Homeowner's Stability Plan

Questions and Answers for Borrowers about the Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

1. What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?
Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

2. I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

3. How do I know if I am eligible?
Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

4. I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

5. Will refinancing lower my payments?
The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable

6. What are the interest rate and other terms of this refinance offer?
The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

7. Will refinancing reduce the amount that I owe on my loan?
No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

8. How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?
To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

9. When can I apply?
Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

10. What should I do in the meantime?
You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:
* information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances from month to month, and
* payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

1. What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?
The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

2. Do I need to be behind on my mortgage payments to be eligible for a modification?
No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

3. How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?
In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

4. I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?
No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

5. I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

6. I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?
Only the first mortgage is eligible for a modification.

7. I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?
The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

8. I heard the government was providing a financial incentive to borrowers. Is that true?
Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

9. How much will a modification cost me?
There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

10. Is my lender required to modify my loan?
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

11. I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?
Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

12. How do I apply for a modification under the Homeowner Affordability and Stability Plan?
You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

13. What should I do in the meantime?
You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

* information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances from month to month, and
* payments on other loans such as student loans and car loans.

14. My loan is scheduled for foreclosure soon. What should I do?
Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.

Article courtesy of Kathleen Hickman, First American Title

First Time Buyers Credit

On Tuesday, President Barack Obama signed into law a $787 billion economic stimulus plan designed to spur consumer spending and create millions of jobs. The American Recovery and Reinvestment Act contains numerous provisions: roughly $300 billion in tax breaks for individuals and businesses, more than $250 billion in aid to distressed states, and almost $200 billion to upgrade the nation’s infrastructure. The package also includes an $8,000 tax credit for first-time homebuyers, which does not have to be repaid unless you sell your home within three years.

Homeowner Stabilty Initiative

On Wednesday, Obama unveiled the $75 billion Homeowner Stability Initiative. The multi-step plan would help struggling homeowners by providing incentives to lenders, servicers, mortgage holders and borrowers to help modify mortgage loans. The goal is to prevent as many as nine million Americans from losing their homes to foreclosure.

It's Election Day!!

The state of our great Nation has been under much scrutiny in recent months. There is kind of "sky is falling" mentality. With sooooo much press on the "downturn" of our markets, the general public has been inundated with negativity and feels as though our economy is going to implode. It is true that some families are struggling and that, overall, people are having to rein in their spending and THINK about the words "budget" or "spending plan." Isn't it about time though??? The last few years have been rout with consumerism and buying just for the sake of spending. Savings accounts are at an all time low and debt at an all time high. Despite all that you are hearing in the media, this shift has brought on some serious discussion and planning about where we want to be in the future and how to create strong, financially stable Americans. I hope that today you exercised your right to vote in our country's democracy.

We know where we have been in the past. Here is a little data to show you how far away from this Nation's untimely demise we ACTUALLY are. Which to the media and naysayers... isn't worth reporting. Here is a graph courtesy of Charles Schwab.
If you study the chart carefully you will realize, the sky isn't going to fall anytime soon! Don't get me wrong. I KNOW there are families out there suffering. The last few years of economic growth were unprecedented!!! People have over spent... and over consumed. There is going to be some leveling out that happens to put the system back in to balance. It is time to get a great financial planner if you don't already have one. It is time to take advantage of the plethora of business opportunities out there and GROW your business, if you are a business owner. And last, but not least, it is time to THINK ABOUT REAL ESTATE!!!!!!!!!!!!!!! There are some amazing properties out there for buyers! The buying market is very strong and as a result of this "dooms day" media, sellers are slashing prices and falling into the lair of nationalized media coverage! Don't incorporate what you hear on a national scale... get localized with your information. The Puget Sound has a very different market experience than most of our fellow countrymen.

If you are a seller considering selling... homes are still going for fair prices...IF... they are in sale ready condition. The right agent can certainly market a home and get you top dollar, considering the market. And, the best part... on the buying side you will get all the advantages of buying at a discount from those other sellers out there whom have not been educated by their real estate agent on our CURRENT market. The market is ever evolving. Homes ARE selling, buyers ARE buying, interest rates ARE low... those are the facts.

