During the past year I have read everything I can find about available government programs; my greatest concern are the blatant lies told to the American people.
WEDNESDAY, FEBRUARY 18TH, 2009 AT 9:36 AM, Help for homeowners, Posted by Macon Phillips The President’s strategy for economic recovery is a stool with several legs, as he’s said, and one of them is solving the foreclosure crisis.
“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.”
Wednesday, February 18th, 2009 at 6:20 pm, Press Briefing with Treasury Secretary Geithner, HUD Secretary Donovan, and FDIC Chairman Bair, THE WHITE HOUSE, Office of the Press Secretary, For Immediate Release February 18, 2009
Page 3: “Finally, we will provide a series of incentive payments for success both for owners where you can benefit from a $1,000-a-year payment up to five years — if you’re successful and succeed in your modification for up to five years, $5,000 that can reduce the principal on your home mortgage — as well as incentive payments to servicers and lenders that if the modifications work over the years we will make payments to them as incentives to keep people current.”
Page 7: “Q: From 38 down to 31 — does that include principal, as well, or just interest?
SECRETARY DONOVAN: That is up to the servicer. We are willing to match payments for principal reduction or interest reductions or extending out the term. Whatever the combination is that can get payments down to 31 percent, that’s critical. We’ve seen a lot of modifications that have failed because they’ve actually increased payments rather than reduced payments. So getting payments to 31 percent debt-to-income ratio is critical.”
Page 9: “SECRETARY GEITHNER: Absolutely. Absolutely. You can come and initiate that process. And there’s a variety of — to make that easier, easier to happen more quickly. On your second part of your question, as Shaun said, you can bring those mortgage payments to 31 percent through a mix of interest rate reductions, principal reductions, or extensions of the loan. And we’re trying to incent and help that actually happen. And whatever mix works is okay.
Q– the principal, as well?
SECRETARY GEITHNER: That’s right.”
Homeowner Affordability and Stability Plan Executive Summary
Page 2-3 “A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.”
THE WHITE HOUSE, Office of the Press Secretary, FOR IMMEDIATE RELEASE, May 20, 2009, REFORMS FOR AMERICAN HOMEOWNERS AND CONSUMERS, President Obama Signs the Helping Families Save Their Homes Act and the Fraud Enforcement and Recovery Act
Page 2: “Hope for Homeowners targets help to underwater borrowers, who often face heightened risks of foreclosure, by requiring principal write-downs to help homeowners increase the equity they own in their homes. The legislative modifications to the Hope for Homeowners program included in S.896 will ease restrictions on eligibility and enable refinancing of underwater mortgages for a greater number of borrowers.”
Senate Banking Committee Chairman Chris Dodd and House Financial Services Chairman Barney Frank in a letter said,
“A key part of this effort was the creation of the HOPE for Homeowners (H4H) program, enacted as part of the Housing and Economic Recovery Act of 2008 (HERA), and the improvements made to the program in the Helping Families Save Their Homes Act of 2009. The program is premised on the view, expressed by Federal Reserve Board Chairman Bernanke and others, that the creation of equity for troubled homeowners is likely to be an effective tool for helping families keep their homes and avoid foreclosure.”
Although Hope for Homeowners mandated principal reductions, servicers continue to add to principal balances. Nowhere in the HAMP documents (published to the web September 23, 2009) are principal reductions or write-downs even mentioned. During the “Trial Period” of the HAMP program servicers are continuing to increase principal balances. There are no provisions to stop the arrears payments from increasing principal and retroactive interest is not offered.
GMAC is unwilling to write off the arrears payments and late fees. With the current value of homes in our area if our principal is increased we will be underwater in our mortgage. In a normal housing market where appreciation is 5% per year it will take over 7 years to break-even on the principal balance. The offering of a forbearance agreement of the arrears payments and late fees does not benefit the over all market.
Policies must be changed to provide modifications that actually work. The guidelines for HAMP should be adjusted to provide relief to homeowners. Homeowners need assurance of the terms of the permanent modification. Modification agreements should not waive the rights of homeowners, reaffirm the debt, or supersede any state laws.
“What we should do?” Homeowners need more information on the laws surrounding “original” loan documents. Should we stay in our home regardless of the banks proceedings? Should we investigate the Truth in Lending Act as it pertains to the mortgage?
This problem will not go away until there are solutions that benefit the homeowner and not merely a way for the banks and servicers to collect the debt.
