Second Mortgage Modifications for Credit Lines and Equity Loans and
by admin ~ September 1st, 2009.The use of second mortgage liens grew during the housing boom as homeowners extended themselves with home equity loans to consolidate debt and finance as much as 100% of the original purchase price. Administration officials estimate that modifying home equity loans could help as many as 1.5 million homeowners. An Obama official said that “by bringing the 1st and 2nd lien together, we can reduce monthly payments for borrowers and make it more likely they can stay in their houses.”
Twelve mortgage servicers, covering more than 75% of mortgages, have signed contracts to participate in the first mortgage program, government officials say. Some of them also expressed support for the home equity loan program. Kevin Moss, executive vice president of Wells Fargo Home Equity Group said the new loan modification guidelines balance “the needs of all shareholders, the borrowers, the investor and the loan servicing companies nationally.” Laurie Goodman, a senior managing director with Amherst Securities Group said the latest announcement “certainly goes a long way towards alleviating investor concerns,” said. The latest FHA mortgage program, Hope for Homeowners “is very important,” she said. “It appears that large numbers of delinquent borrowers would qualify for this modification program for their equity loan.”
Some investors still have concerns about pending legislation that would protect mortgage servicers from lawsuits over loan modifications. “The way the investor community will be comfortable with this is if there is no servicer safe harbor,” said one investor. An administration official said that “we don’t feel like we need safe harbor for our program to be successful.”
The revised program requires mortgage servicers to determine whether a borrower is eligible for the Hope for Homeowners program and includes financial incentives to encourage the mortgage refinance loans. Many investors say they would be willing to take a principal write-down in exchange for getting troubled mortgage loans off their books. But so far, just 51 loans have been refinanced under the Hope for Homeowners program, the Department of Housing and Urban Development says.
Category: Government Mortgage Relief, Home Equity News, Home Equity Programs, Mortgage News | Tags:
January 13th, 2010 at 8:06 am
I don’t typically take the time to leave a comment, but the home equity posts were especially helpful to me today. As I myself helping people with loan modification plans, I found this as incredibly useful advice. Thanks – Holly T.