Click below for free info on your options for avoiding forclosure fast:

Congress Ready to Tap $350 Billion in Aid, Frank Says
By Alison Vekshin

Dec. 19 (Bloomberg) — U.S. House Financial Services Committee Chairman Barney Frank said Congress will release $350 billion from the bank-rescue package after lawmakers, President- elect Barack Obama and Treasury Secretary Henry Paulson agree to provide foreclosure relief and aid to automakers.

Frank, a Massachusetts Democrat, said he plans to introduce legislation with Senate Banking Committee Chairman Christopher Dodd to release remaining funds in the $700 billion package next month. The bill will include homeowner help and short-term loans for General Motors Corp. and Chrysler LLC, Frank said in a telephone interview today.

“We should have an agreement among Obama, Paulson and the congressional leadership to release the $350 billion with conditions on how it’s spent,” Frank said. “We need the second $350 billion, but it can only be done if there’s an agreement as to how to do it.”

Frank and congressional leaders have prodded the Treasury to use the $350 billion Congress gave the agency in the first phase of the Troubled Asset Relief Program to reduce foreclosures and hold participating banks accountable for stepping up lending to consumers. Frank said his measure will require recipients of U.S. aid to report on their new lending.

Paulson today urged Congress to release the second half of the rescue funds after the government exhausted $350 billion in less than three months.

“Congress will need to release the remainder of the TARP to support financial market stability,” Paulson said in a statement released in Washington. “I will discuss that process with the congressional leadership and the president-elect’s transition team in the near future.”

Foreclosure Prevention

Frank said the legislation will include Federal Deposit Insurance Corp. Chairman Sheila Bair’s foreclosure-prevention plan, which provides a U.S. guarantee for troubled mortgages to spur loan modifications.

Paulson has resisted adopting the proposal, while Bair has said the law enacted in October gives the Treasury authority to fund a plan she said might prevent 1.5 million foreclosures through next year at a cost of $24 billion.

Frank also plans to revise the Hope for Homeowners foreclosure-relief program Congress passed in July. The program, run by the Federal Housing Administration, is aimed at helping about 400,000 homeowners by insuring as much as $300 billion in refinanced loans after mortgage servicers forgive part of the loan balance. Few lenders have signed up because banks must cut a large portion of the loan and pay high fees.

Reducing Re-Defaults

The program is “very important because that has principal reduction, which is important in reducing re-defaults,” Frank said.

Frank said he wants to include a proposal Paulson is considering that would use Fannie Mae and Freddie Mac, the federally chartered mortgage financers the U.S. seized in September, to reduce 30-year, fixed home-loan rates to about 4.5 percent from an average of about 5.54 percent.

He also plans to adapt a plan from Harvard University economist Martin Feldstein to let the government substitute a new loan with a lower interest rate for a portion of an existing troubled mortgage.

Frank says he will propose using TARP funds to reduce the upfront and annual fees required under the foreclosure program, and raise the loan-to-value ratio on a participating mortgage, which would reduce the loss taken by lenders.

Frank said he’s ready to act on the legislation during the final month of the Bush administration, without waiting until Obama’s Jan. 20 inauguration.

“Why wait three weeks? Let’s do it,” Frank said. “We’re in a crisis now. How many people’s homes will be foreclosed?”

Lawmakers will have a chance to vote for a bill to reject Paulson’s request for the funds, “but I think they should also have a chance to vote for a bill that allows it go forward with these conditions,” Frank said.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

Click here to find out how to drastically reduce your monthly payments.

On Monday December 16^th, House Speaker Nancy Pelosi said that she is directing House Financial Services Committee chairman Barney Frank, D-Mass to write legislation that would require the Treasury to move ahead with helping homeowners avoid foreclosure as a precursor to access to the second $350 billion in government bank bailouts fund.   At a news conference Pelosi said. “It was very clearly spelled out in the initial legislation that funds would be used for mortgage foreclosure forbearance,”

Spokesman for the House Financial Services Committee, Steve Adamske , said that Barney Frank has begun work on the bill Monday and expects it to be ready during the first week of the New Year.  There is a possibility that legislation could be expedited it the Treasury seek out the funds at an earlier timer. Adamske mentioned that that Frank is considering a variety of foreclosure mitigation conditions on the funds, which would include a provision to make a portion of the funds available for modifying mortgages which could help millions of American homeowners avoid foreclosure.

Adamske said that the bill that Frank is working on may also include provisions to expand the FHA Hope for Homeowners Program that which will refinance mortgages for distressed borrowers that can afford a new loan insured by the FHA.

