You may qualify for a LOAN MODIFICATION if:

• You own and occupy your home as your primary residence.
• You are either current, at risk of imminent default, or behind in your mortgage payments, or are in foreclosure or bankruptcy.
• The unpaid principal balance of the first mortgage on your primary residence is $729,750 or less (loan limits are higher on owner-occupied multi-unit properties).
• You have verifiable source(s) of income to put towards a mortgage payment each month, even if that income has recently been reduced.
• You can provide copies of your most recent tax returns and will sign an affidavit of financial hardship.
• You have not previously modified your mortgage under the MHA program.

Note: Mortgages on second homes, vacant homes and investment properties are not eligible for modification under this program.

You may qualify for a MORTGAGE REFINANCE if:

• You have a Fannie Mae or Freddie Mac mortgage loan on your primary residence, second home or investment property.
• You owe no more on your 1st mortgage than 105% of your home’s current value. (Example: you owe $105,000 on a home with a current market value of $100,000.)
• You are current on your existing mortgage.
• You are interested in a new fixed or adjustable loan at current low rates.

Note: Refinancing fees may apply.

For more info: www.financialstability.gov

The John Adams Radio Show
Now on WGKA 920 am in Atlanta
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Investor Real Estate Topics Each Hour!
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TODAY’s topic:
Obama Housing Stimulus Plan Offers Mixed Bag of Benefits for Stressed Owners

by John Adams
from the Atlanta Journal-Constitution HomeFinder

According to numbers from the Mortgage Bankers Association, there are about 55 million mortgages on homes in America today, and the payments are being made “on time” at about 51 million of them. That means about 4 million American households are either slightly behind on their home loans or are at some stage in the foreclosure process.

In addition to those, there are another 4 to 5 million homeowners who have never missed a payment, but are struggling to make ends meet, and may not be able to hold on much longer. This group includes those whose credit is still considered good, but who are prevented from refinancing to a lower rate because falling home values have wiped out their equity.

It is these two groups that the president’s housing initiative tries to target. The ultimate goal of the plan is to keep as many homeowners as possible in their homes, paying an amount that they can afford each month for their home.

I have read the initiative and studied its features, and it appears to me a mixed bag of benefits; in all likelihood a reasonable first step toward putting a floor under the housing market.

I agree with Senator Johnny Isakson, who states that housing carried us into this economic mess and that it must be housing which lifts us out. Until we can stop the free fall of home values, no amount of stimulus will prevent more foreclosures.

The administration’s Housing Affordability and Stimulus Plan is a two-step approach to help stop foreclosure and stabilize our neighborhoods. In a nutshell, here is how it might work:

1. REFINANCING will be made available to about 4 million responsible homeowners, who have kept their payments up despite the fact that they are stuck with bad loans.

This group includes buyers who currently are paying on exotic or subprime loans, as evidenced by programs which began with low teaser rates but have now exploded to much more expensive programs. Regardless of the problem, they are still current on their loans.

The most logical solution for these borrowers is to refinance at today’s low rates, but they are prevented from doing so through no fault of their own, primarily because of falling property values.

For example, let’s say several years ago, you took out a 30 year fixed rate mortgage of $200,000 with an interest rate of 6.750% on a house worth $250,000 at that time. Today, your balance is $195,000, but perhaps the value of homes in your area has fallen 15%, so your home now appraises for $212,000. Under current conventional refinance rules, you would not qualify for a new loan due to lack of equity. Most lending programs today seek at least a 20% equity position.

The proposed stimulus plan would allow you to obtain a loan of up to 105% of the current appraised value of your home, and even to include closing costs in the new loan amount. By lowering your interest expense to today’s historically low rates, you might now be able to stay in your house and afford the lower fixed rate payments.

You would still have to qualify for the new loan under typical approval guidelines, and the proposal only applies to borrowers whose existing loans are insured or guaranteed by Fannie Mae or Freddie Mac - that’s about half of the loans on the books in America today.

In my opinion, this refinancing proposal makes good sense. It simply allows the responsible homeowner to act as he would have done if falling home values had not trapped him in his existing bad loan. The mortgage industry expects borrowers to refinance when rates drop, and should have offered this option by itself without government prodding.

2. MODIFICATION - The second part of the initiative is more difficult to explain in this space, but here goes:

If you are currently behind on your payments or are in imminent danger of becoming past due, then the Homeowner Stability Initiative may be helpful to you. This program seeks to lower payments to an affordable level for a five year period, allowing the borrower to become stabilized and the housing market to recover.

