Burt M. Polson | Napa Valley and Vallejo's Commercial Real Estate Broker

Guiding you through the real estate part of your life™

Commercial Sales, Leasing and Consulting

Private Equity Syndication

Napa Valley and Vallejo, California

Understanding the Housing Stimulus Package

How to Help Homeowner's Understand Obama's Foreclosure Plan March 4, 2009

Courtesy of: Jake Baker, Pacific Mortgage Consultants, (415) 847-2670

Making Home Affordable Programs

Key Refinancing Qualification Guidelines:

  • This program is designed to enable the refinancing of homes that have lost value into today’s lower rates until June 2010
  • Across the board $729,750 1st mortgage maximum!
    • It appears that restrictions by county were eliminated!
    • Homeowner must be able to qualify for and afford the new, lower payment
      • Primary residence will be verified by tax return, credit report, & utility bills
      • Income verified by one year tax returns & recent pay stubs
      • No more that 30-days late on your mortgage payment in the last 12 months
        • In other words, no more than one 30-day late in the past year
        • Current 1st must be held or controlled by
          • Fannie Mae: 1-800-7FANNIE (8am to 8pm EST)
          • Freddie Mac: 1-800-FREDDIE (8am to 8pm EST)
          • Some details are not as clearly stated as loan mod details...
            • For example, 105% LTV for the 1st mortgage was stated in last week's press release
              • In other words, if your mortgage happens to be at the new limit - $729,750; but your home value has fallen to $766,237 -- congratulations, you just made it!
              • However, I cannot find that same LTV cap in the official release today
              • For now, we can assume a 105% LTV is still in effect
              • Nor is it perfectly clear how 2nd mortgage lenders will be dealt with
                • 2nd mortgage payments will still be in the back end debt ratios
                • Will they voluntarily subordinate to the new 1st?
                • There is a cash incentive to cooperate in the loan modification program that will be paid by the FED to the 2nd lien holders; perhaps this will be allowed in the refinance program, too

Key Loan Modification Details:

  • $75 billion to the 3-4 million who are now "Underwater" due to legitimate hardships goes to 2012
    • How the FED will monitor on-going hardships still TBD
    • Only loans currently owned or controlled by Fannie Mae and Freddie Mac
    • Homeowners can go direct to their Lender -- no 3rd parties needed
    • Maximum $729,750 home value, and no LTV requirements
    • Homeowner DOES NOT have to be delinquent in order to qualify
    • Required Docs: most recent tax return; two pay stubs; hardship letter
    • Loans are 5-year fixed going for as low as 2%
    • Payments will be lowered to 31% of income
      • Lenders must drop payment to 38%"
      • FED will share the further drop down to 31%
        • Example: 1st Mortgage = $500k @6.25% = $3,078/month
        • Income = $4,000 per month X 31% = new payment of $1,240!
        • Cash incentives will be paid to lenders to cooperate
        • Cash incentives will be paid to borrowers, too!
          • As long as the borrower stays current on his or her payments, he or she can get up to $1,000 each year for five years paid towards loan principle

An ACRES Real Estate Services, Inc. Company