Freddie Mac Servicers to refer borrowers to a HUD-approved counseling agency for early delinquency counseling

Today’s Freddie Mac Guide Bulletin 2016-9 announces the following update, among others:

The option for Freddie Mac Servicers to refer borrowers to a HUD-approved counseling agency for early delinquency counseling for Home Possible^® mortgages.

Currently, Freddie Mac Servicers may use the services of a nonprofit third-party homeownership counseling agency to conduct counseling when offering early delinquency counseling to borrowers with Home Possible^® mortgages, including Home Possible Advantage^® mortgages. Additionally, the Freddie Mac Servicer may conduct the counseling provided it has policies and procedures in place to offer the same kind of comprehensive counseling, budgeting and advising as a counseling agency.

Effective October 1, 2016, we are providing Freddie Mac Servicers the additional option to use the services of a HUD-approved nonprofit national counseling agency specified by Freddie Mac, without charge to the Servicer.

Please read Guide Bulletin 2016-9 for more details and for other servicing updates.

For More Information

• Read today’s Guide Bulletin 2016-9.
• For more information about the network of national counseling agencies, visit My Home by Freddie Mac^®.  

You don't need to read the bulletin. If you loan is Freddie Mac or not I can provide you with delinquency and default counseling at no charge. I am a certified housing counselor with a non-profit HUD-approved housing counseling agency.  Call me at 615-850-3453. This service is only provided in person at our Nashville office, however, you can call me for a referral and phone evaluation if you live outside the Nashville area. 

Making Home Affordable is winding down. Apply for assistance NOW!

Making Home Affordable (MHA) is winding down. The.transition period begins in September 2016 where servicers will no longer be required to follow specific HAMP (Home Affordable Modification Program) requirements. This means that mortgage companies will no longer have to appoint "relationship mangers" to serve clients, there will no longer be a process for "escalating" a file, and homeowners who are underwater or upside down (owe more on their home than what it is worth) can not expect principal reduction.

This does not mean that there will still not be help available for homeowners who are facing default on their mortgage but there will be fewer options and less federal government involvement in the process incentivizing mortgage companies for assisting homeowners.  If anyone is struggling with their mortgage payment and  would like to be evaluated to see if they may be eligible for a modification, they need to act now!

The MHA wind down starts in September 2016 and by December 2016 the program will be over except for cases that are already in process.

Call me for a phone screening. If I think you warrant a more detailed evaluation, I will schedule an appointment and if we determine you may be eligible I will help you make application. I am a certified housing counselor with the Woodbine Community Organization, a HUD-approved housing counseling agency. I am not going to be modest- I am one of the best mortgage default housing counselors in the nation. I know how to put a package together and know how an underwriter thinks in reviewing your application.  Also, I will not waste your time. If there is no hope for you getting modified, I won't waste your time by going through the motions. My services will not cost you anything. Time is running out, call today. Rod Williams 6125-850-3453 (Tennessee only please).

Is an FHA Streamline Refinance a way to save your home?

Sometimes people who may be facing financial difficulty think they want a modification of their existing loan when an easier option and one that may help them even more is available.  That option is an FHA Streamline Refinance.  A modification is changing the terms of an existing mortgage while a refinance is paying off an existing mortgage and getting a new mortgage.

What Is an FHA Streamline Refinance? 

The FHA Streamline Refinance program is a special refinance program for people who have an existing FHA loan. It is the simplest and easiest way to refinance. "Streamline" refers to an easier process and less paperwork. Unlike a traditional refinance an FHA Streamline Refinance allows a borrower to refinance without having to verify their income and assets. An appraisal may not be required depending on how much you have paid on the original loan balance.  Another advantage of this program is that it does not have a maximum loan-to-value ratio, meaning you could even be upside down on your loan (owe more than the value of the property) and still be able to take advantage of the program.

