In order for loan servicers to modify a Fannie Mae mortgage, they have to verify that the borrower is, in fact, in “imminent default,” meaning that if something does not change, they will default on their mortgage and the property will go into foreclosure. Fannie Mae released new guidelines yesterday in an effort to make the process of obtaining such a loan modification easier and more reliable while still excluding strategic defaulters from the process[1].
When a borrower applies for a loan modification, now the mortgage servicers can use Freddie Mac’s Imminent Default Indicator (IDI) to evaluate the gravity of the situation. They borrower must have no more than $25,000 in cash reserves and show “acceptable hardship” that is preventing them from paying their loan. For example, a co-borrower might have died; a long-term illness or disability come onto the scene or a divorce may have occurred. Once the IDI has cleared, then servicers must use a GSE-approved broker or appraiser to get a broker price opinion (BPO) or an appraisal. No servicer can use one provider for more than three-quarters of all their BPOs and appraisals. Overall, the new regulations make the process less stringent, and allow borrowers who do not qualify for HAMP either because they are not delinquent enough or because they do not fit other qualifications to still be evaluated following the standard imminent default evaluation for HAMP.
These changes come on the heels of a request by Fannie Mae for an additional $8.5 billion from taxpayers to help deal with losses on loans made prior to 2009[2]. Critics allege that Fannie Mae does not deserve the money, as it is not providing adequate aid to the taxpayers that are funding it. Do you think that the GSE is handling loan modifications appropriately? Have you heard any success stories?
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Let us know what you think about Fannie Mae (and Freddie Mac for that matter) in the space below.
[1] http://www.dsnews.com/articles/fannie-mae-expands-imminent-default-test-issues-short-sale-value-rules-2011-05-26
[2] http://www.reuters.com/article/2011/05/06/us-usa-treasury-fannie-mae-idUSTRE7456IJ20110506
I spent almost 2 years sending mountains of paperwork to the idiots at Wells Fargo and B of A, and in the end they just foreclosed. The properties have since been vandalized and are worthless. Tell me again; why do I want to help the banks? This was ALL avoidable, I had tenants, but the rents had dropped so much that I could no longer make up the difference. So my proposal was “Work with me, and in the end we both get paid.”. That was refused and I was forced to default. I don’t trust these banks for one second, they put me through hell and in the end just foreclosed. I’m not too sure that I want to take a chance again as I have a couple of other properties that are becoming an extreme burden. I’m thinking that bankrupcy is my only depenable relief as the banks are incompetant liars.
Well this sounds promising but until they grant principal reduction it will still be a band-aid. If they grant principal reduction a clause were the lender can participate in equity growth should that happen is fair.
I think the best and only solution is to have the big banks pay back the entire 700 Billion Dollars they “stole” from taxpayers after they stole Billions in illegally gained profits directly into a fund designed to help keep homeowners IN their homes. And put the C.E.O.’s of the large banks, Real Estate companies and mortgage Brokerages in Prison where they belong. After all it was their willful acts of FRAUD that led to this mess in the first place. And I for one am NOT going to let them off the hook. Nor should the rest of the country. But people are simply SHEEP being led to slaughter. Well folks, I refuse to be a SHEEP. I will continue to speak out loudly about the FRAUD committed by all the aforementioned players. Take a stand America. Tell these criminals, including Wall Street, that ENOUGH is ENOUGH.
The issue is that banks ALWAYS do what is in their financial best interest, no exceptions, ever. Statistics clearly prove that is is more profitable, in the majority of cases, to take your house away than it is to modify your loan sufficiently to make it affordable. And, it is obviously never in the banks best interest to reduce your debt.
This is just another BS and feathers move in the guise to help the home owners that really doesn’t help.
What created this scene started years ago when manufacturing started leaving this country because of taxes and regulations and unions cutting into the profit margin to the degree that having a business and creating jobs wasn’t worth the aggravation and expense. It cost the average business owner almost as much as their taxes just to pay for their CPA firms to keep up with all the tax compliance issues every year let alone all of the environmental issues.
The Government is full of people elected to their office which have the idea that the government can print what ever money they want for free. And people who believe that elected them to power. What they don’t know is that every time money is printed, a debt is created with the Federal Reserve Bank, a privately held bank and that debt has to be paid, even though the bank didn’t lend the US the money, it was just printed by the US mint. The Federal Reserve is nothing more than a middle man with it’s hand out. The treasury could print money based on real money the treasury has on hand. But with all of the free rides and government spending created by Congress and their voters, the IRS doesn’t take in enough cash to pay for it all. They have robbed Social Security and Medicare. They have allowed Medicare to become an atrocity.
I went to a hospital in LA and Medicare was charged $2,800 for the test I received. When I queried the bill with their accounting dept, I was told that if Medicare won’t pay it all, the bill to me would be $1,400. The bill to Medicare is always doubled!!!
So the government sells off this debt to other countries and then creates more.
