Florida Home Buyers and Investors Blog

August 17th, 2009 8:52 AM
Below is information provided by bank insiders who handle loan modifications.
At the bottom if this BLOG is VERY HOT information about a new program we are negotiating.
 
The government programs say people should be able to afford a payment that is 31% of their gross monthly income.
If Gross Monthly Household income is $10,000.  Payment will be approximately $3100.
We then see if we can make their mortgage fit that payment.
1st step is to capitalize any delinquency.
Then lower the rate by 1/8 increments until we hit the $3100 payment or 2%
If we can't get the payment by rate only, then extend the term 1 month at a time until we hit the payment or 480 months.
If we can't get the payment at 480 months and 2% then forbear principal down to a minimum of the current value of the house.
If we can't get the payment by doing those steps, then the borrower need to look at other options in their life.
 
Here is how the 2% Interest Rate is handled:
 
It is a fixed STEP rate.  They get 2% for the first 5 years.  Then the rate steps up 1% a year until it hits the current market rate.
For example:
            60 months at 2%
            12 months at 3%
            12 months at 4%
            12 months at 5%
            384 months at 5.25%
 
The principal that is deferred sits in a ballon payment.  There is no interest or principal applied to this amount.  When the customer refinances, sells the home, or pays down the 40 year term of the loan, the deferred principal becomes due.
 
Final thought:
On the HAM (Homeowner Affordable Modification) with Fredie Mac and Fannie Mae, if the customer is delinquent, we can look at the modification.  If the customer is not delinquent they have to show imminent danger of default.  Imminent danger of default in a nut shell is that they don't have the ability to meet their monthly obligations and they have less than 3 months Principal and Interest reserves in liquid, non-retirement assets.
 
Money taken out of savings would not count as gross income, but could come into play with the imminent danger of default calculations.  Generally they aren't going to make them drain retirement plans.  But other liquid assets will have to be used. 
 
You can read up on the Home Affordable Modification guidelines at Fannie Mae's Website, Freddie Mac's website, or the Treasury's website.  For the traditional programs, you might have a hard time finding guidelines.  They tend to keep those in house so people don't play the system.
 
I hope you found some valuable information, I know I have.
 
Stay tuned for more insider information.  Also, we are currently negotiating with a Bank who purchases Mortgage NOTES.  For our clients who qualify, the bank will purchase your NOTE from the exiting investor at a minimum 30% Discount, and pass the savings along to you.  Basically you will have a new Loan at 30% Less than your current loan, with 0% interest for 15 years.  We have it! and you will too, very soon.
 
Posted by Craig Fialkowski on August 17th, 2009 8:52 AMPost a Comment (0)

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