The basic requirements and benefits of an FHA streamline refinance are:

• The mortgage to be refinanced must already be FHA insured.
• You have to live in the house you are refinancing.
• The mortgage to be refinanced must be current (not delinquent).
• You can’t have made more than two, 30-day late payments on your FHA mortgage in the past 12 months.
• You have not completed an FHA Streamline Refinance in the past 6 months.
• The refinance results in a net tangible benefit to the borrower. That basically means it must lower your monthly payments. The streamline refinance must reduce your mortgage payment by at least 5 percent.
• FHA does not have a minimum credit score requirement. While FHA does not have a minimum score for a streamline refinance, your lender might. You probably are going to have to have a score of at least 620.
• You can refinance without paying any closing cost out of pocket. To do this however you may have to pay a slightly higher interest rate and have an appraisal. 
• FHA Streamline Refinance is only available to homeowners who made their home purchase before June 1, 2009.
• You will get to skip a house payment.  That is because house payments are paid in arrears, not in advance, so it works out that the borrower gets to skip a month in making a house payment.
• No maximum loan-to-value requirement, so even if you are "underwater" you may be able to refinance.   
• There is no debt-to-income ratio requirement. That means if you have other debt, that will not disqualify you from getting an FHA streamline refinance.  
•  Employment verification is not required with an FHA Streamline Refinance
•  Income verification is not required with an FHA Streamline Refinance
•  Credit score verification is not required with an FHA Streamline Refinance

Please be aware that while  FHA says you can basically refinance your underwater home even if you have bad credit and are unemployed, most lenders will require you to meet a certain level of standards that they impose.  These may vary from lender to lender.

Sometimes one may not be eligible for a streamline refinance but eligible for a modification; other times the reverse may be true. It depends. To sit down with a HUD-approved housing counselor and have your situation reviewed and consider all of the options, give me a call: Rod Williams, 615-850-3453. There is no cost for our mortgage default services.

Bill to extend foreclosure protections for military homeowners passes House

By Ripon Advance News Service  |  March 24, 2016 - U.S. Rep. Steve Stivers (R-OH) said that House passage of a bill on Monday that would provide foreclosure protection to military homeowners would help them adjust to civilian life. 

The House of Representatives approved the Foreclosure Relief and Extension for Servicemembers Act, S. 2393, which extends foreclosure protections for military homeowners from 90 days to one year through January 2018.

“When our service members come home they shouldn’t have to fear losing their homes as they transition back to civilian life,” Stivers said. “The foreclosure protection extension will give them the time they need to get back on their feet financially and begin their new lives post military service.”
U.S. Reps. Stephen Fincher (R-TN), Joe Heck (R-NV), and Stivers filed a House companion version of the Senate bill in December that was approved on Monday.

“Readjusting to civilian life from active duty can be difficult for many of our vets,” Fincher said. “It is tremendously important to allow our veterans more time to readjust to life at home and get on their feet financially. It’s the least we can do for those who willingly risk their lives every day to protect the freedoms we hold dear.”

Congress temporarily extended foreclosure protections for service members in 2012, and then again in 2014. The most recent extension is slated to expire on April 1.

For expect advice, call a well-trained, experienced HUD-approved housing Counselor, Rod Williams 615-850-3453.

Moving the missed payments to the end of the note

Often borrowers who have defaulted on their home mortgage and get a work-out from their lender on their FHA loan will say the lender "moved the missed payments to the end of the note."  In reality this is what is referred to as a "partial claim."  When a borrower defaults and the lender must foreclose on a borrower, the lender can recoup losses by filing a claim against the FHA mortgage insurance. A partial claim is similar except it prevents foreclosure and is a claim against the amount necessary to bring the loan current instead of a full claim for losses, thus it is a "partial claim."

When the borrower had had a hardship but now is able to pay the house payment but does not have funds to bring the loan current and does not have income to support a repayment plan to bring the loan current, then a partial claim may be an option.

Under a partial claim, HUD pays the missed payments and the borrower signs a note to HUD for the amount of the money HUD paid the lender.  The note is due when the first mortgage is paid off and it is a loan at a zero interest rate.

Lenders may use an FHA-HAMP stand-alone partial claim without an accompanying loan modification if certain criteria is met.  One of the criteria is that the current house payment is affordable to the borrower and that the the borrower’s current interest rate is at or below the market rate of interest.

For more information see mortgagee letter 2013-32.

 For expect advice, call a well-trained, experienced HUD-approved housing Counselor, Rod Williams 615-850-3453.

