HUD ISSUES NEW CARES ACT MORTGAGE PAYMENT RELIEF FOR FHA SINGLE FAMILY HOMEOWNERS

Mortgage servicers instructed to offer deferred or reduced mortgage payments

by as much as 6 months to start

WASHINGTON – The U.S. Department of Housing and Urban Development today announced a tailored set of mortgage payment relief options for single family homeowners with FHA-insured mortgages who are experiencing financial hardship as a result of the COVID-19 National Emergency. Also included is an extension period for seniors with Home Equity Conversion Mortgages. Read today’s Mortgagee Letter.

           Effective immediately for borrowers with a financial hardship that makes them unable to pay their mortgage due to the COVID-19 National Emergency, mortgage servicers must extend deferred or reduced mortgage payment options – called forbearance – for up to six months, and must provide an additional six months of forbearance if requested by the borrower. This mandate implements provisions contained in the landmark Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which President Trump signed into law on March 27, 2020.

“The last thing any of us wants is for Americans to lose their homes unnecessarily while we continue to fight this invisible enemy. If you’re struggling, immediate help is now available. The FHA will continue to work with stakeholders to ensure that the loss mitigation options that are offered for both forward and reverse borrowers are appropriately tailored for the present situation,” said HUD Secretary Ben Carson.

In addition to special COVID-19 forbearance, FHA also implemented today the COVID-19 National Emergency Partial Claim, an option to be used by servicers when the COVID-19 forbearance period ends. This partial claim will help eligible homeowners who have been granted special COVID-19 National Emergency forbearance to reinstate their loans by authorizing servicers to advance funds on behalf of homeowners. The partial claim will defer the repayment of those advances through an interest-free subordinate mortgage that the borrower does not have to pay off until their first mortgage is paid off.

Further, FHA today instructed mortgage servicers to:

·       Delay submitting Due and Payable requests for Home Equity Conversion Mortgages by six months, with an additional six-month delay available with HUD approval; and

·       Extend any flexibility they may have under the Fair Credit Reporting Act relative to negative credit reporting actions.

“For American families impacted by the COVID-19 virus and unable to pay their FHA-insured mortgage, imminently losing their homes is now one less fear they should have. Today’s actions will ease the immediate pressures faced by many Americans who, through no fault of their own, are struggling with financial uncertainty,” said Assistant Secretary for Housing and Federal Housing Commissioner Brian Montgomery

Borrowers who are not currently impacted and able to make their monthly mortgage payments should continue doing so.  However, those who are experiencing financial hardship as a result of the COVID-19 National Emergency should immediately contact their mortgage servicer – the entity to which they make their monthly mortgage payments – to discuss forbearance or other options that may be available to them. Borrowers who are not experiencing an income reduction due to COVID-19 are asked to avoid contacting their mortgage servicer about these options, as these questions will divert resources from serving those truly in need.  

To assist homeowners with FHA-insured mortgages in understanding these options, FHA has also published a Q&A for consumers at https://www.hud.gov/sites/dfiles/SFH/documents/COVID-19HomeownerHelp.pdf

Rod's Comment: I am now retired but served for many years as a housing counselor, working primarily in "mortgage default" since 2007.  I have helped a lot of people avoid losing their home but unfortunately seen a lot of people lose their home because they did stupid stuff. A forbearance is an excellent tool to help a person through a rough spot who can not make their housepayment. However, it is a temporary solution and at the end of the period of forbearance all of the payments that accumulated are due. You may be eligible for a partial claim or a modification or repayment plan, but it is not automatic. Don't try to do this on your onw, get professional advice from a HUD-approved housing counselor. 

Don't lose your home to foreclosure during the Coronavirus crisis.

