Treasury Proposes Plan to Help Borrowers
The U.S. Treasury Department is considering a plan to improve the chance that distressed home owners will get help from federal programs.
Among other things, Treasury proposes to give borrowers 30 days to respond when they are denied a loan modification under the Home Affordable Modification Program (HAMP). During that time, the lender couldn’t auction off the property or even put it up for sale.
The proposal would demand that lenders consider all requests and even contact all borrowers who are 60 days delinquent to determine if they qualify for HAMP. Their contact efforts would have to include multiple telephone and written notices. Lenders would also be required to certify in writing that the borrower isn’t eligible.
Lenders say these guidelines would further slow the foreclosure process past the year that it takes now.
A Treasury spokesperson says the guidelines are only in the proposal stage and haven’t been approved.
Source: The Wall Street Journal, James R. Hagerty, and Associated Press, Alan Zibel (02/22/2010
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Government Announces Short Sales Guidelines
The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.
To qualify under these new guidelines:
* The property must be the home owner’s principal residence.
* The home owner must be delinquent on the mortgage or close to defaulting.
* The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
* The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.
Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.
Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines.
Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)
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