They needed more taxing sources and votes to keep this all going so they created a loan that allowed anyone who could qualify for a new loan at 1 to 1.5% interest rate o buy a new home. That created a giant false economy based on real estate to keep the economy going because manufacturing and jobs related to that went to China. The false economy burst when interest rate on the Notes for those low
qualifying loans jumped from 1.5% to market at 6.5%. The home owners couldn’t pay that rate and they gave up their homes. Massive fporeclosures ensued and because tose loans were sold as securities by banks and wall street to other banks and investor groups all over the world, the economies of the whole world went down, all because of the loans our government and Fannie Mae created; Barney Frank in particular as chairman of the Banking and Finance Committee along with Maxine Walters, also a member of that committee and other bleeding heart irresponsible Liberals on the Committee and members of Congress. Barney Frank was re-elected because he is gay and represents the gay vote in a mostly gay area. Being gay was obviously more important than the security of this country. I am not pregidous against gays. They need to become more responsible in their lives and not take up so much government time with hey love. If all the heterosexuals in the country tied up the government that way, there would not be any government. They think they are so important, we even have gay education in our public schools on how to have gay sex. It can make kids think they are gay when they are not.
A good sign is that China middle class is growing and wants more money. Some of the US companies are coming back to the USA. We could do more to help that by eliminating taxes and regulations that are onerous. I have no problem with protecting the environment in a responsible manner.
I think the IRS had got to go! If that money wasn’t there and if the government was not allowed to spend money it didn’t have, then we would all survive better. Give most of the government functions and so called protections back to the States. I’m all for State’s Rights.
If you don’t like the laws and rights in one state, move to another with laws you can live with.
The federal government should support our Army, Marines and Navy. Maybe we can prune that down to an Army, Navy and Air Force.
The Mexicans who have come over here to participate in the good life must understand their responsibilities in maintaining freedom.
Every citizen must know their responsibilities to defend and protect our freedom.
Ever since the creation of this Country, there has been two factions trying to have the Country operate their way and in direct competition; Every one thinks it been between the Democrats and the Republicans.
ut really it’s been between the Progressives and the Constitutionalists. The Progresives want Socialism, total government control,no one can own anything. The Constitutionalists want to abide by the Constitution which is the document with the Power that gives the people of this Country their freedom! It is not out dated like a lot of the students say that have graduated from our Progressive colleges and Universities. The students have been lied to and need to be re-educated before they vote Obama into another 4 years.
Real Estate finance regulations should not be put in because one broker lied to a little old lady and she lost her home. That kind of legislation punishes the 80% of brokers who are doing busines ethically. The criminal broker should be tried and sent to prison and made an example of.
I’m off the soap box.
What ever Fannie may is doing it is O.K. It is actually remains to be seen soon.
What about home owners does not have fannie mae or freddie mac, who will help them. There are millions of families in big trouble.
Congress/fanniemae and Obama should come up with
some reasonable plan to help them.
Banks are not helping, giving them run around.
Hope white house/congress get serious and start
helping people before next election.
Well this is useless..just more smoke an mirror… Again our govt continue to only cover themselves.. Fannie mae an Freddie mac loan that are in default are only a small fraction of the loan on the market even thou they were believed at on time to back 75% of securitized mortgages.. Next these guide lines don’t speak to pooling service agreement. That dictate a servicer can only modify a certain percentage of loan in any given pool.. Fannie saying that it’s forcing people to proven to be imminent foreclosure is redundant. Servicers budget an financial analysis already was not granting mods based on the fact people could pay. They never were granting mods to people who could afford their payment. This actually will make things worst. No more saving your saving an walking away from your home an more power for banks an servicer to deny you…
Jerry was on a roll…….blame isn’t going to change anything. Unfortunately we can’t go back, only forward, and from here something needs to break. Now I have been in default for almost 2years and have been trying to modify my loan. My bank has asked me for the same paperwork every 6 or so weeks for almost 2years. It appears they have no intention on modifying my loan, and was just buying time. I am so frustrated I could cry. My life has been in limbo for two years, like a band aide being ripped off slowly. I messed up, I admit that, I didn’t have a crystal ball, we were doing so well when everyone else was too, I bit off more than I could chew…that’s for sure. I need a modification or I will lose my home, they should s— or get off the pot….so I can get on with my life. It’s not like I didn’t pay my mortgage for 15 years. I eat that if I lose the house, and if they modify it’s like they get to keep all that money…..because we start right back a a 30 all over again. So I really don’t see the big deal….theyvalways make out in the end, it’s not like by helping me they lose money, because we all know that’s far from the truth.
I have tried for over a year to get the HAMP program. After two servicers and sending my information many of times,hours upon hours on the phone, I was then denied because I did not have a death, disability or divorce!!!!!. I lost my job and I am making alot less than when I first obtained my mortgage. What do I do. Are these the ONLY ways (Death, disability or divorce) that I can get help.