Fannie, Freddie to cut principal in 2 states
Pilot programs in Nevada and California will use federal funds to pay for the mortgage relief, and the two loan entities will not be required to contribute.
Up to this point, if your underwater mortgage was backed by Fannie Mae or Freddie Mac, you had no chance of seeing any principal forgiven. That relief was available only to mortgages held by other lenders.
Now the two government-supported entities have signed on to pilot programs in Nevada and California and will write down up to $50,000 of principal in Nevada and $100,000 in California.
What made the difference? In those states, Fannie and Freddie will receive whatever they write down from federal funds administered through a state program.
"Principal reduction combined with mortgage refinancing will mean hundreds of dollars returning to the pockets of homeowners," Terry Johnson, director of the Nevada Department of Business and Industry, said in a news release. "This effort represents our continued focus on combating the worst housing crisis seen in a generation and in the state hit hardest by it."
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The Nevada pilot program will provide mortgage relief to residents of Clark County (Las Vegas), where about two-thirds of homeowners owe more than their home is worth. Eligible homeowners can get the principal reduction and have their loans refinanced at current low interest rates through the federal Home Affordable Refinance Program. Citing state figures, The Wall Street Journal estimated about 1,500 homeowners would be eligible for the relief.
To be eligible, homeowners must owe at least 115% of the value of their homes and have incomes of less than $99,000 for a family of four. Unlike many foreclosure relief programs, this one also requires that homeowners be current on their payments. You can see the rest of the criteria for the Home Means Nevada program here.
According to the state's information, homeowners whose mortgages aren't held by Fannie Mae and Freddie Mac could get up to $100,000 in mortgage relief, if the servicer is willing to match the state contribution.
Fannie and Freddie also agreed to participate in a similar California program after the state eliminated the requirement that the entities match the amount of principal forgiven, the WSJ reported.
The money for the principal reductions is coming from the Hardest Hit Fund, which made $7.6 billion available to the states. Little of that has been used to help homeowners. According to the WSJ:
President Barack Obama announced the Hardest Hit Fund two years ago to provide states with federal housing funds to design their own programs, but states have struggled to spend the money, largely because Fannie, Freddie and banks have balked at several of the programs, according to a federal audit published in April. Of $7.6 billion available from the Treasury, states had spent just $217 million through the end of last year.
What do you think? Is this program likely to be helpful?
My comment was a defense based on the nasty comments being made that encompassed everyone that can't afford their house payments. There are more smart people out there than you give credit to, and serious circumstances affected their ability to pay.
Your replies assumed that I am a loser. You couldn't be more wrong. I have worked for over 45 years and I lost my job after 19 years with the a certain bank. It was a cutback of older workers making more money than they could pay an entry level worker with no education or experience. It was also age discrimination, but that is hard to prove. The only work I could get was with an organization that dealt with older workers forced out of the job force. I work 20 hours a week for minimum wage. Before I got that job, I used up my Savings and most of my Retirement to support myself for the two and 1/2 years I was jobless. Age discrimination still at work here.
I was lucky though. I bought my house many years ago, owe less than $18,000.00 on it and the payment is $356.00 a month. I did refinance it 12 years ago to go to court to get legal guardianship of my grandson, but the interest rate is only 4.25%
I have never drawn unemployment, received Food Stamps, or asked for any other kind of help. I also qualified for Social Security last year. That helps me keep my bills paid, depending on no one but myself.
Everyone wants something for nothing. My house is not underwater. We did the right thing. So why should someone that made bad decisions get a gift. I am not willing to have tax money go to bailout someone that made a bad choice or choices.
I would love to refi I have a 1st and 2nd. But due to the downturn the banks will not look at us because we are not late and making our payments. If we could refi we would spend $300 less per month and add ZERO new debt. But we are not late so we are told to piss off.
