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Banks may decide who will be offered principal reduction under new program
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Q: How can I find out if I can refinance under the recent mortgage settlement agreement reached between most state attorneys general and major banks?
A: At this point, it's almost easier to tell whether you won't qualify for a cut than determining who will.
The banks are supposed to spend about $3 billion of the $26 billion settlement refinancing about 750,000 underwater borrowers who are current on their payments into new, lower-interest loans.
First of all, you won't qualify if your loan isn't serviced by one of the five participating banks. That's Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo. And your primary mortgage can't be owned by Fannie Mae or Freddie Mac -- the big government-owned companies that provide most of the money for home loans in this country.
If it is, the government's recently improved Home Affordable Refinance Program is for you instead. Loans owned by private investors aren't eligible for refinancing either. Only those held by one of the banks involved in the settlement will qualify. They'll choose who will ultimately benefit.
Q: What other benefits are included in this deal?
A: The biggest chunk of the settlement, about $17 billion, will be used to reduce the debt for about 1 million underwater homeowners on the verge of foreclosure. One out of every five Americans with a mortgage owes more than their properties are currently worth, an average of about $50,000 more.
To qualify for principal reduction, a homeowner must not only be underwater but behind on their payments or at "imminent risk" of default. The loan modifications are intended to help homeowners with first mortgages or with both first and second mortgages on their homes.
Ultimately, the banks will decide who will be offered principal reduction.
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Another bail out for the banks. Boy I wish I was a bank. That way I would be too big to fail.
The ONLY Borrowers with DAMAGES (lost money) are those who: (1) obtained conservative mortgages (<80% LTV) and (2) stayed current (never defaulted) despite being increasingly upside down due to the Borrowers who defaulted. Yet, the damaged borrowers are ignored and mocked. REFINANCING? Even with refinancing of debt that exceeds property value, the borrowers who defaulted may still win in the end as they are not upside down! To make matters worse, Government refinancing programs, such as HARP1, is financially HARMFUL to borrowers who must pay upfront FEES (non-refundable) and pay tens of thousands of dollars to resolve any gap btwn existing loan balance and refinance amount. HARP2 removes refinance limit, but the honorable borrower is still upside down (loan > property value)! GOVERNMENT GETTING RICH. Who ever follows where the restitution (shakedown) money goes? It is spread within Government as seen my the many secret millionaires in government. FLAW IN LAW. The foreclosure mediation law does not appear to require the defaulted borrower to pay any money into a trust acct until the "paper trail" dispute is resolved. The borrowers who default then squat for as long as possible and are enriched. This law has therefore caused further decline in real estate values and thus the economy. REAL SOLUTION IGNORED. Years ago, Govt programs should have reduced Principal in phases to borrowers who stayed Current (never defaulted) on mortgages obtained from 2004-2007 (high point of boom). That would have avoided most or all defaults and real estate values would have been more stable and thus the economy. ADS. radio ads now offer "credit restoration" to those with foreclosure or short sale on record. So the FICO system has no integrity? TV ads say STOP paying your mortgage if upside down. Those who pay their mortgages are mocked as fools.
The BANKS will decide? AND the banks get to keep and use the lions share of the funds how they wish as well? And this program is designed to help underwater homeowners how again? Sounds like ANOTHER payday for big business again to me. The Banks get to do whatever they want and in the end keep the cash! WHAT A DEAL! Way to go Obama!