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.

New Streamlined Refinance Offering for High LTV Borrowers: HARP Extended through September 2017

Press release, Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac (the Enterprises), at FHFA's direction, will implement a new refinance offering aimed at borrowers with high loan-to-value (LTV) ratios.  The new refinance offering will provide much-needed liquidity for borrowers who are current on their mortgage but are unable to refinance through traditional programs because their LTV ratio exceeds the Enterprises' maximum limits. 
"Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the Enterprises," said FHFA Director Melvin L. Watt.  "This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac."

Eligibility

In order to qualify for the new offering, borrowers: (1) must not have missed any mortgage payments in the previous six months; (2) must not have missed more than one payment in the previous 12 months; (3) must have a source of income; and (4) must receive a benefit from the refinance such as a reduction in their monthly mortgage payment.  Full details will be available in the coming months through the Enterprises, but the offering will make use of the lessons learned from the Home Affordable Refinance Program (HARP) and its streamlined approach to refinancing.
The new high LTV streamlined refinance offering is more targeted than HARP but as with HARP, eligible borrowers are not subject to a minimum credit score, there is no maximum debt-to-income ratio or maximum LTV, and an appraisal often will not be required.  However, unlike HARP, there are no eligibility cut-off dates connected with the new offering, and borrowers will be able to use it more than once to refinance their mortgage.  Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of the Enterprises traditional refinance products.

HARP Extended into 2017
The new high LTV streamlined refinance offering will not be available to borrowers until October 2017.  To ensure that high LTV borrowers who are eligible for HARP will not be without a refinance option while the new refinance offering is being implemented, FHFA is creating a bridge to this future program by also directing the Enterprises to extend HARP through September 30, 2017.  HARP continues to be one of the most successful crisis-era programs with more than 3.4 million homeowners already having refinanced their mortgage.  More than 300,000 U.S. homeowners could still refinance through HARP.  Visit HARP.gov and follow @FHFA on Twitter, LinkedIn and YouTube for more information.