If you would like to read the entire Charles Schwab Article... visit the "Featured Articles" tab at www.janellewiltonhomes.com

New Housing Bill

Despite reports by the media, there really isn't much *direct* benefit to consumers. I'm not knocking reporters at all, but the bill is so large, covers so many topics, and often requires an intimate knowledge of industry problems, that I think many journalists focus on the FHA bail out and less on the other Titles in the Act.

There are three key indirect benefits:
1.) The GSEs (Fannie/Freddie) get new overseers (this means abolishing several Federal agencies in favor of a new one - when is the last time Congress abolish a Fed Agency?), tighter controls by the Executive Branch, and a number of benefits designed to shore up investor confidence in the secondary market. This is by far the largest regulatory change in the secondary mortgage market since the formation of Freddie Mac back in '74. No direct benefit to consumers, but in a round about way it might keep retail mortgage interest rates from jumping into the double digits.

2.) National licensing for ALL mortgage loan originators. Banks and direct lenders have previously been exempt from any state licensing, background checks, and examination of character/ethics. Despite intense lobbying by the nation's largest banks, bank employees will have to meet minimum standards of education, pass a criminal background check, be fingerprinted, and demonstrate solid credit character.

You might recall a recent article in the Miami Herald that discovered some 10,000 convicted felons were employed as loan originators in the state of Florida since 2000. The majority avoided individual licensure by working for banks and direct lenders, whose employees are exempt from Florida's licensing requirements. No mas, hombre, no mas. The indirect benefit here is that borrowers will be protected from loan originators who haven't demonstrated expertise (by passing a license exam) or avoided a criminal background check.

3.) Community Grants - The Act has a title that provides $4 billion to local communities to buy up vacant foreclosed homes. The grants can be used to help neighborhoods with a large rate of foreclosure, thus helping protect the home values of home owners who have paid their mortgages on time.

A couple of direct benefits:
1.) Tax credit for first time home buyers. This might be useful for FHA down payments. We'll wait to see how the IRS promulgates the regs for this one. But it sounds very good.

2.) FHA Bail Out: If a lender is willing to write down mortgage balance(s) to 90% of appraised value on an owner-occupied dwelling, and if the home owner qualifies (by proving income and assets this time around, not like last time) for an FHA loan, and if several other factors are met... some home owners currently upside down *might* be able to refinance to a smaller FHA insured loan. Maybe. No one really knows how many troubled home owners might qualify, no one knows if the write-downs are possible, and no one knows who is willing to buy out some other lender's bad paper. But it sounds nice in an election campaign sound bite to say you voted for it.

Some things Consumers won't like:
1.) FHA is increasing the statutory down payment from 3.00% to 3.50% of the purchase price. That is correct; in a market flooded with unsold homes, buyers will need more money to close on an FHA insured loan.

2.) Seller-funded down payment assistance grants are FINALLY dead. HUD has been trying to get rid of this money laundering scheme for years. The IRS revoked the non-profit status of the DPA companies in an effort to help HUD to end the practice. Since 2000, when HUD was finally forced to allow seller funded DPA grants into FHA insured transactions, the use of "non-profit" grants grew from 2% of FHA originations to 37% of FHA originations in 2007. Buyer savings, community grants, and family gifts (which demonstrate savings discipline, home buyer education, family support respectively) were abandoned by buyers in favor of "quickie grants" at closing. As a result, default on FHA loans grew from just under 8% in 2000 to nearly 18% in 2007. Goodbye and good riddance, seller-funded DPA.