by Rod Williams - I am retired now but spend about the last thirty years working for a HUD-approved non-profit housing counseling agency. Up until 2007 I worked helping low-income people become homeowners. After the 2007 housing crisis hit and up until I retired I worked mostly in mortgage-default, helping people avoid losing their home. Unfortunately, a lot of people have poor money management skills, to put it mildly. To be less generous, I would say a lot of people are irresponsible. I see reports that say 70% of Americans live paycheck to paycheck. That does not generate sympathy from me. They shouldn't. It is irresponsible to not have some savings. I know bad things can happen to good people and there are some people living on the edge who can't help it. However, for the majority of people who are financially living on the edge, they never learned discipline and delayed gratification. That being said however, I don't want them to lose their home, because they lost their job. With the closing of bars and restaurants, a lot of people already find themselves unemployed. With the further lockdown, more people are losing their job. The longer this crisis lingers, the more people will lose their job. A lot of people, when they lose their job will lose their house. A lot of people lose their home because they do the wrong things. If one has some savings, one has a better chance to keep one's home than if one does not, but the savings only delays the foreclosure unless one acts wisely. With savings are not having savings, there are steps to increase the likelihood that you will avoid foreclosure. Your solution for avoiding foreclosure and keeping your home can vary depending on several factors. Here are some of them: Who actually owns your mortgage and what policy for foreclosure avoidance to they have in place. The company you pay your mortgage payment to is most often a servicer of the mortgage and their options are limited by the entity that insures your mortgage or owns your mortgage. How is your home titled? If you are married is the mortgage in both names? If you once owned a home jointly with a spouse and are now divorced and were awarded the home through divorce, did you ever have the ex-spouse's name removed from the mortgage and the title? When you lost your job, did you just quit because the company was reducing staff or closing their doors or were you laid-off? Your housing ratio, which is the percentage your gross income that it takes to pay the house payment, and your debt ratio, which is the percentage of your gross income it takes to pay all debt, are factors. Before the crisis did you pay your mortgage on time? It can be complicated. I am listing some general guidelines of what to do if you lose your job and own a home and don't want to lose it. This are general. Other recommended actions would depend on ones specific variables. Immediately get on a crisis budget. Cut all unnecessary expenses. Prioritize. If you have two car payments and a house payment, it is probably better to lose a car than a house. As a housing counselor, I have seen people lose their home who could have saved their home if they would have tightened their belt and prioritized their spending. If you have not applied for unemployment, do it! If the unemployment office says you must have a separation letter from your employer, get it. Communicate with your mortgage company. Don't sent partial payments. Some people think paying half a mortgage payment or whatever they can afford shows good faith and helps them with their mortgage company. It doesn't. If you are not making payments do not let the money you could have paid toward a mortgage payment just get adsorbed in other spending. Save it, so when you do get a workout offer, you have some money to pay toward your mortgage. Don't think a "forbearance" means you can just skip some payments. A forbearance is a temporary plan to skip payment for a while but at the end of the period, the accumulated skipped payment must be paid or a plan put in place to catch them up. See a HUD-approved housing counselor. A counselor can evaluate your situation, develop an action plan for dealing with the crisis and advocate on your behalf. Don't try to do this alone. Be aware of scams. If someone ask you for money to help you avoid foreclosure, it is probably a scam. Don't move out of your home. Some people panic and move. If you are living in your home, you are more likely to be eligible for a workout plan or assistance than if you have abandoned your home. If this crisis continues, there will probably be more programs to help people avoid foreclosure as there were when the housing crisis of 2007 hit. Don't count on it but don't do stupid things that would disqualify you from taking advantage of whatever program may be offered. Taking on more debt is one of the things people do in a crisis that is the wrong thing to do and may disqualify them from whatever workout solution or assistance for which they would otherwise be eligible. Don't panic. Don't bury your head in the sand and just assume it will all work out. Be proactive. I wish all who are facing this crisis, the best. Here are some important links: HUD Approved Housing Counseling Agencies National Community Reinvestment Coalition.

The Home Affordable Refinance Program (HARP) Extended Through 12-31-18

This morning, the Federal Housing Finance Agency (FHFA), Freddie Mac's and Fannie Mae's regulator, announced that HARP (the Home Affordable Refinance Program) has been extended from September 30, 2017 through December 31,2018.

HARP is unique over any other refinance program in the industry.  The borrower can owe more (even much more) on the loan than the property is worth.

FHFA estimates there are still in excess of 143,000 homeowners across the country who can benefit from refinancing through HARP.   

Here is the eligibility criteria:

● Loan must be owned or guaranteed by Freddie Mac or Fannie Mae;

● Loan must have been originated on or before May 31, 2009;

● Current loan-to-value ratio (LTV - outstanding mortgage balance/home value) must be greater than 80 percent. There is no LTV ceiling; 

● Borrower must be current on the mortgage payments at the time of the refinance; and 

● Payment history - borrower is allowed one late payment in the past 12 months, as long as it did not occur in the 6 months prior to the refinance.

Here's how you can determine if your loan is owned by either of the GSEs (Government Sponsored Enterprise):

     Freddie Mac loan lookup

     Fannie Mae loan lookup

If you need additional assistance, please feel free to  call me, Rod Williams 615-850-3453. 

"Moving the missed payment to the end of the note," update.