Wrong 'good bargains'. A ruling out of chicago through the federal 7th circuit court (cert denied on scotus level leaving the ruling as valid) mandated that 20% of all loans MUST be bad loans, oops. I mean 'sub-prime'. When Barney Franks boyfriend (no chit) who was a vp at freddie mac wanted the bonuses for generating the mortgage flow, Frank (Democrat, house of reps, Mass)and Chris Dodd (democrat senator) rewrote the regs for fannie mae and freddie mac mandating that they purchase the bad loans.
So, in a nushell, you had no clue what you were talking about.
p.s. Frank and Dodd are both 'retired' and making huge pensions for destroying the economy.
Back in 2008 I was looking at condo ad's selling really nice condo's for $700 a month and no down that you could qualify with a 25k income. Reading the fine print i found after 2 years the rate would reset which would drive the payment to almost 1800 a month. I couldn't believe the insanity that any lender would sell a property to someone making 25k when after the reset the payment would exceed their net income. I guess these underpaid bank CEO's making 40 million a year couldn't figure out that's a bad plan.
I'm somewhat in the same boat. We are underwater on our mortgage right now, though not to the extent that some are, and we have been faithfully making payments for five years. It's hard for me to believe that after almost $120,000 in payments over five years that we are still behind, however, we bought just before it burst, so shame on us. We've put about $25,000 in costs to upgrading our house during that time and are in the midst of a refi. That has saved our butts. We looked at the HARP, which we could do, and go through all the paperwork, sub-ordinating loans, etc. Because of the upgrades on the property we've done the appraisal came in just $1,000 below what we paid for it and now we can actually get a lower interest rate by financing 95% of the value, and actually have to pay PMI, which we haven't had to pay since our first house, over 16 years ago. Our credit scores are awesome, the income is finally there, but if you look at the last five years? It's definately a loss! We are not walking away for two reasons.... 1: We don't want to lose our credit scores. 2: We are the ones who signed our names on the bottom line and have to take the consequences of it.
This just sucks....for all. There is no other way to look at it.
I just wish the people who caused this mess, or allowed it to happen, could see what they've done to the middle class and lower class America.
The only thing you had right was that chit happens. And if you failed to plan for it, what? You failed! key word being YOU. If you bought a house that you couldn't afford on minimum wage, it's your own fault you lost it. Where was your equity? Didn't you buy a small house and mve up as you could afford it? Or did you move up when someone was willing to loan the money because congress rewrote the banking regs and told them they had to? Again, your fault! Teh trut can oly set yu free if you accept it. YOU screwed up. and you can't learn from it if you don't accept it. Which means you will stay a scew up. Is that what you want? Cause it i up to YOU
Sh't happens, and there are some very bad things that happen to people through no fault of their own that makes it hard or impossible to keep up with their house payments. People who bought houses within their means have seen their property values drop due to Wall Street, Financial Institutions, lost jobs and the resulting bad economy. They have used up their savings, retirement and whatever else they have to try to keep their heads above water. They deserve a little more compassion rather than the hateful posts directed at them.
I am a 100% disabaled Viet Nam Vet who bought a home over 14 yrs ago....due to the down fall of the housing market and having no chance to get a job to supplement my fixed income,i am someone who has become underwater with my mortgage...its corp,Citi Group,One Main Financial who holds my mortgage is refusing to allow me to be a part of HAMP program which i am 100% qualified for so that my monthly payments can be lowered which would allow me to continue to saty in my home of over 14 yrs...One Main Finanacial can sponser a Nascar race team and pay a top Nascar driver to drive their race car but yet, they will not and its not that they can't,its that they seem to continue to make bad money decesions and refuse to make my monthly payment affordable but would rather not accept a lower payment and looks like they will take me to foreclouser, where getting Govt pension checks because of being wounded in Viet Nam can not be garnished or taken from me and seemingly for the last 4 months have been getting no payment from me and rather than allow me to be in the HAMP program where they could lower my monthly payment and continue to recieve $750 per month rather than the $1,000 it has been which i no longer can afford says to me that this Corp. Citi Group aka One Main Financial has no business being allowed to be in the Financial business.....they suck big time and should be forced to liquidate!
A disabled Veteran
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.