Mortgage Insights Blog

At the end of last month JP Morgan Chase led a new trend by anouncing a new, agressive change to the way they handle their foreclosure and loss mitigation process. Followed thereafter by CitiMortgage and just earlier this week, the GSE's (Fannie & Freddie) and Federal Housing Finance Agency as well.

For the last two years homeowners have faced much frustration and dissappointment with obtaining loan modifications and short sale approvals. For a while it seemed like banks just did not want to deal with the reality of the distressed real estate markets and come to terms with what would best help their investors and most importantly their homeowners. Instead they allowed short sales and foreclosure sales to languish for months without response all-the-while depressing the home values in their respective neighborhoods.

The Federal Housing Finance Agency yesterday announced a new loan modification program designed to reduce preventable foreclosures with a simplified, streamlined program to put struggling homeowners into mortgage they can afford. The goal is to have a uniform process for loan modifications that the majority of lenders and servicers will use. Participants include Fannie Mae, Freddie Mac, Federal Home Loan Banks, Hope Now participants, the U.S. Dept. of the Treasury, the Federal Housing Administration and the Federal Housing Finance Agency, and Wells Fargo.

To be eligible, the borrower must: have missed three or more payments; own and occupy the property as a primary residence; have not filed for bankruptcy; and be able to have their mortgage modified so their entire mortgage payment, including association dues, if applicable, is no more than 38 percent of their gross income.

Program details are still forthcoming, with a targeted implementation set for Dec. 15. Troubled homeowners should inquire with their lenders or servicers as to participation and eligibility for this new program.

By the way, the best thing to do if you find that you are falling behind on your mortgage payments is to call your lender or mortgage servicer and find out what options you have. Other resources exist such as the Hope Now Alliance or you can look up your local HUD counselor who can assist you as well. Don't hesitate to contact your real estate agent or mortgage broker either as they can be helpful as well.

Finally we are seeing a joint effort in the way that Lenders are responding to rising foreclosures with an increased effort to streamline their loan work outs and short sale approvals.