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Obama signs The Affordability and Stability Plan

The Affordability and Stability Plan has 2 Parts:

Part 1 is the Refinance Option

Part 2 is the Loan Modification Option

1) The Refinance Part of the plan:

To be eligible for the refinance option of this plan, the borrower must:

Be on time with their mortgage payments

The LTV (loan to value ratio) of the property can can not exceed 105%

At the moment only loans “held or securitized by Fannie Mae and Freddie Mac” qualify for the refinance option.

If these qualifications are not met, the homeowner can only qualify for the loan modification option.

2) The Loan Modification Option:

To participate in the loan modification plan, borrowers must:

·     Have obtained their mortgage before Jan. 1, 2009;

·     Have a primary mortgage of less than $729,500;

·     Must live in the property;

·     Must be able to fully document their income by providing tax returns and pay stubs;

·     Must sign a statement of financial hardship; and

·     Go for counseling if their total household debt - including auto loans, credit cards and alimony - totals more than 55% of their income.

The modification program will be in effect until the end of 2012, but loans can only be adjusted once.

Officials also unveiled more details on how servicers will modify the loans. First, they must reduce interest rates so that borrowers' total house payments are not more than 38% of their monthly income. The government will then subsidize servicers dollar-for-dollar to lower that ratio to 31% - but the interest rate can't go below 2%.

The new interest rate would then remain in place for five years, after which it will increase by 1 percentage point a year until it reaches either the original rate or the prevailing mortgage rate at the time of the modification, whichever is lower.

If rate reductions aren't enough to get payments to 31% of income, a lender can extend the term up to 40 years, or shift part of the principal to the end of the loan at no interest. Servicers also have the option of reducing the loan's balance.

The multipronged fix calls for companies to help as many 4 million struggling borrowers by modifying loans so monthly housing payments are no more than 31% of monthly gross income.

Separately, homeowners who haven't missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners.

The $75 billion loan modification plan will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments.

"This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans," said Housing Secretary Shaun Donovan.

Borrowers can now begin to see if they are eligible for assistance. Federal officials will promote the program at homeownership events nationwide.

The administration Wednesday released additional eligibility criteria and program guidelines.

The loan modification plan focuses on people who are behind in their payments or are at risk of default.

Federal officials clarified the definition of "at risk" as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default.

The “Homeowner Affordability and Stability Plan” will exclude a number of American Homeowners.

No non-owner occupied properties

No jumbo loans

If you don’t have a job, you don’t qualify

Homeowners whose loan to value is at 150% or higher

Homeowners who qualified with stated income on their original loan application

Homeowners whose loan to value is greater than 105% but their mortgage payments are below the 31% income threshold.

Here is the Problem:

Banks are not going to reach out to and let them know if they qualify!

It is up to us to find out if we qualify.

The most commonly asked questions we have been asked are below: ·

Is my loan securitized by Fannie Mae or Freddie Mac?

Did the loan company qualify me with Stated Income? (95% of all loans over the last 5 years were stated income loans, even if you supplied all of your income, it’s likely the lender qualified you via stated income to make the process easier. Thus ruining your chance of qualifying for the new refinance plan).

If my property is above 105%, what are my options?

If you would like the answers to these questions, please click on the link to our Free Loan Evaluation Form below and fax it back for us to review. We will let you know if you qualify within 24 – 48 hours of receiving your completed form.

Printable Qualification Form

Clearing up the Misconceptions about the Presidents Homeowner Affordability Plan

We have received hundreds of emails and calls from homeowners that are worried that they don’t fit the guidelines for the Presidents new Homeowner Affordability Plan wanting to know if that means that they don’t qualify for any type of loan restructuring, refinance or modification.

It is important to take a quick moment to clarify that there are 4 powerful options for every single homeowner in the United States to help them get their loans under control.

The Presidents new Homeowner Affordability Plan is just the newest option available to homeowners but it is far from the only option.

To be clear, every single homeowner in the United States will have the opportunity to restructure, refinance or modify their existing loans as long as they present a lender or servicing company with a strong enough case that after a forensic cost benefit analysis it is determined that it makes more financial sense to modify the mortgage than to let it run its current course.

As of today there are 4 extremely powerful options available to people that do not qualify for a traditional refinance.

