Banks Must 'Step Up' To Help Stop Foreclosure
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Housing Secretary Shaun Donovan said Thursday in an interview that it’s critically important that banks and lending institutions “step up to the plate” to help make certain the Obama administration’s new home foreclosure initiative succeeds.
“This started as a mortgage crisis but it’s become a jobs crisis,” said Donovan following the announcement of the $75 billion plan to help prevent foreclosures.
In an interview with the “Today” show on NBC Donovan stated that the administration feels confident that enough requirements are put in place to ensure refinancing by the banks which will “tip the balance for millions of homeowners.”
Sheila Bair of Federal Deposit Insurance Company stated that the while some foreclosures will be unavoidable, the plan should help bring the foreclosure levels to the historical averages.
The plan’s key provision for mortgage modification will only benefit the people with good credit under the new plan, Donovan said in the interview.
“There are clearly a number of homeowners around the country who won’t benefit and shouldn’t benefit”, Donovan said referring to the investor homeowners that never intended to occupy the purchased property.
Reported by Associated Press on February 19th 2009
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I started my refi. of my first mortgage in Jan. 09. My existing mortgage holder Countrywide now Bank of America loan officer advised that I may qualify roe a rework under the HASP program. Well two months later in March 09 I submitted all requested paperwork and met the prequal. rules under the HASP. I have never been late on a payment and am not in foreclosure but because of the market and what thebuilders are doing to the housing prices in my development I met the prequal. requirements to refi. into a 30 year fixed rate from my current 5/1 ARM. I have about 2.5 years left on my existing ARM at 6% rate. Under the HASP refi. I locked in @4.75% APR with .75 orig. fee. Was told I would be required to pay 2 discount points under the HASP program. I was willing to pay the points to get into a lower 30 year fixed mortgage. No apprasial was required. My home was new construction and we paid $450,000.00 for the home. We owe $411,000.00 with the first and second mortgage. The second Mortgage is also with Bank of America. At this point Iwas told that everything was a go and we would close 10 May 09 and that my loan disclosure paperwork would be received in about a week. Well three weeks went by and no paperwork arrived. I contacted my loan guy and he checked on it and said because I had a second mortgage on the home (which he always new about and had factored this in to the plan)Bank of America was now requiring an additional 2 discount points to do the deal. I stopped everything at that point. Looks like price gouging by the bank under the HASP program to keep from lending the money. I have above a 730 credit score. I decided to take a wait and see approach. From where I sit the HASP program will not really help anyone but the BANK. Customers are again gouged and left out in the cold, while our tax dollars pay them to do it.
The above scenario talks about the HASP REFINANCE program. In any refinance there are going to be substantial closing costs. These include but are not limited to points, underwriting fees, processing fees, appraisal fees, and title insurance. Generally in a refinance the closing costs are added to the loan amount which means that the balance on your mortgage actually winds up being higher than it is presently. A loan modification is a totally different program. In a loan modification you are not taking out a new loan to payoff the existing loan but merely modifying or changing the terms of your existing loan. There is usually a one time fee equal to approximately one month’s mortgage payment and no other closing costs. The ultimate goal is to pay down your mortgage balance, not to keep making it higher.
I think both parties are somewhat at fault for the housing crisis. The lenders for living outside their means and the banks allowing them to do so with the loans they gave out.