I want out of my house.

[angelbaby]

Who's eligible?
The administration Wednesday released additional eligibility criteria and guidelines for the refinancing and modification prongs of the program.

The refinancing portion, which is open to homeowners who took out loans from Fannie Mae and Freddie Mac, allows borrowers with less than 20% equity in their homes to refinance to the current prevailing rate. However, borrowers cannot owe more than 105% of the value of their home and must be current on their payments.
The program ends in June 2010. Each servicer will provide details on the terms and costs associated with refinancing, which is aimed at helping borrowers suffering from the decline in home values.

The government provided far more information on the loan modification plan, which it is spearheading. This portion 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 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. This should prevent borrowers from suffering the "payment shock" that sent many borrowers with adjustable-rate mortgage into default in recent years.

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.

Servicers will receive $1,000 for each loan modified, as well as additional annual bonuses if borrowers keep up with payments. Mortgage investors will receive one-time $1,500 incentive payments for restructuring qualifying loans that are not yet delinquent. Finally, borrowers who keep up with their new payments will receive up to $1,000 a year in principal reduction, for up to five years.

While the program is voluntary, once servicers commit to participating, they must evaluate all loans that may be eligible. Financial institutions that receive government money going forward must participate.

Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. The government is also providing incentives to servicers and borrowers to enter into "short sales" or "deed-in-lieu of foreclosure" agreements with those who can't afford to stay in their homes. In these cases, the bank agrees to take back the home for less than what's owed without filing for foreclosure.

They are not encouraging anyone to walk away from their loans.

 

[onebdzee]

So where do those of us that have been making our monthly mortage payments and are in an upside down loan go to apply for these refinance loans?

 

[belvak]

No, that's not the case. Sometimes it is better that married couples hold separate assets. Sometimes one person just wants to be on the loan.

Yeah, but that person would have to qualify on their own income, right? If they have a co-signer/co-applicant, that person's credit would get run too, so the bad credit woud pop up?

 

[Tigerlily]

How long before interest rates start climbing due to everyone bailing on their loans?

I just received a letter from one of my credit card companies the other day informing me that they are rasing their interest rates. I have had the card for two years, have never been late, never gone over my limit & just paid it off last month.

The letter states that due to economic conditions they have to raise their rates but they won't go into effect until January of 2010. So my rate now which is 9.9% will jump to 19.9% in in January. Well fark me running.

I will be saying no thank you and closing that account. If all I get for doing the right thing is a big eff u lady. I will just take a pass.

 

[aps45819]

Pretty much the only reason to pay your bills on time and do the right thing is personal ethics.

screwed again

 

[onebdzee]

I just received a letter from one of my credit card companies the other day informing me that they are rasing their interest rates. I have had the card for two years, have never been late, never gone over my limit & just paid it off last month.

The letter states that due to economic conditions they have to raise their rates but they won't go into effect until January of 2010. So my rate now which is 9.9% will jump to 19.9% in in January. Well fark me running.

I will be saying no thank you and closing that account. If all I get for doing the right thing is a big eff u lady. I will just take a pass.

The company that I have my credit card for my business tried to do this....I called them and asked them why they were doing this, I've had this card for over 4 years and have never been late on a payment....the guy on the phone said that it was because they ran a credit check and saw that I had a large debt in my name(my house) and because of this the rate had to go up

They were trying to raise it from 7.9% to 21%....I laughed and told them they had 2 choices....they either leave the rate alone or close the account....they left it alone

 

[Christy]

Christy, I don't know where you are getting your info from but you are wrong.

I'm getting my information from experience. I have a normal interest rate, 6%, not high, not low. I have never been late on a mortgage payment and I will never qualify for any special deals. Call it sour grapes, but it just really frustrates me that they are creating special programs to save people who should have known darn well that taking out a loan with an ARM is risky. That is why the interest rate is so low to begin with, because it is a gamble.

It doesn't matter what you call it, refinance or "modification". The fact still remains that those of us who played it safe and locked in at a fixed rate are really seeing no benefit and we should be the ones who are rewarded with the option to refinance at an extremely low interest rate not the other way around. :shrug:

 

[angelbaby]

The company that I have my credit card for my business tried to do this....I called them and asked them why they were doing this, I've had this card for over 4 years and have never been late on a payment....the guy on the phone said that it was because they ran a credit check and saw that I had a large debt in my name(my house) and because of this the rate had to go up

They were trying to raise it from 7.9% to 21%....I laughed and told them they had 2 choices....they either leave the rate alone or close the account....they left it alone

Good for you to stand up to them!