Fannie Fact Sheet link
Freddie Fact Sheet link

Foreclosure Odds Drop 42% with THDA Homebuyer Ed

Press release, (August 24, 2016) – A first-of-its-kind study uses THDA home loan data to identify the impact of homebuyer education classes on default and foreclosure rates.
The new study shows the odds of foreclosure were 42 percent lower among participants in THDA’s down payment assistance program who completed a homebuyer education (HBE) class compared to participants who did not.
THDA began offering down payment assistance as part of its home loan program in January 2002 but did not start enforcing a requirement to attend an HBE class until July of that year. As a result, study author Scott Brown, a Ph.D. student in the Community Research and Action program at Vanderbilt University’s Peabody College, recognized a unique opportunity to compare two sets of otherwise identical homebuyers: down payment assistance recipients from the first half of the year who did not take an HBE class and those from the second half of the year who were required to take HBE.
“This is one of the first studies on the effectiveness of homebuyer education to provide evidence similar to an experiment with a control group,” said Brown.
“Because all of the homeowners in this study qualified for and received a home loan with down payment assistance from THDA in the same calendar year, their demographic, geographic, and financial characteristics are nearly identical. This is very helpful from a scientific perspective because it largely controls for factors other than homebuyer education when comparing one group to the other,” he explained.
Brown’s results were recently published in the prestigious Journal of Policy Analysis and Management. According to the study:
By the end of the seven-year study time period, only 10.6 percent of borrowers with HBE had foreclosed compared to 17.6 percent of those without HBE.
After adjusting for borrower, mortgage, and local economic differences, this amounted to 42 percent lower odds of foreclosure. (Please note, the odds of a foreclosure is not the same thing as the foreclosure rate.) Even after adjusting for differences in borrowers, mortgage loans, and local economies, borrowers who took HBE were still significantly less likely to have their mortgage end in foreclosure seven years later.
“There is a dramatic reduction in the likelihood of foreclosure. These classes make a real difference in people’s lives,” said Ralph M. Perrey, executive director of THDA. “It’s important that THDA does more than just provide families with the financing they need to get in the front door. We’re also preparing them to be successful homeowners for years to come.”
“Foreclosures are expensive and disruptive on all sides, including the borrower, the loan holder, and the mortgage guarantor, and this study shows that HBE classes are a relatively low-cost approach to preventing them in a significant percentage of cases,” said Brown.
The percentage of homeowners falling into default (being at least 90 days behind on payments at some point during the study) was not significantly different between the two groups: 32.6 percent for homeowners without HBE compared to 30.7 percent for those with HBE.
“Both program income limits and need for down payment assistance may have generated a pool of homeowners who are more vulnerable to disruption in their incomes. So these classes may have been more limited in being able to prevent program participants from ever falling a couple months behind on payments,” said Brown. “But HBE may still provide these homeowners with an understanding of how to adapt and be proactive when trouble hits, enabling them to prevent a default from escalating into a foreclosure.”
Another factor in the default data may be that homebuyers tend to participate in HBE classes near their loan closing date, long after a house is selected and an offer made. By this point, the opportunity to influence the price range of homes under consideration and down payment amount, and thus the size of the monthly home loan payment, has already passed.
“More research is needed into the timing of HBE classes and when in the buying process they have the strongest influence,” said Brown. “However, there are other approaches that can reduce the likelihood of default, even after the loan is closed. For example, a study by Stephanie Moulton and colleagues suggests that low-cost follow-ups with new homeowners, such as a quarterly call from a financial coach, could also help lower default rates by catching trouble early.”
Brown’s report cites research indicating, “Half of low-income first-time homebuyers face significant unplanned home repairs or major increases in utility costs, property taxes, or homeowner's insurance within the first two years of ownership.” When facing these or other hardships, homeowners who completed HBE appear to be significantly better prepared to recover and become current on their payments once again. Among borrowers defaulting for the first time, Brown found the odds of foreclosure was reduced 55 percent among those who took HBE compared to those who did not.
“The numbers in this study represent more than just dollars. These are Tennessee families of moderate-to-low income who are trying to make smart decisions about where to raise their kids and how to build up a safe nest egg for their future,” said Perrey.
Additional highlights from the study:

• Among borrowers who defaulted, HBE was associated with both an increased probability of becoming current on payments again and of avoiding a later foreclosure. Policymakers should consider the timing and intensity of HBE programs needed to influence default risk and how HBE may promote sustainable homeownership by influencing borrowers’ help-seeking behavior and strategies for resolving defaults.
• HBE appears to affect both the overall rates and timing of foreclosures. Though borrowers with and without HBE were defaulting at similar rates for the first four years after they received their mortgage, remarkably few foreclosures occurred in the HBE group during this time.
• Borrower credit scores were strongly connected to whether they were ever 90 days or more late on their payments. HBE did not appear to be particularly helpful in avoiding default or foreclosure for those with the lowest credit scores compared to those with higher credit scores.
• Only 16.7 percent of borrowers with HBE had their first default end in foreclosure compared to 37.8 percent of borrowers without HBE.

The full study as published in The Journal of Policy Analysis and Management is available online: http://onlinelibrary.wiley.com/doi/10.1002/pam.218...
Scott Brown is currently a Ph.D. student in the Community Research and Action program at Vanderbilt University. He served as an intern in the Research & Planning division of THDA in 2009.

My Comment:  The agency I work for offers the Homebuyer Education referenced above.  If you know someone seeking to become a homeowner have them call 615-833-9580 for more information.  If you already own a home and are in default or facing default, call me and let me see if I can help you. Rod Williams, 615-850-3453.