The initiative, as envisioned by the administration, would be a joint effort between the lender and the government, causing the interest rate on your home loan to be lowered to a rate at which the total housing expenditure in your budget would be no higher than 31 percent of your gross monthly income.

If this sounds surprisingly similar to the old-fashioned “front & back” ratio system of qualifying for a home loan, you have discovered the simplicity of this proposal. The theory is that anyone can typically afford to spend one-third of their gross monthly income on their housing payment, usually consisting of principal, interest, taxes, and insurance.

For many years before the advent of credit scores and desktop computer approvals, lenders worked for hours to confirm that borrowers fit this conservative model of loan approval. This initiative is a throw-back to an approval guideline that worked well in the past.

Both government and lender will share in the cost of artificially lowering the interest rate, and the lowered rate will stay in place for five years. After that, the lender may begin gradually stepping the rate up to today’s current fixed rate for such loans, around 5 percent.

The government plans to offer a dizzying array of cash incentives to both lenders and owners who modify their loans then follow-through and keep their loans current. Homeowners can receive as much as five thousand dollars if they don’t miss a payment, and lenders get cash bonuses as well to join the program.

I know this is a quick overview, but it looks like a good first step to me. Only time will tell if it will impact the foreclosure market for the better.

Mr. President, we all hope you succeed.

This article first appeared in the Atlanta Journal-Constitution.

Treasury Releases Loan Mod Details
Carrie Bay | 03.04.09

The Treasury Department released guidelines on Wednesday that will enable servicers to begin modifications of eligible mortgages under the administration’s Homeowner Affordability and Stability Plan – announced by President Barack Obama just two weeks ago.

The loan modification component of the federal government’s housing recovery plan is intended to help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. The Making Home Affordable program, as it has been dubbed by the administration, is expected to become standard industry practice in performing affordable and sustainable mortgage modifications. The program will work in tandem with the GSE Home Affordable Refinance program, which will allow another 4 to 5 million homeowners with mortgages owned by Fannie Mae or Freddie Mac refinance into lower interest loans.

The Making Home Affordable loan mod program involves a $75 billion commitment from the federal government, materialized in the form of incentive payments to lenders, servicers, and investors, as well as principal reduction payments for homeowners who remain current on their modified loan. Additional incentives are given to servicers on modifications made for borrowers at imminent risk of default but who have not yet missed payments.

Eligible mortgages include loans originated on or before January 1, 2009 for owner-occupied properties with unpaid principal balances up to $729,750. Modifications can be made for first liens only, but the program does now include an optional incentive that allows servicers to offer second lien holders a partial payment for the modification in exchange for dissolution of that second lien.

All borrowers must fully document income and must sign an affidavit of financial hardship. Owner occupancy status will be verified through borrower credit report and other documentation to ensure no investor-owned, vacant, or condemned properties are included in the program. Servicers are also expected to put procedures in place to prevent fraud, and detailed records must be kept for audit and verification, administration officials said.

Modifications can start from now until December 31, 2012, and loans can be modified only once under the program. Government officials did say, however, that borrowers who have already received mortgage modifications that are not consistent with the new guidelines are eligible for re-modifications under the Making Home Affordable program.

A senior representative from the Department of Housing and Urban Development (HUD) participating in the announcement to the media this morning stressed that access to the program is free, warning homeowners to beware of rescue scams that claim to charge a fee for a government modification.

Servicers are encouraged to modify all eligible loans under the rules of the program unless explicitly prohibited by the mortgage’s servicing contract or agreement, and if this is the case, servicers are required to use “reasonable efforts” to obtain waivers for any limitations on participation in the government program.

Loan servicers will be required to use a standard net present value (NPV) test on each loan that is at risk of imminent default or is at least 60 days delinquent. The NPV test will compare the net present value of cash flows with and without modification. If the test is positive – meaning that the net present value of expected cash flow is greater with a modification – the servicer must modify. If the NPV test returns a negative result, modification is optional. Parameters of the NPV test are provided in the guidelines, including acceptable discount rates, methods of property valuation, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.

Servicers will follow a specified sequence of steps in order to reduce homeowners’ monthly payments, first bringing the amount down to 38 percent of gross monthly income. The government will then share in the obligation to lower payments even further to 31 percent of borrowers’ income. The first step in the process involves reducing the interest rate (with a floor level of 2 percent). Then, the term of the loan can be extended up to 40 years, and if necessary, the principal can be reduced. The homeowner’s monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees.

