Saturday, May 18, 2013

Streamlined Modification Initiative to begin July 1, 2013

The Streamlined Modification Initiative will allow certain eligible delinquent homeowners to qualify for a new mortgage modification without having to provide the voluminous documentation and hardship information typically required to get a modification.  Borrowers delinquent more than 90 days, but less than 720 days may qualify.  Servicers are required to send Streamlined Modification Solicitation Letters to all borrowers who would qualify, even without the borrower applying.  Those borrowers who receive the letters and show a willingness and ability to pay will then be required to make three trial payments.  The three trial payments will be listed in the letter.  After successfully paying the three trial payments, the modification will become permanent.  No documentation and no hardship will be required.

Borrowers who receive a Streamlined Modification will still have the option of submitting the fully documented HAMP application with a hardship letter and, if they qualify, can have the Streamlined Modification reduced to the HAMP payments and terms.

Fannie Mae and Freddie Mac services are required to start sending out Streamlined Modification Solicitation Letters to borrowers who are eligible beginning July 1, 2013.

See the Fannie Mae Servicing Guide Announcement SVC-2013-05 and Freddie Mac Bulletin Number 2013-5 for more information.

Thursday, May 16, 2013

Mortgage Insurance changes on FHA loans to Take Effect June 3, 2013

Thinking of Getting an FHA Loan?  Changes to Mortgage Insurance requirements on FHA loans are coming as of June 3, 2013.

Mortgage Insurance (MI) is a premium paid by borrowers who don't meet certain minimum equity requirements, like not putting at least 20% down so your loan to value (LTV) is over 78%. It used to be that after you reached 78% equity in your home you could cancel the MI. Not so any more. If your LTV starts at 90% or more, you will have to pay MI for the duration of your loan, even if you go below 78% equity. Considering a benefit of FHA loans is that they allow borrowers to put down only 3.5%, it means pretty much all FHA borrowers will have to pay more mortgage insurance.