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Thank you taxpayers!  From HW:

The Treasury Department will triple payments to mortgage investors for reducing borrower principal through an expanded Home Affordable Modification Program announced Friday.

Officials announced several critical changes to HAMP, including an enrollment extension to Dec. 31, 2013, from its original expiration date at the end of this year.

The Treasury will also require servicers to factor in second liens and other obligations in the debt-to-income ratio calculation. Previously, if a borrower’s first-lien mortgage monthly payment was below 31% of the income, the borrower was deemed ineligible. Factoring other debts to the DTI evaluation will expand the pool of borrowers who could receive the assistance.

To combat blight, officials said they would also expand HAMP to investors who are renting properties to tenants.

Since HAMP launched in March 2010, more than 900,000 permanent modifications have been conducted. The Treasury originally estimated the program to reach between 3 million to 4 million borrowers. As of Dec. 1, less than 1 million were estimated to be eligible for the program under past rules.

Of the modifications already given, roughly 36,400 resulted in reduced principal as of Dec. 1. The Treasury paid between six and 21 cents to the investors for each dollar forgiven under HAMP, but that will grow to between 18 and 63 cents, under the rule changes.

In a conference call Friday, Treasury Assistant Secretary Tim Massad would not estimate how many borrowers would be eligible after the changes, but he did say mortgage servicers were signaled some expansion, even for principal reduction.

“We have previewed the changes with the servicers,” Massad said. “We got a very positive initial reaction.”

Department of Housing and Urban Development Secretary Shaun Donovan said in the conference call Friday that the Treasury would make these payments to Fannie Mae and Freddie Mac if they participate in the principal reduction program.  To date, the GSEs have not committed to such a program.

Both GSEs owe the Treasury $151 billion in bailouts, and their regulator the Federal Housing Finance Agency said a wide-scale principal reduction program would cost Fannie and Freddie $100 billion.

Of the $29.9 billion allocated for HAMP and other housing programs, the Treasury has spent only $2.3 billion. The Treasury still owes another $9 billion to $10 billion for the modifications already done, Massad said.

Donovan renewed calls for servicers to ramp up principal reductions, and reiterated that they would be a main tool in crackdowns stemming from the ongoing foreclosure settlement talks and the securitization investigations launched this week.

“These changes aren’t going to solve all the problems in the housing market, but they shouldn’t have to wait for the market to hit bottom before getting some relief,” Donovan said.

CR outlined on his show how the Fannie/Freddie HAPR refinances will escalate in March when they change to automated underwriting, and loosen the guidelines by not requiring appraisals or income verifications.  See more details here:

http://www.bubbleinfo.com/2012/01/11/harp-no-income-refis-in-march/

In the State of the Union address last night, President Obama said he will send to Congress a proposal to expand the refinancing to loans carried by private lenders.  An excerpt from the nytimes.com:

The new plan would require Congressional approval, a difficult hurdle for any legislation in the current polarized environment. Still, some Republicans have expressed support for expanding the availability of refinancing, and White House officials insisted that the plan was not an act of theater.

“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates,” Mr. Obama said Tuesday night in his State of the Union address. “No more red tape.  No more runaround from the banks.”

Administration officials said they would release the full proposal in the near future.

The new program will be directed at people whose mortgage debts exceed the value of their homes, according to a senior administration official who spoke on the condition of anonymity because the details have not yet been finalized. The official estimated that the program could benefit two million to three million homeowners who have loans that are not guaranteed by the government, and that the program’s cost would not exceed $10 billion.

The proposal is the latest in a long series of largely unsuccessful efforts by the administration to bolster the housing market. Like most of its predecessors, the plan is focused not on borrowers facing foreclosure but on those who have been able to keep making the payments on their homes. Reducing housing payments for those borrowers will allow them to spend more money on other things. It also could help to stabilize housing prices by encouraging them to stay in their homes.

They haven’t rolled out the details yet, let along convince Congress that they should add 2-3 million more refinances of private loans to the 1 million projected to be helped by HARP.

But if they did, the last sentence is the key – it will bring fewer homes to market, which may or may not ‘stabilize housing prices’. 

What his program will do is stagnate the market further, because there will be fewer distressed sales selling for retail price or less (which would stimulate sales!).  Instead, the housing inventory will be dominated by equity sellers who insist on listing their homes for retail-plus prices, and holding out. 