On a Treasury conference call with the media, Mike Heid, co-president of Wells Fargo Home Mortgage, said systems and process changes to fully implement the new program could take a couple of weeks, but he said that Wells Fargo and other major servicers have already begun taking steps to quickly put the new program into place. Heid added that he expects significant increases in calls and responses related to the Making Home Affordable program – a “flood of activity,” he said, advising consumers to remain patient, but persistent to obtain the help they need.

James B. Lockhart III, director of the Federal Housing Finance Agency (FHFA) said that Fannie Mae and Freddie Mac will be participating in the Making Home Affordable loan mod program, both for loans that they own or guarantee and as administrators on behalf of the Treasury Department for all loan modifications made under the program. “This program is a major step forward in reducing preventable foreclosures and stabilizing the housing market,” Lockhart said.

Lockhart added, “With the concerted effort of mortgage servicers, mortgage insurers, Fannie Mae, Freddie Mac and all other holders of first and second mortgages, we will be able to prevent millions of foreclosures.”

Senior Treasury officials said the new program will not only bring relief to responsible homeowners struggling to make their mortgage payments, but will prevent neighborhoods and communities from suffering the negative spillover effects of foreclosure, such as lower housing prices, increased crime, and higher taxes.

In conjunction with the release of the new guidelines, the Treasury, HUD, and other members of a broad inter-agency task force have prepared consumer friendly Q&A and eligibility assessment tools for borrowers available at FinancialStability.gov. To ensure the program can be implemented as quickly as possible, the agencies also have conducted extensive outreach with housing counselors and mortgage servicers, including the development of call center phone scripts, a training plan, and detailed guides, to prepare them for incoming inquiries from borrowers in the wake of the guidelines release.

In addition, an expanded online resource will soon be available for borrowers, and agency representatives will fan out across the country in the coming weeks to conduct outreach at homeownership events in communities hardest hit by the housing crisis.

Democrats Reach Compromise on Cramdown Bill
House Democrats have reached a compromise on the cramdown bill by adding some restrictions.

The compromise version requires that if a bankruptcy judge lowers the principal balance, the home owner must share any profit from the eventual sale of the home with the lender.

It also limits the home owners’ ability to seek bankruptcy principal modification if they have already received or been offered a loan modification that lowered their payments to 31 percent of their income.

“I think essentially the concern is that we want to ensure that those people who get relief have tried the other avenues,” said Rep. Steny H. Hoyer, the House majority leader.

Source: The Washington Post, Renae Merle (03/04/2009)

Dear  Home Owner,

The purpose of this red envelope is to give you guidance and assistance should you be having difficulty in making your mortgage payments in the future. As your REALTOR® Consultant for Life, I have listed below some basic instructions to help you communicate with your mortgage company. The sooner you call your mortgage company, the more options that will be available to you. Before calling your mortgage company, familiarize yourself with these various options.

Repayment Plan            ForbearanceLoan Modification                Pre-ForeclosureDeed-in-Lieu of Foreclosure                 Foreclosure

Repayment Plan - Past due amounts are divided and added onto the regular monthly payments for an extended amount of time to bring the loan current.  Plans may be from 6 to 24 months in duration.

Forbearance - A period of suspended or reduced payments that prevents delinquent reporting of the loan to the credit bureaus, and prevents late charges and fees accumulation, and referral to a Foreclosure attorney, as long as the contract is being honored by the homeowner.

Loan Modification - Loan is brought to a current status by adjusting one or more of three terms of the mortgage i.e. reducing the interest rate, extending the term of the loan. Example:  Increasing principal balance by adding the past due amount (interest, taxes and insurance) to the existing principal balance or extending the term of the mortgage to 30 – 40 amortization. 

Pre-Foreclosure Sale - An approved sale of the property to an unrelated third-party for less than is owed on the mortgage preventing a Foreclosure on the borrower’s credit report.

Deed-in-Lieu of Foreclosure - This procedure allows the homeowner to transfer your property voluntarily to their lender or Mortgage Company and the debt or deficiency is often forgiven.

Foreclosure - Georgia Foreclosure Law Pre-foreclosure Process – approximately 45 day procedure. ·Notice of Default to Homeowner giving 15 days to cure the default.· Publish Foreclosure Sale 4 consecutive weeks in local newspaper.·Sale is conducted between 10:00am and 4:00pm first Tuesday of each month.

