Fannie Mae launches exclusive foreclosure deterrence plan

Fannie Mae declares unique foreclosure avoidance planfrom Government Refinancing Assistance In addition to the HAMP and HARP and HAFA foreclosure avoidance programs offered from the federal government, Fannie Mae released its own plan just lately for the numerous loans they back. We obtain this from a recent HousingWire article about the topic: Fannie Mae introduced its version of the Making Residence Affordable Foreclosure Alternatives (HAFA) program Tuesday, implementing the plan for all conventional home loans that are held in Fannie’s portfolio, which are part of an mortgage-backed security (MBS) pool with a distinctive servicing choice, or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired house.



The Fannie Mae plan takes effect August 1, this year and is created to mitigate the impact of foreclosures on borrowers that are entitled for any mortgage modification below the Residence Affordable Modification Program (HAMP) but were unsuccessful in acquiring one, Fannie said. Like the Treasury Department’s HAFA program, servicers can't think about a borrower for HAFA before borrower is examined and eliminated from eligibility for any Making Home Affordable Modification Program (HAMP) workout strategy. Also like the Treasury plan, Fannie Mae may offer servicers cash incentives for completed HAFA transactions, $2,200 for short sales and $1,200 for deed-in-lieu of foreclosure agreements. Borrowers are also entitled for $3,000 in incentives. That’s much more than within the Treasury’s HAFA program, where servicers are entitled for $1,000 and the borrower gets $1,500. Within the Treasury HAFA, the investor is also entitled for any $1,000 incentive. …


After announcing the plan in October 2009, Treasury’s HAFA plan began in April. The Fannie Mae HAFA plan is the latest in a string of programs designed to help borrowers avoid foreclosure. In addition to HAFA and HAMP workouts, Fannie Mae is letting some distressed borrowers stay in their homes as renters, under the deed for lease (D4L) plan. Below D4L, the homeowner-turned-renter is required to pay fair market rent to stay in their home for up to twelve months. The renter must have enough income to sustain a 31% income-to-rent ratio and rental payments are not subsidized by Fannie Mae, but could possibly consist of renters suitable for Section eight payments. Also, in 03 this year, Fannie Mae instructed its servicers to think about an “alternative modifications” for all mortgages that did not qualify for any permanent conversion below HAMP. That “Alt Mod” plan, which sunsets on August 31, this year, is comparable to HAFA.

Getting Loan Modification To Your Favor

Loan modification or loan workout as sometimes commonly called, is a change in the terms of a mortgage agreed upon by the lender. Alterations are considered to aid homeowners in getting lower monthly payments that will deter possible foreclosure. The lender meets with the owner to reach an agreement in determining what loan terms can be changed for the benefit of both parties. The proposed outcome will enable individuals to pay a smaller monthly sum based on their present income.

Lenders can make modifications at their own discretion, but are usually motivated by profit to offer better options to the borrower. When an individual continues to make payments at a reduced rate, the financial institution accrues more income than if they had to foreclose on the property. Federal programs available within low-income states mandate that lenders offer appropriate modifications. Mortgages are improved in a number of ways that comprise of reductions in interest rates, principals and late fees. The loan can also have a monthly payment cap according to a household's income and be extended over a longer period of time. Forbearance programs are obtainable for those needing a few more months to get back on good financial standing.

There are determining factors a lender will ponder before making loan modifications. Consent relies on the type of hardship that has caused the borrower's predicament. The recent economy has brought upon the stress of employment loss. Individuals may get laid off or fired, losing their regular income. People are losing their jobs due to company cutbacks and business bankruptcy. An accident could leave the sole income provider with unexpected medical bills or the inability to work. Other reasons that determine modifications to mortgage loans may be the financial future situation, property equity and the amount owed.

Many homeowners now have the option of utilizing HAMP or the Home Affordable Modification Program. Applications can be submitted when borrowers are in default, bankruptcy or foreclosure. The process is not difficult and starts with a modification affidavit. The borrower then provides proof of income and tax returns with all family information. Documents are then submitted to the lender for approval.

With the housing crisis upon us, many individuals owe more on their homes than the property is worth. The HAMP program believes struggling property owners should be given the chance to stay in their homes.

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