By MSS Contributing Faculty Member Jim Sahnger
In an effort to fill in some of the gaps exposed in the initial Making Home Affordable (MHA) program, Washington has stepped up its efforts to assist more distressed homeowners. In a press release on April 28th, the U.S. Treasury announced an update to the program designed to assist nearly 50% of those homeowners seeking relief from the MHA program.
With millions of lay-offs recently, optimism about the future is fleeting at best. As many as 6 million families are expected to face foreclosure in coming years. Combined with a loss of or reduction in income, many families also have a second mortgage creating additional pressure on their monthly payment obligations.
To minimize these complications, MHA announced plans to assist mortgage servicers with new guidelines to both incentivize participation and to help decrease payments for homeowners. These incentives have also been extended to homeowners enrolled in the program to assist them in making their future payments on time.
The news announcement also addressed the Hope for Homeowners (H4H) program created last year, which has failed miserably. Designed to help millions of distressed homeowners refinance their home by lowering interest rates and reducing their principal balances, the program has provided hope for less than 100 people!
The biggest news here on H4H is that participating servicers will be required to look at H4H in tandem while considering a loan modification. In order to support more investor participation, incentives will be extended to the servicer and the Treasury will purchase special H4H Ginnie Mae IIs wrapped by the GSEs. And while this enhancement could potentially benefit homeowners, it does not look like an opportunity for originators to generate income.
To learn more about these enhancements, read the press release from the Treasury Department at http://www.mortgagemarketguide.com/download/SecondLienFactSheet.pdf
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