing shingles or multiple layers of roofing.
Are the gutters clean? Clogged gutters can cause leaks inside.
Inspect the siding or masonry for signs of wear.
Take a deep breath. Sewage or gas smells should set off your alarms.
Exterior features such as porches, driveways or grading that slope toward the home almost always mean water in the basement or beneath the home. This can lead to structural problems, mold and insect infestation. Inside Water damage is devastating to any structure. One freshly painted wall or an unusual rug placement or carpet patch could be an attempt to cover up water stains. Be sure to look for these signs of water problems, too:
Musty odors can mean a mold problem. At the very least, moisture is sneaking in where it shouldn't.
Foggy windows are a sign that the seals are allowing water vapor to seep in. Obviously, you want your home to be structurally sound as well. Watch for these clues:
Poor water pressure can be an indication of plumbing issues.
Are the sellers using lots of extension cords? The home's electrical system is probably outdated.
Doors that are hard to close, swing open by themselves, or don't open all the way could just be installed incorrectly. This could also be an indication of serious structural problems.
Large cracks in the walls or foundation are dead giveaways for settling issues. Everywhere Else
Anytime you aren't allowed to see a certain part of the house—be concerned. Any room or area you aren't allowed to see could be hiding some flaw.
Check out the neighborhood as well. If businesses are boarded up or there are lots of empty houses, think twice about moving in where so many seem to be moving out.
If you're getting a mortgage to buy your home, be wary of your lender. If you're not paying cash for your home, you should get a mortgage for 15 years or less, with 20% down and a payment that is no more than 25% of your take-home pay. Lots of lenders will say you can afford more, but stay conservative. Then your home will be a blessing rather than a curse. If you're ready to start house hunting, don't go it alone. Call Beccie @ 850-3062 (ariticle is from Dave Ramsey's web site)

Tax Write-offs You Should Know About

The votes are in! The Equifax Facebook fans voted on what newsletter topic they wanted, and the winner was tax changes that could impact your 2009 return. So whether you're at home, on the job, in the classroom, on the road or making efforts to be more charitable or environmentally friendly, you could be eligible for tax write-offs you didn't even know about!
While April 14th is still a couple of months away, nothing takes the stress out of tax season like preparing in advance. Plus, by getting a head start, you can take the time to discover what tax credits, write-offs, and changes apply to your 2009 return — potentially helping you save! Discover new tax credits — as well as changes to existing ones — in this helpful article.
At Home:Incredibly popular in 2009, the first-time homebuyer tax credit allowed new, first-time homeowners who closed on their homes in 2009 to receive a credit of up to $8,000 on their 2009 return. To be eligible, you cannot have owned a residence in the United States in the previous three years. Plus, here's some great news for those of you still looking at homes: this credit has been extended into 2010. If you commit to purchase a home before April 30, 2010 and close before June 30, 2010, you can still receive this tax credit and elect to write it off on your 2009 or 2010 return.
A similar tax break for existing homeowners was established offering credits of up to $6,500 on 2009 returns for purchasing a replacement home in the same year. This was extended through the first half of 2010, so if you close on a replacement home by June 30, 2010, you can write off up to $6,500 on your 2009 or 2010 tax return. Income limits were also expanded for both of these credits; that means homebuyers who file as single or head-of-household can claim the credit in full if their modified Adjusted Gross Income (AGI) is less than $125,000 ($225,000 for those filing jointly).
On The Job:If your job offers a 401(k) plan, the maximum employee contribution level has increased in 2009 from $15,500 to $16,500. This also applies to similar retirement plans such as 403(b)s, the federal Thrift Savings Plan and more. If you are over 50, you can also contribute an additional $5,500 for a maximum of $22,000. These changes are slated to remain in place for your 2010 return as well.
For 2009, Congress has initiated a Payroll Tax Credit that credits workers 6.2% of their earned income with a cap of $400 for single filers and $800 for those filing jointly. Rather than receiving a rebate check, those eligible for the credit will receive it in advance through lower income tax withholding in their paychecks. This payroll tax credit will continue through 2010's return.
In The Classroom:Whether you or a loved one is attending college or is involved in educating, this year brings great write-offs in terms of the classroom. In terms of college tuition, the Hope credit is being replaced for 2009 by a new credit of up to $2,500 per student for each year of four academic years. It also covers the cost of textbooks. This credit begins to phase out for single filers with AGI over $80,000 and joint filers with AGI over $160,000. Similarly, 2009 brought the ability to tap 529 College Savings Plans tax-free in order to pay for a computer or Internet access. Be sure to keep this in mind in next year's return, as this credit will also be effective for your 2010 return.
If you are an educator, you should be aware of the Educators Deduction available only in 2009. For any classroom supplies purchased with their own funds, educators may deduct up to $250.
On The Road:If you purchased a new vehicle in 2009, you can add the sales tax you paid to your standard deduction — even if you don't claim sales taxes as itemized deductions. Eligible purchases include cars, motor homes, light trucks and motorcycles purchased after February 16, 2009 and before January 1, 2010. Only sales tax paid on the first $49,500 of the cost qualifies, and this credit phases out between $120,000-$130,000 AGI for single filers and $250,000-$260,000 for couples.
Going Green:Tax credits certainly favor efforts to make your home more energy efficient. You can receive a credit of up to 30% of the amount spent to make energy-efficient improvements to your home. There is a cap of $1,500 in a two-year period, and applies to qualified skylights, windows, outside doors, biomass fuel stoves, high-efficiency furnaces, water heaters and central air conditioners.
You can also receive a credit on up to 30% of the cost of installing energy-efficient property improvements such as solar water heating equipment, solar electric equipment, geothermal heat pumps or small wind turbines on your primary or secondary residence. This credit is unlimited but fuel cell property cannot extend beyond $500 per half-kilowatt capacity.
When You Give:2009 marks the last year that IRA owners aged 70½ and older can donate up to $100,000 of their IRAs to charity without having to report the withdrawal as income and subsequently deducting the donation as a charitable contribution. These deductions are not affected or limited by the Adjusted Gross Income cap on charitable contributions or the itemized deduction phaseout. When donating in this way, the amount counts toward the owner's required minimum distribution.
We hope our quick overview of important tax breaks and changes to your 2009 return was helpful, but remember that it's only a brief guide; please consult a tax or financial advisor to see if you qualify for these various tax credits.