FHA-Home Affordable Modification Program guidelines

Below are some of the guidelines governing an FHA-HAMP modification. You don't have to really know all of this stuff, call me and I will tell you if you should be eligible and if you should be eligible, I will help you apply.  Rod Williams 615-850-3453.

Eligibility – Mortgagee	The Servicer of the modified FHA-HAMP mortgage must be FHA-Approved.
Eligibility – Mortgagors	The current mortgagor(s) on the existing FHA-insured single family mortgage must be identical to the mortgagor(s) on the HAMP mortgage, except as provided below. All changes in ownership due to death or divorce of the current owners must be supported by legal documentation. The existing FHA-insured mortgage is in default, but is not more than 12 full mortgage payments past due.  A default is defined as 1 payment past due more than 30 days.  For default calculation purposes, all months are determined to have 30 days.  For example, a mortgage due for the July payment is in default on August 1st.      The mortgagor(s) must be an owner occupant, have sufficient resources to make the payment on the HAMP mortgage and continue to occupy the home. A new mortgagor may be added to the HAMP mortgage, provided at least one existing mortgagor(s) is retained. The mortgagor must not have intentionally defaulted on their existing mortgage.  (Note: Intentionally defaulted means the mortgagor had available funds that could pay their mortgage and other debts without hardship, but failed to pay).
Eligibility – Existing Mortgage	Must be a FHA-insured single family mortgage (1-4 units). Mortgages previously modified under HAMP are ineligible. There is no net present value (NPV) test for eligibility.
Eligibility – Maximum Mortgage Amounts	Not applicable.
Eligibility – Modified Mortgage	The existing FHA-insured mortgage must be re-amortized to a 30-year fixed rate mortgage, and must be modified in compliance with all FHA Mortgage Modification requirements, except those specifically modified under the FHA-HAMP program.
Property Eligibility	The property securing the FHA-insured property must be the mortgagor’s primary and only residence; and only single family (1 to 4 unit) properties are eligible.
Interest Rate – Modified New Mortgage	The interest rate must be fixed and meet the guidelines in Mortgagee Letter 2008-21.
Current Loan to Value Requirements Mortgage	None.
Loan Purpose	FHA-HAMP mortgages are required to have a lower monthly principal and interest payment than the unmodified FHA-insured mortgage and are made without an appraisal.  All existing subordinate financing must be subordinated to maintain the first lien priority of the HAMP mortgage.  For more information, please see ML 2003-19.
Credit History	No minimum credit score required. (Credit report is only used to verify recurring debts.)
Seasoning Requirements on the Existing Mortgage	The first payment due date must be at least 12 months in the past, and at least 4 full mortgage payments must have been paid.
Property Valuation	No appraisal required.
Trial Modification	The Mortgagee must place the mortgagor(s) under a trial modification payment plan for the modified mortgage payment prior to completing the FHA-HAMP.  The mortgagor(s) must have made the first three consecutive trial monthly mortgage payments on time before the FHA-HAMP can be completed, and a partial claim filed.
Documentation Requirements	The Mortgagee must obtain the following additional documentation: To be considered for any of the loss mitigation options, the mortgagor must provide detailed financial information to the Mortgagee. Every borrower and co-borrower must sign a hardship affidavit attesting to and describing the hardship.  The document to be used is available for download at: https://www.hmpadmin.com/portal/docs/hamp_borrower/hamphardshipaffidavit.pdf    The Department has no objection to situations where a cooperative mortgagor provides complete financial information either written or during a telephone interview.  Regardless of how the mortgagor’s financial information was secured, the Mortgagee must independently verify the financial information by obtaining a credit report (the credit report is not used for credit qualification but Mortgagees are to use for determining indebtedness), and any other forms of verification the Mortgagee deems appropriate.