Negotiating With the Mortgage Company

·        Contact your mortgage company regarding hardship with supporting documentation

·        Prepare a budget

·        Have bank statements & pay stubs ready

·        Suggest a remedy

·        Communicate with the mortgage company regularly

  I appreciate the opportunity to be of service. Give me a call.  I will be delighted to assist further. REALTOR® Consultant for Life, Chereda Miller, Broker

Five Things A Homeowner Should Never Do If They Fall Behind On Their Mortgage

1. Absolutely do not ever deed your property to a third party without absolute confirmation your loan has been paid off.If the homeowner deeds their property to a third party, that party then controls the property. The new owner can rent the property (and keep the rent), attempt to sell the property to make a profit, move into the property or use the property in other ways.What the new owner might not do is make your mortgage payments.Just because the homeowner no longer own the property does not mean they are no longer responsible for the mortgage loan obligations. The lender made the loan to them. And until it is paid off they will be primarily responsible for the mortgage obligation.If the homeowner gives up control of the property and the new owner does not pay on the loan, the damage to their credit could be catastrophic.

2. Do not sell the home at a huge discount. Unless the actual foreclosure sale is less than 45 days away, the homeowner has time to explore options. Advise them to take a day or two and make a few phone calls. As a general rule, if someone is pushing you hard to get you to sell your property to them, it’s probably because the deal they are proposing is very favorable – to them.If the homeowner has equity in their home, it belongs to them. They should be encouraged to talk with a Realtor to see if they can get their equity back to them.

3. Do not authorize a prospective buyer to deal directly with the Mortgage Company.The buyer has one goal and one goal only, and that is to negotiate a low, probably very low price direct with the lender. The buyer will ask the lender to accept a discounted payoff.The negotiations could go on over an extended period of time, and if the transaction does not work out the buyer may elect not to buy the property. It could leave the homeowner with very little time to resolve the situation and avoid foreclosure. Further, the homeowner has no control over the information that goes to their lender or the accuracy thereof. It is entirely possible that the buyer could handle the negotiation and presentation of information in a way that makes it very difficult for the homeowner to resolve their loan situation later. Explain to the homeowner:  Using a Realtor professional is the homeowner’s best bet, surly before signing a contract.  It costs them nothing – the lender pays the fees. Someone should be looking out for the homeowner.

4. Do Not Pay Upfront Fees to anyone! Homeowners do not need to pay professional service or consulting fees to get the help they need to resolve their delinquent loan. 

5. Don’t do nothing a surprising number of people just accept what they see as the inevitable, and let foreclosure run its course. Don’t let it happen – the damage to the homeowner’s credit will follow them for years to come.

Daily Real Estate News  |  March 4, 2009  |   addthis_pub = ‘rmostaff’; addthis_logo = ‘http://www.addthis.com/images/yourlogo.png’; addthis_logo_background = ‘EFEFFF’; addthis_logo_color = ‘666699′; addthis_brand = ‘’; addthis_options = ‘delicious, digg, favorites, facebook, fark, google, reddit, magnoliacom, newsvine, furl, yahoo, technorati, twitter, icerocket’; document.write(’ Share

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Experts Weigh Rent-to-Buy Pros and Cons
The weak housing market has prompted some home sellers to offer rent-to-buy agreements to prospective buyers.

These buyers pay an up-front fee of approximately 1 percent of the sales price for the option to buy, and all the payments they make during the rental period go toward the principal.

Most rent-to-buy agreements last for two to five years; and if the occupants decide not to go through with the purchase, they lose the option fee plus the rental payments. Those that agree to purchase the home at the price specified when the agreement was signed also lose money if property prices have since fallen.

Moreover, buyers who make late rental payments often find that these do not count toward the home purchase. According to Arizona State University finance professor Anthony Sanders, “A good rule of thumb [is to] separate the rental decision from the purchase decision.”

Source: Forbes 03/02/09

Copyright 2009 INFORMATION, INC

I’ve just sold a property at 923 Peachtree St in Atlanta. Come and visit my site to see other properties in that area. If you are interested in looking for or selling your home, please Contact Me.

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Welcome to Chereda’s Top Picks! This blog will provide you with valuable information, tips, and general insight into the real estate market in Atlanta Intown, Cascade, Smyrna, South Fulton. Visit my website at http://cheredamiller.com.