In this email I have included the most recent information on the four options.

Please take your time reviewing this information and please call or email me to go over everything in detail.

4 Options Available to Homeowners

Below you will find detailed information on the following options:

1.      The Presidents Homeowner Affordability Plan

2.      Loan Modification

3.      Forensic Loan Review

4.     New Short-Pay Refinance

5.      Who Qualifies

      1) What really is the Homeowner Affordability Plan and who will it help?

1)     It appears that this will only help people with Primary Residences (meaning the home they live in).

2)     Homeowners that have multiple properties may have to liquidate them in order to qualify.

3)     The Plan will only help people with Conforming Loans secured by Fannie Mae or Freddie Mac.

4)     It also appears that it will only help people that owe no more than 105% of the current value of their home. Anyone that owes more than 105% of the current appraised value of their home will be out of luck.

5)     Also homeowners with second mortgages or Home Equity Line may be excluded. This is very problematic in states like Arizona, Nevada, Florida and California where home values sky rocketed and many homeowners needed two loans to buy a home or were given easy access to second mortgages when values increased. These people may not qualify.

6)     Finally with the Presidents new Homeowner Affordability Plan you may only get one shot at getting your loan restructured or modified. The President is enacting major oversight and checks and balances to make sure that the bailout money is being spent wisely. As a result of this each modification and applicants financials will be reviewed rigorously. Homeowners may need professional negotiation assistance even more now than before as they might only get one shot at after the Plan goes into effect, rather than the way it is now where we are able to change things if necessary as we go, even if the homeowner already submitted information to the lender prior to working with a professional negotiator. Each homeowner application is now going to be audited even more tightly and documented to the government to paper trail where the bailout is going to be going and helping for homeowners. There truly may only be one shot at a successful loan mod after the plan goes into effect.

7)     If you are denied the first time (because you don’t know how to structure your financials) you may never get another chance.

Conclusion:

The Homeowner Affordability Plan is a fantastic step in the right direction. It is a way to help force the banks to start helping homeowners and start using the money the government has given them. But as the first step it is really only designed to help people with relatively low loan amounts on loan amounts that do not exceed 105% of the current value of their homes, it is only for primary residences and for people that do not have other properties or second loans on their home. This plan is a great step in the right direction. At this point trying to work with your lender without professional negotiation assistance is very difficult. Trying to navigate the maze of rules and regulations is meant to be intimidating by the banks. The President’s Plan will help force the banks to start working with homeowners that fit these relatively conservative guidelines but it is a start. For everyone else (those with larger loan amounts, second homes, investment properties, self employed, those that have second or third mortgages and home equity lines, and for those that owe much more than 105% of the value of their home) luckily there are other very powerful options aside from the President’s new plan.

2) Loan Modification

Who qualifies:
Any homeowner can qualify for loss mitigation and loan modification as long as they present a lender or servicing company with a strong enough case that after a forensic cost benefit analysis it is determined that it makes more financial sense to modify the mortgage than to let it run its current course.

Misconception:

Loss mitigation and mortgage relief is reserved for people that cannot afford their home or their mortgage payment. This is untrue. Anyone can qualify for loss mitigation and mortgage relief. The factors that create a solid case for loan modification vary from lender to lender and are changing daily. So whether you have a fixed rate or an adjustable, whether you have a large amount of equity or you are upside down, whether you just received a raise or you lost your job, whether you have never missed a payment or you are considering foreclosure, whether you have large reserves or you are living off of credit, whether you are trying to modify your primary residence or your investment property, whether you own 1 home or 18, if it is determined that your specific situation and lender guidelines qualify you for loan modification then modifying your loan is not only possible it is guaranteed.

3) What is a Forensic Loan Review?

A Forensic Loan Review is an important tool when forcing lenders to negotiate with us for a loan modification, an Short-Pay Refinance or a Short Sale (especially if we have not been late on our mortgage).

Many lenders are trying to avoid negotiating with homeowners that are either current on their mortgages or that are only slightly delinquent. Lenders are first working with people that are just about to foreclose (and will cause the greatest and most immediate cost to the lender).

It is becoming apparent that a Forensic Loan Review is a necessary tool in getting the lender to negotiate with us for a Loan Modification, an Short Refinance or a Short Sale (all of which require calculated negotiations with the lender) whether a client is late on their mortgage or not.