Consumer Financial Protection Bureau Expands Foreclosure Protections

Press release, Aug. 4, 2016, Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized new measures to ensure that homeowners and struggling borrowers are treated fairly by mortgage servicers. The updated rule requires servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, clarifies borrower protections when the servicing of a loan is transferred, and provides important loan information to borrowers in bankruptcy. The changes also help ensure that surviving family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower.

“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray. “These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.”

Mortgage servicers are responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. They typically handle customer service, collections, loan modifications, and foreclosures. To address widespread mortgage servicing problems, the CFPB established common-sense rules for servicers that went into effect on January 10, 2014.

The CFPB issued proposed amendments to those rules in November 2014, and the final rule issued today adopts many of the proposed provisions. However, the Bureau made a number of changes in the final rule after considering comments received from the public.

The rule issued today establishes new protections for consumers, including:

• Requiring servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan: Under the CFPB’s existing rules, a mortgage servicer must give borrowers certain foreclosure protections, including the right to be evaluated under the CFPB’s requirements for options to avoid foreclosure, only once during the life of the loan. Today’s final rule will require that servicers give those protections again for borrowers who have brought their loans current at any time since submitting the prior complete loss mitigation application. This change will be particularly helpful for borrowers who obtain a permanent loan modification and later suffer an unrelated hardship – such as the loss of a job or the death of a family member – that could otherwise cause them to face foreclosure.
• Expanding consumer protections to surviving family members and other homeowners: If a borrower dies, existing CFPB rules require that servicers have policies and procedures in place to promptly identify and communicate with family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home. Today’s final rule establishes a broad definition of successor in interest that generally includes persons who receive property upon the death of a relative or joint tenant; as a result of a divorce or legal separation; through certain trusts; or from a spouse or parent. The final rule ensures that those confirmed as successors in interest will generally receive the same protections under the CFPB’s mortgage servicing rules as the original borrower. 
• Providing more information to borrowers in bankruptcy: Under the CFPB’s existing mortgage rules, servicers do not have to provide periodic statements or early intervention loss mitigation information to borrowers in bankruptcy. Today’s final rule generally requires, subject to certain exemptions, that servicers provide those borrowers periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options. Servicers also currently do not have to provide early intervention loss mitigation information to borrowers who have told the servicer to stop contacting them under the Fair Debt Collection Practices Act. Today’s final rule generally requires servicers to provide modified written early intervention notices to let those borrowers also know about loss mitigation options.
• Requiring servicers to notify borrowers when loss mitigation applications are complete: Whether a borrower is entitled to key foreclosure protections depends in part on the date a borrower completes a loss mitigation application. If consumers do not know the status of their application, they cannot know the status of those foreclosure protections. Today’s final rule requires servicers to notify borrowers promptly and in writing that the application is complete, so that borrowers know the status of the application and have more information about their protections.
• Protecting struggling borrowers during servicing transfers: When mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation may not know where they stand with the new servicer. Today’s final rule clarifies that generally the new servicer must comply with the loss mitigation requirements within the same timeframes that applied to the transferor servicer, but provides limited extensions to these timeframes under certain circumstances. If a borrower submits an application shortly before transfer, the new servicer must send an acknowledgment notice within 10 business days of the transfer date. If the borrower’s application was complete prior to transfer, the new servicer must evaluate it within 30 days of the transfer date. If the new servicer needs more information to evaluate the application, the borrower would retain some foreclosure protections in the meantime. If the borrower submits an appeal, the new servicer has 30 days to make a determination on the appeal.
• Clarifying servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures: The CFPB’s existing rules prohibit servicers from taking certain actions in foreclosure once they receive a complete loss mitigation application from a borrower more than 37 days prior to a scheduled sale. However, in some cases, borrowers are not receiving this protection, and servicers’ foreclosure counsel may not be taking adequate steps to delay foreclosure proceedings or sales. The CFPB’s new rule clarifies that, if a servicer has already made the first foreclosure notice or filing and receives a timely complete application, servicers and their foreclosure counsel must not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, even if a third party conducts the sale proceedings, unless the borrower’s loss mitigation application is properly denied, withdrawn, or the borrower fails to perform on a loss mitigation agreement. The clarifications will aid servicers in complying with, and assist courts in applying, the dual-tracking prohibitions in foreclosure proceedings to prevent wrongful foreclosures.
• Clarifying when a borrower becomes delinquent: Several of the consumer protections under the CFPB’s existing rules depend upon how long a consumer has been delinquent on a mortgage. Today’s final rule clarifies that delinquency, for purposes of the servicing rules, begins on the date a borrower’s periodic payment becomes due and unpaid. When a borrower misses a periodic payment but later makes it up, if the servicer applies that payment to the oldest outstanding periodic payment, the date the borrower’s delinquency began advances. The final rule also allows servicers the discretion, under certain circumstances, to consider a borrower as having made a timely payment even if the borrower’s payment falls short of a full periodic payment. The increased clarity will help ensure borrowers are treated uniformly and fairly.