3.) Lastly, any home owners who successfully refinance under the latest FHA backed bailout plan will acquire a co-owner of their home: Uncle Sam. Under the program, home owners promise to reimburse to FHA 100% of the profits on their home should they sell in the first 12 months after closing on the FHA bail out refinance. This drops to 90% in Year 2 down to 50% forever in Year 5. As a taxpayer and originator, I kind of like the idea... but I haven't heard a single media report yet that has picked up on this little hook.
by Deep River, Daytona Beach, Truilia Contributor
FOR ADDITIONAL INFORMATION CLICK ON MY FEATURED ARTICLES TAB of janellewiltonhomes.com

Gas and Independence... an oxymoron?

Every household is feeling a chipping away of their incomes with the soaring prices at the pump. Not everyone is in the market for dumping their full sized SUV and downsizing to a compact hybrid, but there are things everyone CAN do to help stretch their dollar at the pump. Here are 12 helpful tips:
1.) Make sure your tires are properly inflated. (Manufacturer's recommendations are on a sticker in the door jam or on your gas door). The PSI rating on the tire is not always the recommendation from the manufacturer of proper inflation for YOUR vehicle.
2.) Make sure your gas cap is secured TIGHTLY. Gas and your money evaporates quickly!
3.) Unload unnecessary weight out of your vehicle. The less weight the engine is propelling down the road the more efficiently it will use gas.
4.) Change your air filter frequently. Diminished air flow increases gas consumption.
5.) Fuel up when it is colder out. The cooler the air, the cooler the gas and the more dense the fuel.
6.) After the pump stops, clear the pump hose by lifting the last bit of gas out of the hose and into your tank. What is left in the hose, which you paid for, can add up to a few extra gallons in your tank over a year's time!
7.) Fuel up in the morning before 10am on weekdays. Prices typically change after 10am. Most stations have the same pricing over the weekend as they did at noon on Friday.
8.) Driving over 55 MPH increases fuel use due to wind drag. Traveling 65 to 70 MPH can increase fuel consumption by 10-20%!
9.) Idling for more than 1 minute uses the same amount of gas as it does to restart the vehicle. Turn the engine off if you will be parked for a while.
10.) Avoid driving like a jack rabbit to cut down on fuel use. Think tortes!
11.) Avoid using the air conditioner. Shut it off and gain 10-20% efficiency.
12.) Look into gas rebate credit cards. Anytime you fuel up you will receive a rebate of 2-5% (depending on your credit score). For more information about fuel rebate cards (or to check out the benefits of ANY credit card...) go to www.cardratings.com.
Using these tips you will have more independence to celebrate on this 4th of July!

Don't gamble with your rate!

You may have noticed that interest rates continue to be very low. You may not be interested in selling or buying right now but have thought about refinancing. There are a few things to consider, here are some suggestions... 1.) CHOOSE A REPUTABLE LENDER... loans are laden with junk fees and hidden expenses that cost you REAL money. There are on average $1000 in loan "administration and processing" type fees that lenders tack on to some home loans. Check your good faith estimate for these fees and NEGOTIATE! There is a possibility that some of those can be removed. 2.) CHECK YOUR RATE CAREFULLY... by not being knowledgeable on the current rates the lender can make additional money (over and above the loan origination fee) off your loan by something called "yield spread". If they quote you a rate on your good faith estimate and the rate drops... they are paid the difference in commission which can be considerable money. Also, if they quote you a rate that is just a little above the going rate "pad the rate" they are paid the difference as well. 3.) GET 3 LENDER QUOTES... when your lender knows they will be up against another lender and competing for your business (remember though, poor customer service can cost you money too... choose wisely) you will be more likely to get a better rate. 4.) KNOW YOUR CREDIT SCORE... Inaccuracies on your credit report can cost you money by not qualifying for a lower interest rate. Those credit errors bring your credit score down which makes you a higher risk to the bank, translating into a higher interest rate. If you haven't pulled your credit report lately DO SO NOW! You are entitled to a free credit report annually through all three credit bureaus. Go to www.annualcreditreport.com For additional information on credit scores etc. click on the "featured articles" tab of my website. If you have any further questions, call me. I can refer you to a reputable lender AND save you money!