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Homeowner Law info

HenroidHenroid Mexican kicked from Immigration ThreadCentrism is Racism :3Registered User regular
edited May 2009 in Help / Advice Forum
My mom called me a bit ago asking for help looking up information for the law passed (or put into effect) in March regarding homeowners. She unfortunately didn't leave me any useful info like the name of it or details aside from that. I'm having shit for luck with my Google searches. Can someone toss me a bone?

Note: She didn't tell me WHAT info she wanted from it either. She just wants, like, the whole damn thing.

Henroid on


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    ThanatosThanatos Registered User regular
    edited May 2009
    Federal or state? What country? What state? What was it regarding (like, what was it supposed to do to homeowners)?

    Thanatos on
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    HenroidHenroid Mexican kicked from Immigration Thread Centrism is Racism :3Registered User regular
    edited May 2009
    Spoke to her again, and she wanted to know about the Loan Modification thing. She said she wants to know what the banks are supposed to do under this plan for homeowners. I found this page and I suppose it's got the information she wanted, but I told her I'd keep trying to find more just in case.

    I was in a hurry when I wrote the OP but here's the background: My mom is getting her mortgage loan stuff (I'm stupid about this, give me a break) modified under Obama's plan. We're currently waiting on some paperwork to arrive via UPS and it didn't arrive this Friday like it was supposed to and she's getting antsy and wants to know about the details of what the bank is supposed to do for her so that she doesn't get screwed (I guess).

    Edit - Is there anything in that page I linked that's wrong or is missing other critical info?

    Henroid on
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    DjeetDjeet Registered User regular
    edited May 2009
    Check out the government site that was specifically setup for this program. Can't say if there are any issues with the site you linked, but there have been opportunists that have setup shop to take advantage of those interested in this program.

    Djeet on
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    The Crowing OneThe Crowing One Registered User regular
    edited May 2009
    In short, the program asks loan servicers to modify loans based on a 31% front-end ratio. This means that the modification asks to achieve a total payment (Principle, Interest and escrowed taxes and insurance) that is equal to 31% of a borrower's gross income.

    They achieve this by taking three steps:

    1) First they lower the interest rate as low as 2%.
    2) Second they would extend the term of the loan to as many as 40 years.
    3) Third they look to "forbear" a portion of the principle balance on the loan to equal as low as the current market value. This goes into a "balloon" payment with very low interest due and payable in full when the loan itself becomes due and payable (selling the home, refinancing, etc.)

    These steps must be done in order, so for example: If a loan cannot reach 31% of the front-end by reducing the interest rate to 2%, they would extend the term. Therefore, they will not "forbear" principle until both the interest rate has been reduced to 2% and the term has been extended to 40 years and the front-end is still above 31%. If the 31% Front-end can be achieved by lowering the interest rate to higher than 2%, it will be accepted there. The servicers are looking to modify the loan to a 31% front-end, no more no less.

    This interest rate becomes fixed for five years, at which point it adjusts up by 1% a year until it reaches the current "conforming rate at the time of the modification." This rate is around 5-5.5% at this time.

    There are a lot of restrictions, and no servicer is forced to accept the plan. A good majority of major servicers are accepting the plan, though. Any restrictions on modifying the loan that come from the loan's investor (not servicer) still trump the Home Affordable Modification plan.

    So, what loan servicer does your mother have?

    I work for the national non-profit which deals specifically with modifications. If you want information please PM me and I'll be happy to point you toward our resources for entering into the program.

    The Crowing One on
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