This additional program will force buyers to contend with lowly-motivated sellers – the ones who will sell, if they get their price.  Will buyers be willing to pay more?

Thanks to everyone who participated in the blog talk radio show last night with Bill McBride!

Based on the responses here and at CR, people enjoyed hearing from Bill, and are encouraging him to do more – hopefully we can do it again.

Here is the link to the two hours:

http://my.blogtalkradio.com/jim-the-realtor/2012/01/11/bill-mcbride-of-calculated-risk

I will have the transcript of the show hopefully by tomorrow for those who prefer to read – we covered many topics!

Bill brought up the HARP refinancing of underwater mortgages, and how they are going to automated underwriting in March.  This means that the Fannie/Freddie loans over 80% LTV (though appraisals aren’t required) can be refinanced at today’s rates – with no qualifying.

The GovFed guys think this program will help another million people stay in their homes.  We speculated that if it was easy (or at least easier) to get a loan mod, more people would do it, and stay in their home. 

With 8-10 million foreclosures expected, if they could solve a million here, and a million there, and not have to foreclose…for now…could that be enough relief to calm the markets?

The new enhanced Home Affordable Refinance Program guidelines were released on November 15, 2011, and with this December 20th update they stated that no income ratios will be required for qualified borrowers (on page 7).  It appears that they will rely primarily on credit histories.

However, these are guidelines, and the lenders will come up with their own interpretation. 

Fannie Mae and Freddie Mac buy loans, they do not fund loans. Therefore, we must be reminded that these guidelines must now be met up with originators such as BofA, Wells Fargo, Chase, Citi, etc. who will then in turn create their own internal guidelines, based on their interpretation of what Fannie and Freddie have put out. In addition, the lenders may have their own comfort level, company philosophy or other internal reasons for making the program more attractive, or less.

Key components of the new HARP:

1. The original mortgage must have been sold to Fannie or Freddie prior to April 1, 2009.
2. It appears they are looking for scores at 620 and higher.
3. The new guidelines are permitting one 30-day delinquency within the previous 12 months on the mortgage being refinanced provided the Delinquency was not within the previous six months.
4. There are no LTV restrictions for fixed-rate mortgages with terms up to 30 years, including those with terms of 15 years.
5. Any borrower with an LTV ratio below 80% is not eligible for HARP.
6. The GSEs provided specifics on which liabilities would be lifted and noted that the rep and warranty adjustment is one of the most important components of the new program in order to create competition.  The lender will not be responsible for any of the representations and warranties associated with the original loan. As long as the new loan has no fraud associated with it, for the most part the new lender is off the hook as far as buy backs are concerned. This is a major point and will cause additional refinances.
7. The lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property unless they obtain a new appraisal. It should mean that the lender would rather NOT order an appraisal. They will likely order one in the event they believe that the subject property may have challenges that are not being fully disclosed.
8. They are removing the requirement that the occupancy of the Mortgage being refinanced and the occupancy of the Relief Refinance Mortgage be the same
9. The GSEs are also removing the requirement that the borrower (on the new loan) meet the standard waiting period following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed.

https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf

http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1122.pdf
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf1.

You may look up to see if Fannie Mae owns your mortgage by clicking here; http://www.fanniemae.com/loanlookup/ and click here to see if your loan is owned by Freddie Mac; https://ww3.freddiemac.com/corporate/

From Huff:

Less than 20 percent of homeowners who theoretically qualify for a government mortgage modification are actually eligible, according to data released Monday by the Treasury Department.

Although roughly 4.6 million U.S. homeowners have missed at least two mortgage payments — making them technically eligible for Making Home Affordable, the federal government’s flagship homeowner assistance program — a whopping 80 percent of those borrowers cannot be helped by the program. According to the Treasury report, just 900,000 homeowners actually qualify for a loan modification under Making Home Affordable.

Dean Baker, an economist and co-director of the Center for Economic and Policy Research, said that fact reflects the program’s low goals. “If 900,000 are eligible, and this is your main program for helping underwater borrowers, and we know that not all 900,000 can be helped, this doesn’t look very ambitious,” he said.