The measure may also encourage the Treasury to allocate the funds to buy mortgage backed securities and individual mortgages as lawmakers expected the Treasury Dept to do shortly after Oct. 3 2008, when the Bush administration and Congress approved a $700 billion bank bailout fund. Instead, as the markets continued to plummet, Treasury Secretary Henry Paulson decided to use a provision in the new law to buy large minority stakes in financial institutions in an effort of rapidly reinstating confidence in the banks.

Federal Deposit Insurance Corp. chairwoman Sheila Bair is seeking $24.4 billion of the funds for a mortgage modification program she believes could help avoid 1.5 million foreclosures throughout the US.

Click here to avoid foreclosure now.

The FHA has come up with a new loan referred to as the hope for homeowners loan program. Included in the Housing and Economic Recovery Act of 2008, the concept is somewhat simple and provides relief for strapped homeowners who have come in to trouble paying their mortgage. While there are many details that are actually difficult to understand, the basics of the hope for homeowners program are somewhat easy to understand and are aimed at helping homeowners who are in desperate straits and wish to keep their home.

Determining eligibility for the hope for homeowners program from FHA is somewhat straightforward. The borrower can be current or delinquent in order to be financed with the FHA hope for homeowners program if they have made a minimum of six full mortgage payments on the mortgage that they currently possess that is in first lien position and that they have not intentionally defaulted on any type of mortgage or other debt. By referring to the phrase intentionally defaulted, this means that the borrower was currently capable of paying their mortgage without financial hardship, but simply did not do so. The borrower must actually live in the property and can’t have any type of other ownership in other properties, such as investment properties or a second home or even a non-occupant co-borrower on some other type of property. Some of these details are difficult to understand, but they basically boil down to the fact that the borrower must be a regular, run-of-the-mill homeowner, and not any type of investor.

The total monthly payment for the debt to income ratio for the borrower must be significantly higher than 31% as of March 1, 2008. This total payment includes subordinate leans, special assessments, ground rent, association fees, insurance, taxes, interest and of course the principal. While this seems like the standard amount of boilerplate, it is somewhat simple to understand if you add up all of your fees and insurance payments into one lump sum, as most mortgage payments are already arranged. The mortgage being financed for must have been in place or originated on or before January 1, 2008 in order for the borrower to be eligible.

In addition to all of these requirements, the holder of the mortgage must release all outstanding mortgage liens, agree to accept the proceeds of the new mortgage as full payment and waive all prepayment penalties and late fees. Considering the chances of saving the mortgage, it is clear that many note holders would be happy to agree to these requirements. There are several somewhat arcane requirements that provide for HUD to share in the profits if you sell the property in the future or to share the equity that is accumulated over time. Some of this is simply boilerplate that is very difficult to understand, but basically boils down to the fact that the housing and urban development department wants to share in the wealth.

The help for homeowners program can only be used on FHA 30 year fixed loans and the upfront mortgage insurance premium is 3% regardless of the loan-to-value ratio on the home. In addition the mortgage insurance is 1.5%, somewhat higher than the normal rate of .5%.

Have all of your questions answered in plain English by a friendly H4H Loan Specialist!

The H4H Loan program is offered for a limited time so be sure to call today and take advantage of the incredible mortgage savings that may be available to you if you qualify.

The HOPE for Homeowners Act of 2008 (also known as H4H) was recently created by Congress to help Americans that are at risk of defaulting on their mortgages and / or facing foreclosure.  This H4H loan program is an additional mortgage option designed to keep borrowers in their homes by providing the borrower a way to refinance into a more affordable, sustainable loan.

It is estimated that up to 400,000 US homeowners may avoid foreclosure through the H4H loan program over the next three years. If you, like many homeowners, are currently having trouble making your mortgage payments, HOPE for Homeowners may be the answer you have been searching for allowing you to refinance to a new 30 year fixed rate loan with lower payments than you are currently struggling with.

How the H4H Loan Program Works

There are 4 ways that a troubled homeowner can look into participating in the HOPE for Homeowners Loan Program:

1.       Homeowners may contact their current lender or select a new lender to find out if they are eligible and how they can qualify for this program.
 

2.       Loan Servicers working with distressed homeowners may determine that the best solution for avoiding foreclosure is a Hope For Homeowners refinance loan.
 

3.       Originating lenders seeking options to refinance potential customers out from a higher cost loan and / or willing to work with loan servicers to help the troubled homeowner.
 

4.       Loan Counselors who are working with distressed homeowners and their lenders to arrive at a mutually agreeable resolution to stop or avoid foreclosure.
 

The primary method that homeowners will most likely initially participate in this program is through communications with the servicing lender on their existing mortgage.  It is also anticipated that FHA approved lenders who have an underwriting component to their mortgage operations will partner with those that do not have one to provide such services.

