| The Federal Housing Finance Agency (FHFA) has | | | | this plan to help mortgage holders avoid foreclosure. |
| released a simplified and streamlined loan modification | | | | Q: Why is there not a foreclosure moratorium included |
| program to help struggling homeowners afford and | | | | in this loan modification program? |
| keep their homes, thus reducing the number of | | | | A: According to the plan, lenders will suspend |
| foreclosures. This plan has been designed to make the | | | | foreclosure proceeding if the borrowers fulfill certain |
| mortgage modification process simple and to make | | | | requirements and requests. Borrowers must stay in |
| the requirements for qualifying allot easier than ever | | | | contact with their lenders, have a desire to keep their |
| before. As you would imagine there is already rumors | | | | home, and have the ability to afford their new monthly |
| and false information circulating around the web. | | | | payments once a mortgage modification is approved. |
| Here are some Questions & Answers about the | | | | Q: Why was this program created? |
| FHFA Loan Modification Program to clear up some of | | | | A: Because the government wants to eliminate as |
| the controversy: | | | | many unnecessary foreclosures as possible. They |
| Q: What is a loan modification? | | | | have simplified the mortgage modification eligibility |
| A: By definition, a loan modification is a change, revision | | | | requirements and procedures to allow more |
| or adjustment to your loan. The most commonly | | | | homeowners to seek help before they lose their |
| modified terms of a mortgage are: | | | | homes to foreclosure. |
| | | | Q: Who is eligible for this streamlined loan modification |
| 1. Conversion of an Adjustable-Rate-Mortgage (ARM) | | | | program? |
| to a fixed-rate mortgage. | | | | A: The following is the basic criteria for this plan: |
| 2. A change of interest rate. | | | | |
| 3. Amortization term | | | | 1. Homeowner/borrowers who have missed three or |
| 4. Loan's Maturity date | | | | more payments. |
| 5. Unpaid principal balance | | | | 2. The property needs to be the homeowner's primary |
| The mortgage modifications are designed to enable | | | | residence. |
| borrowers to manage their monthly payment | | | | 3. A homeowner who has not filed for bankruptcy. |
| obligations. | | | | 4. Mortgage loan must be under Freddie Mac, Fannie |
| Q: What is a Streamlined Loan Modification Plan? | | | | Mae or participating investors. |
| A: A streamlined loan modification is a kind of loan | | | | 5. The homeowner must be in a financial hardship. |
| reorganization or restructuring that requires less | | | | Q: Why does an applicant need to be 90 days late on |
| paperwork, and a simple and easy procedure. It aims | | | | their mortgage or more to qualify? |
| to help struggling homeowners afford their mortgage | | | | A: Because, the plan's goal is to help borrowers who |
| payments by setting a benchmark ratio, calculated by | | | | are most at risk. Borrowers who have already missed |
| their monthly gross income. | | | | more than 3 months of mortgage payments are much |
| Q: What is the mortgage payment benchmark ratio? | | | | closer to a foreclosure sale than one who is still |
| A: Due to its essentiality, an industry standard has | | | | current. HOPE NOW still has other alternatives for |
| been agreed upon to help homeowners keep their | | | | borrowers who do not qualify for this plan. On a side |
| homes. The benchmark ratio for the calculation of an | | | | note, purposely missing your mortgage payments in |
| affordable payment is 38% of the homeowner's | | | | order to qualify is a sure way of getting denied for this |
| monthly gross income. The servicer will move to the | | | | plan. The lenders can usually tell when a borrower has |
| next steps once this is determined, such as: extending | | | | not paid their mortgage intentionally. |
| the loan's term, reducing the interest rate and | | | | Q: How many people will this new program benefit? |
| forbearing interest - until an affordable payment is | | | | A: Thousands of borrowers are expected to be |
| reached. Otherwise, the situation will be taken into a | | | | helped by the streamlined loan modification plan. It is |
| case-by-case basis using the borrower's cash flow | | | | difficult to estimate the number of people who will |
| budget. | | | | benefit, but if this streamlined mortgage modification |
| Q: What organizations were involved in creating this | | | | plan is implemented effectively, more borrowers in |
| loan modification program? | | | | foreclosure will be saved. |
| A: This was achieved through the combined efforts of | | | | Q: How do borrowers apply for this program? |
| HOPE Now and 27 servicer partners, US Treasury, | | | | A: The borrower must contact their bank and submit |
| FHA (Federal Housing Administration) and FHFA. The | | | | the requested information, such as a monthly gross |
| FDIC helped design the plan from their experience and | | | | income worksheet, association dues and fees, and a |
| assistance in creating the IndyMac bank mortage | | | | hardship letter. |
| modification plan. | | | | Q: How do borrowers complete the loan modification |
| Q: Is this plan similar to the FDIC's IndyMac protocol? | | | | process? |
| A: This plan uses the same affordability target as the | | | | A: Borrowers will need to sign the loan modification |
| indymac plan, but it differs on some aspects due to | | | | agreement and return it with the first month's payment. |
| the need of flexibility among the servicers. | | | | Once this occurs the homeowner will enter the three |
| Q: How is HOPE Now Involved in this program? | | | | month trial period. If they stay current on their |
| A: HOPE NOW employs some of the leading | | | | mortgage during this time, the mortgage modification |
| servicers today. With their collaboration with Fannie | | | | will become permanent. |
| Mae, Freddie Mac and FHFA, they have helped design | | | | |