Today’s final rule makes additional changes to the CFPB’s mortgage servicing rules. These changes include providing flexibility for servicers to comply with certain force-placed insurance and periodic statement disclosure requirements. The changes also clarify several requirements regarding early intervention, loss mitigation, information requests, and prompt crediting of payments, as well as the small servicer exemption. Further, the changes exempt servicers from providing periodic statements under certain circumstances when the servicer has charged off the mortgage. Finally, concurrently with the final rule, the CFPB is issuing an interpretive rule under the Fair Debt Collection Practices Act relating to servicers’ compliance with certain mortgage servicing provisions as amended by the final rule.

Most of the provisions of the final rule will take effect 12 months after publication in the Federal Register. The provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will take effect 18 months after publication in the Federal Register.

View final rule
View interpretive final rule

My Comment: If you are in default of your mortgage or know circumstances are going to change that may put you in default or make your loan unaffordable, seek help early.  Don't try to navigate the complex world of resolving a mortgage default or determining the best course of action all by yourself.  You need help from someone who specializes in the field.  You need to talk to a HUD-approved Housing Counselor. If in the Nashville area, call me at 615-850-3453. Rod Williams

Tick Tock: HARP's Clock is Running Out

From Freddie Mac - The Home Affordable Refinance Program^® (HARP) expires December 31, 2016. With interest rates at an all-time low, your clients still have time to refinance with a Freddie Mac Relief Refinance Mortgage^SM (Freddie Mac's name for the business implementation of HARP) – so they can be better positioned for long-term homeownership success.

For a borrower to refinance through the Freddie Mac Relief Refinance Mortgage offering, the mortgage being refinanced must meet the following criteria:

• Loan must be currently owned or securitized by Freddie Mac.
• Note date on the mortgage must be on or before May 31, 2009.
• The borrower is current on his or her mortgage, with no 30-day or more late payments within the last six months and no more than one in the past 12 months.

Relief Refinance Mortgages must have Application Received Dates on or before December 31, 2016, and Freddie Mac Settlement Dates on or before September 30, 2017.

For More Information

• Go to the Freddie Mac Housing Counselors Resource Center to find more information on Relief Refinance Mortgages/HARP for you -- including a list of Frequently Asked Questions -- and fact sheets in English and Spanish for your clients. 

My Comment: Act now! Making Home Affordable (HAMP and HARP) start winding down in September.  HARP is the refinance program; HAMP is the modification program.  Call for a free phone consultation and if we need to meet in person, I will schedule you an appointment.  There is no fee for my services.  I work for the Woodbine Community Organization. We are a HUD-approved Housing Counseling Agency. After September all that will be available to help struggling homeowners are standard FHA options for those with an FHA loan and in-house modifications for everyone else.  The Federal government is taking away the carrot and the stick that encouraged mortgage companies to modify loans. Call me at 615-850-3453. 

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.