The Process:

Step One:  Cost / Benefit Analysis
Lender considerations: 

Given their financial responsibilities and fiduciary obligations, lenders will evaluate their portfolio and carry out cost benefit analysis to figure out the feasibility of offering the H4H program to homeowners that need it. 

Affordability vs. value: 

Lenders will take losses on the spread between the existing amount owed and the new H4H loan, which is re-set at 90% of the appraised value of the home.  The lender may also provide the homeowner with a more affordable monthly mortgage payment via loan modification instead of taking the loss due to declining property value.

Borrower qualification: 

A Lender will decide if the Hope for Homeowners program is a feasible and applicable option for loss mitigation will evaluate the homeowner’s probability of qualifying for the H4H program by analyzing the following:

·         The current / existing mortgage was originated on or before January 1st, 2008.

·         The existing mortgage payments as of March 1, 2008 are greater than 31% of the homeowner’s gross monthly income.

·         The borrower did not intentionally default.

·         The borrower does own other residential real estate.

·         The borrower has not been convicted of Federal or State fraud in the last 10 years.

·         The borrower did not falsify any information to obtain the original mortgage that is being refinanced to the Hope For Homeowners mortgage.

Homeowner / Borrower considerations:

The lender will explain and disclose all of the benefits of the program to the homeowner including:

1. The ability to retain ownership of the home.
2. The lower, more affordable mortgage payments based on the current appraised value of the home.
3. The 10% equity that is a result of resetting the loan balance at 90% of current appraised value.

The lender will also explain and disclose the costs of the program to the homeowner including:

1. The 3% up-front mortgage insurance premium as well as the 1.5% annual premium on the loan.
2. Appreciation and Equity sharing with the Federal Government (click here for examples)
3. The fact that new junior liens against the property (unless they are directly related to property maintenance) are prohibited.

Step Two:  Borrower and Lien-Holder Negotiation

If the lender that is refinancing the mortgage doesn’t hold the senior mortgage lien, they must obtain an agreement from the existing lien holder to relinquish any prepayment penalty and / or default fees on the current loan and take the loan proceeds from the new Hope for Homeowners loan as payment in full.  The loan amount, which includes the 3 percent UFMIP, for the new Hope for Homeowners loan can not exceed 90% of the property’s current value as dictated by a recent appraisal. The lender will also have any existing subordinate mortgage lien holders to remove all subordinate liens on the homeowner’s property.  To persuade subordinate lien holders to take part in such negotiation processes and release existing liens, the FHA has the authority to share the future appreciation entitlement of the home with them.

Step Three:  The H4H Mortgage Origination Process

v       The lender will use the guidelines established under the terms of the H4H unique statutory requirements to establish qualification of the homeowner to ensure the homeowner has the capacity for making the new payment on the Hope For Homeowners mortgage on schedule and in a timely manner.

v       As dictated by the instructions provided by FHA, when the loan is underwritten, the lender shall calculate the future appreciation interest amount for any subordinate lien holder that may exist.

v       At the time of settlement, any subordinate lien holders shall get a certificate that proves that their interest in the property is an obligation backed by HUD and with payment being a condition of the appreciation value of HUD’s share of the property.

Following the loan’s funding, in addition to the note and the typical security instrument for the first mortgage, the lender shall record a SEM (shared equity note and mortgage) and a (SAM) shared appreciation note and mortgage.  The servicing on these mortgages will be through the Federal Hosing Administration.  The lender will also attempt to obtain insurance on the new mortgage from the FHA, certifying that the processes of  origination, underwriting and closing were carried out according to Hope For Homeowners program guidelines.

Step Four:  Fulfilling Hope For Homeowners Mortgage Obligations

Sale of H4H Loan Property

When the property sells, the homeowner is to use the proceeds from the sale to pay off the Hope 4 Homeowners mortgage and also to pay off the shared appreciation and shared equity mortgages.

The Federal Housing Administration will give instructions to the settlement agents concerning subordinate lien holders that are entitled to a portion of appreciation on the home.  The highest priority lien holder will be paid up to the full dollar amount of its interest.  This interest is not to exceed the amount of available appreciation.  This process continues in order of priority until all of the prior lien holders are paid or the amount of the available appreciation is depleted.  Finally, all of the remaining appreciation is remitted to the  Federal Housing Administration.

In a situation where the homeowner fails to make the initial payment on their new Hope For Homeowners mortgage, the Hope for Homeowners statute prevents the FHA from paying claim benefits to anyone holding the mortgage.

At the time of writing this article, it has been announced that the Hope for Homeowners Loan Program is effective from October 1, 2008 to September 30, 2011

End your mortgage worries now - click for free info.