Borrowers with an FHA mortgage who face a hardship and get behind on their house payments, may be eligible for a workout called a "partial claim."  The way the homeowner thinks about it and the way the mortgage company my describe it is that the missed payments were "moved to the end of the note."  In reality what happens is that the mortgage company files a claim against the FHA mortgage insurance and  FHA makes a loan to the borrower to catch up the missed payments.  No interest is charged on the loan and no payments are required.  The loan does not become due until the first mortgage is paid off. If the homeowners income is insufficient to resume making the regular payment, the partial claim may be combined with a modification that results in a lower payment.

As a housing counselor I sometime encounter people who have already had one partial claim and then experienced a new hardship and got behind again.  At one time, the amount of partial claim available was only 12 months of payments. Now the program is more generous.  Here is the way to calculate the amount of partial claim available as described in MORTGAGEE LETTER 2016-14:

Partial Claim : The total amount available is the lesser of: ( 1) the unpaid principal balance as of the date of Default associated with the initial Partial Claim , if applicable , multiplied by 30%, less any previous Partial Claim (s) paid on this Mortgage; (2) if no previous Partial Claim(s), the unpaid principal balance as of the date of the current Default multiplied by 30%; or (3) the total amount required to meet the Target Payment. The Partial Claim amount may include: arrearages; legal fees and foreclosure costs related to a canceled foreclosure action; and principal deferment ...

Assume a homeowner is ten months past due and assume the monthly payment is only $508 a month but with legal expenses and other foreclosure cost it would take $7750  to reinstate the loan. Also assume the homeowner had had a previous partial claim of $3000. Assume the amount of the principle balance at the date of default the first time they got a partial claim was $56,000. To calculate if this homeowner would be eligible for a partial claim one would do this calculation: $56,000 x 30% = $16,800, the total amount available for a partial claim. $16,800 - the amount of the first partial claim of $3000= $13,800, the amount of partial claim still available. Since the homeowners current amount needed is reinstate the loan is $7750, the homeowner should be eligible for a partial claim assuming they meet the other requirements.

Don't worry about knowing how to do this, that's my job.  If you are in default on your mortgage, there may be other solutions also.  If you live in the middle Tennessee area and are in default or are having trouble making your house payment, call me for a free consultation. Rod Williams 615-850-3453.

New program to help homeowners save their home from foreclosure.

The following is from the THDA website: 

The Tennessee Housing Development Agency’s (THDA) Principal Reduction Recast Program with Lien Extinguishment (PRRPLE) will lower monthly mortgage payments to affordable levels for eligible homeowners by providing (1) a reduction in the principal balance of their first mortgage loan, combined with a loan recast, modification, refinance or (2) principal reduction which results in a full lien extinguishment.

This program is available to qualifying homeowners who are facing a financial hardship, through no fault of their own, which resulted in a loss of income due to the death of a spouse, divorce, or underemployment.

The goal of the program is to reduce delinquencies and foreclosures by lowering mortgage payments to affordable levels for homeowners who have encountered a financial burden due to an eligible hardship, including but not limited to homeowners who are living on social security, long-term disability or other fixed income source.

If you have questions or need assistance with the PRRPLE application please call (855) 890-8073 or email PRRPLE@thda.org.

This is a great program and may save your home if you meet the criteria and if you can successfully apply.  The program expects a consumer to be able to answer questions they may not understand and assumes they know terminology they may not know.  To apply, you must scan and upload documents.  If you are a loan processor or a legal secretary it should be easy to make application by yourself; anyone else may have difficulty.

It you want help completing an application, call me.  There is no charge for my services.  I will evaluate you and see if you are eligible and if you are I will help you make application.  I can scan document for you and notarize documents and help you write letters you may need to write.  You can apply without help but your chances of successfully applying are greatly enhanced if someone who knows what they are doing helps you. I am a counselor with a HUD-approved housing counseling agency and have over 20 years of experience as a housing counselor and am good at what I do.  The agency is Woodbine Community Organization. Call me, Rod Williams, 615-850-3453.

What is HAMP? Last chance to apply.

 The HAMP program ends December 30th, 2016.  That does not mean that there may not still be other option for mortgage assistance, but nothing as good as the HAMP.  If you are interested you must apply now! All applications and documentation must be complete and in the hands of your mortgage company by Dec. 30 to be considered.

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, 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.  

HAMP modificatiion program ends December 30, 2016

There is still time, but very little time for homeowners to be considered fro a HAMP modification.  To be considered for a HAMP modification homeowners must apply and submit all documentations no later than December 30, 2016.

To schedule an appointment or for a phone consultation about your options for avoiding foreclosure, in the middle Tennessee area,  call Rod Williams at 615-850-3453.