Even a minor $30 miscalculation on the lender's part could be an actionable offense, and the threat of a lawsuit is often enough to persuade the lender to deal with you in trying to find a way to help you work through your financial difficulties.

In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth in-lending (TIL) statement the lender provided shortly after you applied for your mortgage and the lender's annual-percentage-rate (APR) calculation so you could compare loan costs.

If the TIL statement doesn't match up with the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.

Typically, forensic loan audits are ordered by mortgage investors to determine what kind of legal liability confronts them in the pools of loans they already own or are considering buying. As a so-called "business-to-business service," they are not generally available to individual borrowers.

That is until recently.

We are now offering comprehensive loan document reviews to homeowners as part of its service to help homeowners get the attention of their lenders and ultimately achieve powerful loan modification results.

If an error is found, it can force the lender to move you up to the front of the long, long line of borrowers who are looking for loan modification.

In some cases, if people were simply overcharged by $30 on the final HUD-1, or if the APR was higher by just .125 percent than was originally disclosed, this may give the lawyers leverage when negotiating with the lender to grant a beneficial loan modification.

This is an excellent option for homeowners that have Negative Amortization or Pick a Pay loans.

The TIL (truth in lending) statement for Neg Am loans are notorious for having mistakes.

Because Neg Am loans have 2 interest rates (the minimum payment rate and the fully amortized rate) the APR is very difficult to calculate and there is bound to be mistakes on the paperwork.
Intentional or not these mistakes give negotiators the leverage to force lenders to modify the loan.

4) What is a Short-Pay Refinance? (Principle Reduction)

Another powerful option for homeowners that have not been late on their mortgage but are interested in a loan modification or principle reduction is the new Short-Pay Refinance.

Many homeowners still have good income, and have not been late on their mortgage or credit cards but cannot refinance because the value of their home has dropped in recent months.

For these individuals there is a powerful option that went into effect in October called the Short-Pay Refinance.



Where as a "Short Sale" has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the "Short Payoff Refinance" (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home.

This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new lender. A Short-Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes while reducing their principal.

The transaction itself is a basically a three part process.

1.     First we need to establish the actual current conservative value of the home with an appraiser.

2.     Next, we document and underwrite the homeowner's income for the new appraised value and issue an approval.

3.     Now, armed with that approval, we can enter into equity re-negotiations with the bank/loan servicer of the homeowner's loan to negotiate a principle reduction on the current mortgage.

Once the bank/loan servicer accepts the offer presented, we can complete the new loan transaction and principle reduction.

In areas where values have dropped 20% or more, this could mean a substantial reduction in principle and loss to the lender.

It is still a win win for the homeowner and the lender (who gets to remove the bad loan from their books and move forward making new loans.

Who should get a Short-Pay Refi?

For those borrowers that still have decent credit, ficos, income and no mortgage lates but through either upcoming changes to their interest rate (making it no longer affordable) or to a decline in the value of their home (owing more than it's worth), a Short-Pay Refi is the perfect solution.

Through the Short Refi, the borrower will qualify to refinance into a low fixed rate loan at the highest LTV's (loan to value ratio) possible.

This allows the borrowers to put the brakes on before everything gets away from them and spins out of control.

Why would the bank/loan servicer agree to a Short-Pay Refi and not just foreclose on the property?

Simply put, foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value. The Short-Pay Refi allows the loan servicer to avoid the majority of the legal fees and let's the new lender make its largest loan based on the fair market value. When a Loan Modification can't solve the problem as many loan servicers are not lenders, a Short-Pay Refi becomes a very powerful alternative.

To sum it up.

In essence, with a Short Payoff Refinance, the bank/loan servicers are happy because the loan is off their books and the homeowners are happy because they get a fresh start while still staying in their home with a lower mortgage payment and a lower mortgage balance.

It needs to be noted that Short Refinances, Short Sales as well as Loan Modifications, all require that we negotiate with the lender.

The lender will not grant a Loan Modification, a short refinance or a Short Sale unless we negotiate and present a convincing case to the lender that this alternative will cost the lender less than a foreclosure. As with any negotiations the final outcome and optimal results are determined by the knowledge, experience and tools at the disposal of the negotiator.