So where do those of us that have been making our monthly mortage payments and are in an upside down loan go to apply for these refinance loans?

You have to call your current lender and ask to refinance. They will check to make sure you qualify and tell you what you need to do. My lender was great. We should be refinanced in about 3 weeks. I will tell you that it did take a long time to get through on the phone. Just be patient and good luck .

 

[Christy]

You have to call your current lender and ask to refinance. They will check to make sure you qualify and tell you what you need to do. My lender was great. We should be refinanced in about 3 weeks. I will tell you that it did take a long time to get through on the phone. Just be patient and good luck .

What was your interest rate to start and what interest rate are they refinancing you to?

 

[angelbaby]

I'm getting my information from experience. I have a normal interest rate, 6%, not high, not low. I have never been late on a mortgage payment and I will never qualify for any special deals. Call it sour grapes, but it just really frustrates me that they are creating special programs to save people who should have known darn well that taking out a loan with an ARM is risky. That is why the interest rate is so low to begin with, because it is a gamble.

It doesn't matter what you call it, refinance or "modification". The fact still remains that those of us who played it safe and locked in at a fixed rate are really seeing no benefit and we should be the ones who are rewarded with the option to refinance at an extremely low interest rate not the other way around. :shrug:

Look there's no easy answer to this problem. I will tell you that it wasnt just people who took risky loans. A good majority of these people refinanced their fixed rate loans to take out equity when the prices of houses went up dramatically. How do you know you can't refinance your loan? If it's held by Freddie mac or Fannie mae it is eligible for refinance.

 

[angelbaby]

What was your interest rate to start and what interest rate are they refinancing you to?

I won't know that until this week. I will be sure to let you know when I find out.

 

[Christy]

Look there's no easy answer to this problem. I will tell you that it wasnt just people who took risky loans. A good majority of these people refinanced their fixed rate loans to take out equity when the prices of houses went up dramatically. How do you know you can't refinance your loan? If it's held by Freddie mac or Fannie mae it is eligible for refinance.

I'm going to call and check and I will publicly apologize if they refinance me at a crazy low rate, but I just don't see it happening because my interest rate isn't that high. :shrug:

What rate did you get?

 

[angelbaby]

I'm going to call and check and I will publicly apologize if they refinance me at a crazy low rate, but I just don't see it happening because my interest rate isn't that high. :shrug:

What rate did you get?

They didnt tell me yet. I'll let you know as soon as I do. There's no harm in asking. The only guidelines were you had to buy your house before Jan 09 and the loan has to be held by Fannie mae or Freddie mac. I hope it works out for you.

 

[Tigerlily]

The company that I have my credit card for my business tried to do this....I called them and asked them why they were doing this, I've had this card for over 4 years and have never been late on a payment....the guy on the phone said that it was because they ran a credit check and saw that I had a large debt in my name(my house) and because of this the rate had to go up

They were trying to raise it from 7.9% to 21%....I laughed and told them they had 2 choices....they either leave the rate alone or close the account....they left it alone

That's what DE told me to do. It just ticked me off. You do all you can to do the right thing and end up paying in the long run. With the way the economy is and hearing that creditiors are not giving loans, etc. I don't know if it would be as easy to say "Well if you don't lower my rate I will go somewhere else"

The rate I have now whicih was 0% for my first 6 months and then went to 9.9, is now considered my new "Promotional rate" until Jan 2010. So I have time to decide. It just irks me that they are looking that far ahead. So I guess I won't be carrying any balances that would be subject to their interest. That will show them.

 

[somdrenter]

Sure you'll be able to refinance and get maybe a 5% interest rate, but if you don't pay for a couple of month's you'll qualify for a 2% mortgage. Also if you pay your credit card bills they still can arbitrarily jack up your interest rate but if you stop paying them they'll be calling 24/7 to work out a deal where you don't even have to pay back the full amount, just a partial amount of the total debt. Crazy days, crazy days.

 

[somdrenter]

There seems to be a myth that you can walk away with no problems. Wait until you try to rent a place with no credit. Most landlords today are turning people down for credit problems because they don't want get stuck with deadbeats and end up losing a rental home.

One could have the rental agreement in hand, move in, (credit still intact), then walk away from the mortgage.