Friday, April 4, 2014
Loan Modification HELP!! Homeowners will have few options if a coming wave of resets on home equity lines is not addressed. It will once again leave Simi Valley Home Owners struggling to pay their monthly bills.
By Chris B Johnson Realtor, Simi Valley CA. Resets on HELOCs are expected to accelerate this year and peak in 2017, which could cause borrowers to default because the monthly payments will jump as these second liens become fully amortizing.
If these resets turn into a real problem for borrowers, it may be difficult for the federal government to respond with meaningful assistance, unless Congress steps up to the plate.
Ten million dollars went to a California program administered by the nonprofit Community HousingWorks, based in San Diego.
California's Community 2nd Mortgage Principal Reduction Program provides up to $50,000 per customer to reduce or extinguish second liens and HELOCs. But it requires a 60% match from the holder of the second lien.
On a $50,000 HELOC, "the C2MPRP will provide up to 40% or $20,000 and the participating lender/investors would forgive 60% or $30, 000," according to guidelines issued by the California Housing Finance Agency.
Programs already in place to help underwater borrowers with second liens have had little success. Meanwhile, the Treasury's authority to create and fund new homeowner assistance programs under the Troubled Asset Relief Program expired several years ago.
"After 2010, we can't create an entirely new program designed for HELOCs," says Mark McArdle, the director of Treasury's homeownership preservation office.
Treasury created a second-lien modification program, known as 2MP, in 2009. At this point, "we could make small changes to help more 2MP borrowers or provide more relief if a HELOC is in a second-lien position," McArdle says.
In September, Treasury expanded the 2MP program so that second liens tied to loans guaranteed by Fannie Mae or Freddie Mac could be modified as part of a GSE standard loan modification. Over 2,600 second liens have been modified this way since then.
Under Treasury's Hardest Hit program, states can use Tarp funds for modifying or extinguishing HELOCs and other second liens.
Banks can modify a HELOC by extending the amortization period. "But we don't want see them to extend the interest-only period," Piepergerdes says, particularly when the borrower is already having difficulty making payments. "The interest-only payments should only be extended in cases where the borrower goes through full underwriting and qualifies for interest-only terms."
You may have enough EQUITY in your home to sell WITHOUT having to be “short”. If you are thinking about a short sale I can help you get an accurate value for your home and get back on your feet.
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Chris B Johnson specializes in loan modification assistance and short sales in Ventura County California. Ventura County Loan Modification Help, Ventura County short sales. Ventura County Short Sale Realtor Moorpark CA Short Sales. Moorpark Realtor. Copyright 2012 SFI Marketing Institute, LLC. All Rights Reserved.