Once your file has been submitted to AMRS we will receive an eligibility approval within 24 – 48 hours.

Once your file has been approved by AMRS, we can rest assured that your situation qualifies you for modification.

And once we know we have the ability to have the loan modified we can go over your 4 loan modification options in detail.

Importance of Professional Negotiation Assistance

This is one of the most incredible times in banking and lending history. Loan Modification has always existed, yet over the last 30 years it was usually not in the banks best interest to modify a loan rather than foreclose. Only recently with the advent of 100% financing and relaxed lending guidelines have banks been put in a position that many homeowners owe more than their homes are worth.

For the first time ever on a nationwide scale, foreclosures will cost lenders more money than simply modifying the loans and taking a loss on the amount of interest or principle balance.

If we had been told 2 years ago that we could get an easy low doc loan and either buy a home with zero down or refinance and cash out to 100% of the over inflated value of our homes and in 2 years qualify for a loan modification or an short refinance and have our interest rate reduced to below the going rate and even have the principle balance of our loans reduced we would not have believed it.

But that is exactly what is happening for homeowners that qualify.

I do not think that by asking for a loan modification or an Short Refinance we are taking advantage of the lenders. Remember these are the same lenders that would raise the interest rates on our credit cards to 22% if we miss a payment or freeze our Home Equity Lines of Credit and Small Business Lines of Credit without warning.

It is my firm belief that everyone that has a mortgage in the United States should see if they qualify for a loan modification or short refinance.

Loan modifications, Short Refinances and Short Sales all require that we negotiate with the lender.

The lender will not grant a Short Refinance a Short Sale or a Loan Modification unless you negotiate and present your case without a shadow of a doubt. As with any negotiations the final outcome and results are determined by knowledge and experience of the negotiator. One important factor stands alone in determining the best results and that is Professional Negotiation Assistance.

Even for people that believe they may qualify for the Presidents new Homeowner Affordability Plan, having professional assistance may be more important than ever.

With the Presidents new Homeowner Affordability Plan homeowners may only get one shot at getting a loan modification. Once you submit your financials you may not get another chance, making it more important than ever to have a professional on your side (just as you would with a divorce, bankruptcy, arrest or injury).

There is a complex set of procedures, negotiations, and documentation that needs to be completed. In most states this process needs to be performed by an attorney or properly licensed counselor.

The key to borrower success is navigating the red tape and unfamiliar internal processes at banks and lenders and knowing when to be aggressive and when to take the offer and this is why working with professional loan modification experts is extremely important.

Even more frustrating and challenging is the fact that the lender that services our loans may not be the ultimate investor that owns the note. The loan modification guidelines for the company that services your loan may be dramatically different from the company that owns the note. In addition to this the loan modification guidelines are changing monthly and vary from bank to bank. Countrywide has changed their guidelines on late mortgage payments 3 times in as many months. Countrywide even told one of my clients that what may work with Countrywide last month won't always work this month. This is exactly why homeowners need professional assistance to obtain the best results possible.

The window for homeowners to qualify is very small and it is getting smaller due to stricter guidelines and audits as a result of the President’s Plan. Many lenders require homeowners to have monthly positive income to qualify while others require negative cash flow and it is different depending on the lender.

So if a homeowner doesn’t know this information (because lenders do not put out guidelines for public use) it can be difficult for homeowners to know how to approach the lender with the proper numbers.

Homeowners could disqualify themselves immediately by saying the wrong thing and they may only get one shot.

This is just like having an attorney do divorce or bankruptcy paperwork.

For many homeowners, this is their most important and probably largest investment into one thing.

It makes sense that they want someone that is skilled and understands how to handle the negotiations and do it for them so they don’t cause any mistakes and in order to insure the best results for them.

5) Who Qualifies?

The next step for any homeowner interested to see if they qualify for one of these programs is to simply fill out the Free Loan Evaluation Form (by clicking on the link below) and faxing it back to us for our network of attorneys to review.

Quint Cobb & Associates (Loan Modification Evaluation Form)

This Free Loan Evaluation Form will allow us to determine if your financial profile fits within the eligibility requirements for a successful Loan Modification or Short Refinance and if you qualify under the Presidents new Homeowner Affordability Plan.

You will receive an approval within 24 – 48 hours after completing this Free Loan Evaluation Form.