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From theenterpriseblog:

This could be just the beginning. If President Barack Obama’s legally dodgy appointment of Richard Cordray to head the consumer finance agency should stick, it may open the door to more such actions. Here’s Jaret Seiberg of the Washington Research Group:

To us, the most important takeaway from a recess appointment of Cordray is that the President could use this same maneuver to put a housing advocate in charge of FHFA.

And why is that important? The Federal Housing Finance Agency is the regulator and conservator of Fannie Mae and Freddie Mac. And the FHFA currently has an acting director, Edward DeMarco. If Obama replaces him with a “housing advocate” via the same recess appointment process, here’s what might happen next, according to Seiberg:

That could lead to a mass refinancing program for agency-backed mortgages that would go well beyond the existing HARP program. That could hurt agency MBS pricing and result in higher financing costs going forward. Yet it also could be a big boost for the economy and housing going into the election.

Indeed, my sources tell me the Obama administration has been eager to implement just such a plan, but needs to have its own man heading the FHFA to make it happen. The plan would be modeled after one originally devised by Columbia University economists Glenn Hubbard (a campaign adviser to Mitt Romney and AEI visiting scholar) and Christopher Mayer. In recent congressional testimony, Mayer described how the mass refinancing plan would work:

Under our plan, every homeowner with a GSE mortgage can refinance his or her mortgage with a new mortgage at a current fixed of 4.20 percent or less. … To qualify, the homeowner must be current on his or her mortgage or become so for at least three months. … Other than being current, we would impose no other qualification or application, except for the intention to accept the new rate (that is, no appraisal, no income verification, no tax returns, etc.).

Mayer estimates that some $3.7 trillion of mortgages would be refinanced. That’s right, this would be the Mother of All Mortgage Refinancing Plans. It would help roughly 30 million borrowers save $75 billion to $80 billion a year. As Mayer puts it: “This plan would function like a long-­lasting tax cut for these 25 or 30 million American families.”

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From cnnmoney.com (seen at CR):

NEW YORK (CNNMoney) — Delinquent borrowers facing foreclosure are learning that they can stay in their homes for years, as long as they’re willing to put up a fight.

Among the tactics: Challenging the bank’s actions, waiting to file paperwork right up until the deadline, requesting the lender dig up original paperwork or, in some extreme cases, declaring bankruptcy.

Nationwide, the average time it takes to process a foreclosure — from the first missed payment to the final foreclosure auction — has climbed to 674 days from 253 days just four years ago, according to LPS Applied Analytics.

It takes much longer than that in Florida, where the process averages 1,027 days, nearly 3 years. In D.C., foreclosure averages 1,053 days and delinquent borrowers in New York often stay in their homes for an average of 906 days.

Because California is a trustee-sale state, the delays are shorter – only 11 months on average:

And while some borrowers are looking for ways to make good with lenders and get their homes back, many aren’t paying a dime. Nearly 40% of homeowners in default have not made a payment in at least two years, according to LPS.

Many of these homeowners are staying in their homes based on a technicality. There is rarely any dispute over whether or not they have stopped paying their mortgage, said David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks and other financial institutions in foreclosure cases.

“In my experience, they never say, ‘I’m not delinquent’ or ‘I want to pay my bill but I’m confused over who to send it to,’ or ‘Oh my God, you mean I didn’t pay my mortgage?’ They’re not in technical default. They’re in default because they’re not paying,” he said.

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From the Carlsbad Patch:

Four men pleaded guilty in federal court in San Diego to stealing more than $11 million in a loan modification scam that preyed on desperate homeowners trying to save their homes from foreclosure.

Gary Michael Bobel, 59 of Carlsbad, Scott Thomas Spencer, 35, Mark Andrew Spencer, 32, and Travis Corey Iverson, 35, pleaded guilty to conspiracy charges. Bobel, also admitted that he failed to report approximately $489,308 in taxable income received in 2009 from 1st American Law Center. An employee of 1st American Law Center, Roger Trent Jones, pleaded guilty a year ago and was sentenced in March to 21 months in custody for his involvement in the conspiracy.

According to court documents, Bobel opened up the loan modification business in North County in 2008. The defendants used high-pressure sales tactics and outright lies to induce customers of 1st American to purchase loan modification services — for payments of $1,995 to $4,495 — such as falsely claiming to have a team of attorneys who pre-screened clients and having a 98 percent success rate in obtaining loan modifications.