Underwriting Requirements - General	No Credit Alert Interactive Voice Response System (CAIVRS) review is required, but HUD’s Limited Denial of Participation (LDP) and General Services Administration (GSA) exclusion lists are still required checks for all mortgagors. FHA-HAMP processing and underwriting instructions are described below.  Where the mortgage is in default and no more than 12 full payments delinquent the Mortgagee combines a partial claim for up to 12 months of arrearages, foreclosure costs, and principal reduction with a modification. Except for the new maximum partial claim amount calculation, the partial claim must meet the requirements of Mortgagee Letters 2000-05, 2003-19 and 2008-21. The mortgagor may not be charged any additional costs for receiving this loss mitigation workout option.  On a cancelled foreclosure, Mortgagees are reminded that all such costs must reflect work actually completed to the date of the foreclosure cancellation and the attorney fees may not be in excess of the fees that HUD has identified as customary and reasonable for claim purposes.  The financial analysis, Hardship Affidavit, and documentation supporting the decision to provide partial claim relief must be maintained in the mortgagee’s claim review file.
Loss Mitigation – Priority Order	FHA-HAMP can only be utilized if the mortgagor(s) does not qualify for current loss mitigation home retention options (FHA Special Forbearance, Loan Modification and Partial Claim) under existing guidelines (ML 2008-21, 2003-19, 2002-17, 2000-05).  To qualify for the FHA-HAMP, Mortgagees must utilize its loss mitigation actions using the aforementioned priority order.
Underwriting – Monthly Gross Income	The mortgagor’s Monthly Gross Income amount before any payroll deductions includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security received by adults on behalf of minors or by minors intended for their own support, annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income.
Underwriting – Front End Debt to Income Ratio	Front-End ratio is the ratio of PITI to Monthly Gross Income.  PITI is defined as principal, interest, taxes and insurance. The Front-End ratio must be as close as possible to, but not less than, 31%.
Underwriting - Back End Debt to Income Ratio	The Back-End ratio is the ratio of the mortgagor’s total recurring monthly debts (such as Front-End PITI, payments on all installment debts, monthly payments on all junior liens, alimony, car lease payments, aggregate negative net rental income from all investment properties owned, and monthly mortgage payments for second homes) to the mortgagor’s Monthly Gross Income.  This ratio must not exceed 55%. The Mortgagee must validate monthly installment, revolving debt and secondary mortgage debt by pulling a credit report for each mortgagor or a joint report for a married couple.  The Mortgagee must also consider information obtained from the mortgagor orally or in writing concerning incremental monthly obligations.
Underwriting – Subordinate Financing	Subordinate liens are not included in the Front-End ratio, but they are included in the Back-End ratio.
Underwriting – Upfront Mortgage Insurance Premium	Not applicable.
Underwriting – Annual Premium	Remains the same.
Underwriting - Calculation of  Maximum Partial Claim Amount	The maximum one-time only principal reduction on the modification is determined by multiplying the outstanding principal balance of the existing mortgage as of the date of default by 30 percent reduced by (i) arrearage amounts advanced to cure the default for up to 12 months PITI and (ii) allowable foreclosure costs.  However, the actual principal reduction amount for a specific case shall be limited to such amount that will bring the mortgagor(s) PITI to an amount not to exceed 31 percent of gross monthly income.  Whether or not there are previous Partial Claims for a given case number, the arrearage component of this and any previous Partial Claims cannot exceed the equivalent of 12 months PITI and allowable foreclosure costs.  This 12 month PITI maximum is NOT affected by any payments that may have been made to reduce the partial claim mortgage balance.
Partial Claim Guidelines	No interest will accrue on the partial claim.  The payment of the partial claim is not due until (i) the maturity of the HAMP mortgage, (ii) a sale of the property, or (iii) a pay-off or refinancing of the HAMP mortgage.
In Foreclosure Process	To ensure that a mortgagor currently in the process of foreclosure has the opportunity to apply, Mortgagees shall not proceed with the foreclosure sale until the mortgagor has been evaluated for the program and, if eligible, an offer to participate in the FHA-HAMP has been made.  In the event that the mortgagor does not participate in FHA-HAMP, the Mortgagee must consider the priority order, outlined in “Requirements to Use FHA-HAMP” section of this Mortgagee Letter, prior to proceeding to foreclosure.
90 days Past Due	Ninety day past due mortgages must have been considered for all loss mitigation programs prior to being referred to foreclosure.
Escrows	Mortgagees are required to escrow for mortgagors’ real estate taxes and mortgage-related insurance payments.
Unpaid Late Fees Waived	The Mortgagee will waive all late fees.
Credit Report	The Mortgagee will cover the cost of the credit report.
Mortgagor Cash Contribution	The Mortgagee may not require the mortgagor to contribute cash.