Next Wave Of Housing Aid Will Focus On Mortgage Principal Forgiveness Billings MT
Wallinder Mortgage Brokers Inc
746 Grand Avenue
Fidelity Home Mortgage Corporation
4900 Laurel Rd
Empire Equity Group Inc
490 N 31St Street Suite-135
Streeter Brothers Mtg Corp
2823 6Th Avenue N
Home Owners Mortgage Eqty Corp
801 15Th St W
Mann Mortgage LLC
219 N 30Th St
Intermountain Mortgage Co Inc
3333 2Nd Ave N Ste 250
First Citizens Bank
2812 1St Avenue North
Countrywide Home Loans Inc
2545 Central Ave Ste M
Valley Federal Cu Of Montana
1541 Custer Avenue
Next Wave Of Housing Aid Will Focus On Mortgage Principal Forgiveness
As the Federal Housing Administration (FHA) prepares to release new plans for addressing the mortgage crisis, industry leaders are concerned that the new program may lack incentives and create additional problems in both the short and long-term. For more on this, read the following article from HousingWire .
New plans to push lenders to offer principal forgiveness and originate Federal Housing Administration (FHA)-backed refinance mortgages are leading borrower advocates to argue that the program isn’t enough to entice lenders and servicers to participate. Additionally, industry players are concerned over the potential moral hazard the initiative potentially presents.
The Obama Administration announced the allocation of $14bn in Troubled Asset Relief Program (TARP) funds to incentivize lenders to provide principal reductions and refinance underwater borrowers into FHA-backed mortgages.
Under the terms of the voluntary program, lenders will be required to write down at least 10% of the mortgage principal for borrowers who are current on their payments. The program is open to borrowers whose mortgage isn’t currently insured by the FHA. The principal reduction must bring the new FHA loan to value (LTV) to 97.75% and make the new payments account for 31% of the borrower’s monthly income. The program also offers incentives to lenders who offer borrowers with second lien mortgages similar principal reduction and refinance options. The maximum allowed LTV of the combined loans is 115%.
John Taylor, president and CEO of the National Community Reinvestment Coalition is one such advocate. In a prepared statement, Taylor said there is a discrepancy between government support for large financial institutions and individuals.
“We rush to give banks tax breaks, but we dawdle to help homeowners who through no fault of their own lost their jobs because of the economic crisis or bought defective loans that caused the economic crisis,” Taylor said. “Let’s not be so quick to forget that we bailed out banks, but we’ve nickeled and dimed innocent borrowers. Moral hazard? The moral hazard is allowing borrowers to pay the price for the crimes of Wall Street.”
Lee Howlett, president of mortgage technology and service provider ISGN’s servicing practice, told HousingWire that the principal forgiveness initiative was expected. “We’ve seen sequential progress toward that over the past year and a half,” he said.
But Howlett believes the industry would have been better served had the principal forgiveness incentives been implemented from the start.
“It’s frustrating in the sense that the people that have gone through some kind of modification, now come back and say I want my principal reduced,” he said. “Every time you announce a program six months after the old one, you run that risk of everybody that’s in the midst of a current trial modi...
Click here to read the rest of this article from NuWire Investor