The FHA-Home Affordable Modification Program (FHA-HAMP)

The FHA version of the Home Affordable Modification Program or HAMP, allows homeowners to modify their FHA-insured mortgages to reduce monthly mortgage payments and avoid foreclosure.

FHA-HAMP uses two tools to make the house payment affordable. One of these is a "partial claim" and the other is a modifications of the loan terms.

A partial claim is a claim the mortgage company files against the FHA mortgage insurance.  The way the public thinks about it and the way it is often expressed is that it is said the missed payments are moved to the end of the note. More than just the missed payments may be included in the FHA-HAMP. Under a FHA-HAMP, up to 30 percent of the unpaid principal balance as of the date of default may be included in the partial claim.

The modification of the loan terms involved two things. One, the loan is amortized to 30 years; that is, it is stretched back out to a thirty year note. The other thing is that the interest rate is reset to 200 basis points above the monthly average yield on United States Treasury Securities, adjusted to a constant maturity of 10 years. That is .2% is added to the yield of the "ten-year T bill."  This is a constantly changing number. At the time I am writing this it is 2.1807%. Add .200 to that and the interest rate should be 2.387%.

The goal of the FHA-HAMP is to get the loan affordable.  Affordable is considered 31% of the borrowers gross monthly income.

I am now working with a client who has a loan with an unpaid principal balance of $133,400.  If they got the maximum reduction under a FHA-HAMP, their payments would be reduced to $787.89 from a current payment of $1118.24. In order to be eligible they would need an income of $2542 a month.

There are various variables that may determine whether of not one gets a modification.  As a certified and experienced housing counselor with a HUD-approved agency I can increase your chance of getting approved. For more information, call me: Rod Williams, 615-850-3453.

Avoid Foreclosure Rescue Scams

To get help from a legitimate housing counselor who works for a HUD-approved Housing Counseling agency, call Rod Williams at 615-850-3453.

Bogus foreclosure rescue relief offers false HOPE

by Lisa Lake, Consumer Education Specialist, reposted from the FTC - What happens when you pay someone who says they’re going to help you, and they don’t? Well, in the case of HOPE Services, the FTC came calling.

Here’s the story: According to the FTC, a group of companies and individuals doing business as HOPE Services told consumers facing foreclosure they could get help from legitimate, government-backed programs, like Making Home Affordable —  but only after they made three monthly trial payments into a so-called mortgage lender’s trust account. Then, says the FTC, HOPE Services pocketed that money, while strongly discouraging homeowners from talking to a lawyer or to their mortgage lender. All this, even as homeowners faced foreclosure notices and hearings.
In the end, HOPE Services provided no help for these homeowners. Financially-strapped people lost almost $2 million. That forced some into bankruptcy. Some people, ultimately, lost their homes.
Look for these signs of this kind of scam:

• “Guaranteed” fixes. No one can guarantee they can stop a foreclosure.
• Fees up-front. Don’t pay in advance anyone who promises to stop a foreclosure or guarantees you a new mortgage.
• Stop paying, stop talking. Avoid anyone who tells you not to pay your lender, or not to talk with an attorney or your lender.
• Pressure to sign. Is someone rushing you, or asking you to sign over the title or deed of your house to someone other than your lender? Those are red flags.

Read more, if you’re worried about paying your mortgage. And if you think you’ve been the victim of a mortgage or foreclosure rescue scam, file a complaint with the FTC.

To get help from a legitimate housing counselor who works for a HUD-approved Housing Counseling agency, call Rod Williams at 615-850-3453.

Watch out for Rental Scams

Aside from fraud on the foreclosure side of the business, scammers are now targeting an already vulnerable segment - low income borrowers.

Scammers are creating websites that look official and are asking for (and getting) social security numbers and rent deposits and promising consumers they'll get on a Section 8 waiting list. Legitimate housing authorities do not ask for this information. 

For guidance in finding affordable rental call me: Rod Williams 615-850-3453. I am a certified housing counselor working for a HUD-approved housing counseling agency.

What is Cash for Keys?

If foreclosure is imminent, and you have worked with your lender to find a solution to your mortgage default that reinstated the mortgage and were unable to find such a solution that allowed you to keep your home and are considering a short sale or a deed in lieu of foreclosure, some lenders are willing to offer “Cash for Keys,” whereby the lender will actually pay you to vacate the home in a timely fashion. The money you receive in exchange is intended to pay for your relocation costs.

The reason mortgage companies are willing to do this that it is their best interest to forego the cost and time involved in carrying out a foreclosure. When the mortgage company agrees to give you cash to move out on a mutually agreed upon date, you agree to maintain the property and leave it in a “broom sweep clean” condition. Often the cash is paid upon or after exiting the property.

Mortgage companies do not have to do this and probably want even tell you about it unless you ask. If you trash the place, leave food to rot in the refrigerator or steal the appliances or are not out on the agreed date, you won't get the money. 

If you are eligible for the government Home Affordable Modification Program (HAMP), but are denied a loan modification or can not avoid losing the home, then you may qualify for the Home Affordable Foreclosure Alternatives (HAFA) program. HAFA options are the short sale, and the deed in lieu.  Short sale transactions are complex, involving coordination and cooperation among a number of various parties. Fortunately, the HAFA program simplifies and streamlines the process. If you do not cooperate in making the short sale happen, you won't get cash for keys. When you close, HAFA may provide $10,000 in relocation assistance but typically provides between $1,000 and $3,000.

FHA cash for keys may provide up to $3,000.  There is a limit on how much other cash one may have. If one has over $5,000 in cash at the time of the move out, the amount of money you get from cash for keys is reduced.

Are you eligible for a HAMP Loan Modification?

HAMP stands for “Home Affordable Modification Program.” Banks who received TARP funding from the government during the bailout are required to review homeowners facing foreclosure for a loan modification through the HAMP program. Also, Homeowners with Fannie Mae or Freddie Mac backed loans are eligible for the HAMP program.

A HAMP modification can:

1. Reduce your monthly mortgage payment to 31% of your gross monthly income.
2. Reduce your interest rate to as low as 2% for the first 5 years.
3. Extend your amortization period to stretch out loan payments.
4. Give you $5,000 toward your principle loan balance if you make all the new monthly payments on time for the first five years.

In order to receive a permanent loan modification under HAMP, you will have to make payments during a three-month trial period plan.

To be eligible for a HAMP:

• You are ineligible to refinance
• You are facing a long-term hardship
• You are behind on your mortgage payments or likely to fall behind soon
• Your loan was originated on or before January 1, 2009 (i.e., the date you closed your loan)
• Your loan is owned by Fannie Mae or Freddie Mac –or is serviced by a participating mortgage company.    You can click the links to look up your loan and see if you are eligible.

There is also a FHA version of HAMP.  FHA, FHA, VA and USDA all offer mortgage modification programs for struggling homeowners designed to lower monthly mortgage payment to no more than 31 percent of the homeowner's verified monthly gross (pre-tax) income — making monthly mortgage payments much more affordable. If you have a loan that is insured or guaranteed by the Federal Housing Administration (FHA), you may be eligible for a program offered through that government agency.

For more information on a HAMP modification, call Rod Williams at 615-850-3453.  Rod Williams is the Senior Housing Counselor with the Woodbine Community Organization, a HUD-approved Housing Counseling agency.