Among other ruses, telemarketers pretended that their grandmothers got a loan modification through the company, that they had a special relationship with a particular client’s bank, or that the company had helped thousands of happy homeowners with loan modifications, prosecutors said. The telemarketers even persuaded homeowners to pay the company’s fees instead of using their limited funds to stay current on their mortgage payments, according to prosecutors.

Through the use of false representations and promises, 1st American Law Center fraudulently obtained more than $11 million in client payments between 2008 and 2010 from more than 4,000 homeowners across the country, prosecutors said.

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From his classified ad two years ago – sound familiar?  bobel ad

It is our mission and highest priority to provide Americans in every city with an ethical, affordable, and effective program in obtaining multiple solutions to financial freedom. Our vision is to create the largest and most reputable law firm in the country by providing education, customized client resolutions, and 100% customer service/satisfaction. It is evident, through the financial crisis that is taking place in all aspects of lending, that consumers need a personal advocate to help intervene. 1st American Law Center and Gary Bobel are committed to protecting all Americans from predatory lending and financial distress. It is our confident belief that success ultimately depends on establishing a customer service and relationship oriented environment, that instills the integrity in each team member in the crusade of “Protecting The American Dream.”
Gary Bobel

A reader sent this in:

An article in today’s Wall Street Journal sounds like the HARP program should be named CRAP, because Fannie/Freddie are holding the line by not allowing HARP refi’s on loans over 6% to appease their bond holders, and the Bond rates increased yesterday on this news.

All while our guviment is out there saying they are trying to ‘help’ homeowners that are stuck with high loan rates and high LTV’s that do not allow them to refi, as long as they are current.  Other recent news showed Fannie/Freddie Execs are getting massive payouts, while homeowners bend over and take it. 

I am in this group over 6% trying a ‘streamlined’ Wells refi but Fannie will not approve it under HARP and I am being forced to paydown approximately $22,000 to keep the new 1st plus 2nd HELOC that is being subordinated under a combined 95% LTV.

Here’s an excerpt of the WSJ article:

NEW YORK—Mortgage-backed securities issued by Fannie Mae and Freddie Mac jumped Wednesday, as investors grew more confident that new incentives to boost refinancing for borrowers stuck with high-interest-rate loans would have a limited impact.

Fannie Mae 6% mortgage-backed securities—backed by 6.5% home loans—rose 8/32 to 109 14/32, outpacing gains in Treasurys by about 7/32 after accounting for the change in interest rates, according to Credit Suisse’s Locus analytics. Prices fell late in the day, after Fitch Ratings warned about the European debt exposures of large U.S. banks, which are some of the biggest buyers of mortgage-back securities.

“There was a big fear that you’d see a big rise in prepayments, and, based on what [Fannie Mae and Freddie Mac] said, that has receded,” said Todd Abraham, co-head of the government- and mortgage-bond group at Federated Investors in Pittsburgh. “It doesn’t look like they’ve done anything big here.”

The changes to HARP came after more than a year of speculation that the administration would enact major overhauls of mortgage programs to help lift home buying out of its five-year slump. The talk persisted even as banking groups and some investors warned that rewriting rules could discourage buyers of the securities and result in higher interest rates.

Excerpted from this article in  ProPublica:

For HAMP’s first two years, the government offered very little public detail about its oversight efforts. It was virtually impossible for the public – or even Congress – to know how well the banks and mortgage servicers were complying with the government’s effort to prevent struggling homeowners from losing their homes. Those years were crucial, because that’s when the vast majority of homeowners eligible for a modification – about three million – were evaluated by servicers.

The documents obtained by ProPublica show auditors finding serious problems at a major servicer during that time. Instead of publicly revealing the findings, Treasury chose to privately request that GMAC fix the problems.

“For two years, they’ve known how abysmal servicers were performing and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.

“It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference,” he continued. “It’s why the program has been a colossal failure.”

Treasury continued to release few details about its audits until this June, when it began publishing quarterly reports based on the audits’ results. The public report showed what Treasury called “substantial” problems at four of the ten largest servicers – Bank of America, JPMorgan Chase, Wells Fargo, and Ocwen – and Treasury for the first time withheld taxpayer subsidies from three of them.

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This attorney is spreading hysteria here – banks don’t have keys to your house.  If you don’t want to be in this predicament, then don’t make your house look like it’s vacant! Hat tip to daytrip for sending this:

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