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For about the 87th time, President Obama just announced a revised, updated, change of the prior revision of the sequel to the last thing they tried that didn’t work to help underwater homeowners. But this time they say that it will really work. (wink…) What I’m talking about is the Home Affordable Refinance Program (HARP). HARP was first rolled out back in 2009 to much fanfare as a way for underwater homeowners to refinance their loans into something more affordable. It was supposed to help millions of homeowners, but the actual results fell far short. The main reason was that they would only allow loans up to 125% of the appraised value, and most underwater homeowners owe much more than that.

The new program does away with the 125% cap on the loan amount vs. the value for fixed rate mortgages, and they have also made some other tweaks that should help more people qualify. They are actually loosening up some of the underwriting rules that were resulting in so many turn-downs in the old program. (Yes, loose underwriting is how we got into this mess. Move along, nothing to see here, we know better this time [more winking]…)

To qualify, your loan must have been purchased by Fannie Mae (800-7FANNIE) or Freddie Mac (800-FREDDIE) prior to 5/31/2009. You can call them to verify. You must be current on your mortgage with no late payments in the past 6 months and no more than one late payment over the past 12 months. You can call your existing lender, or any other mortgage lender that offers HARP refis. This program will start to be rolled out by mid November of this year, and should be fully rolled out by Dec. 1. Also, as with most of the other plans, this program is voluntary for lenders, so if your lender doesn’t do it, you may have to check around to find someone who does participate.


In January the law in California changed so that in most cases your first mortgage lender can’t pursue you after a short sale. Then just a few months ago they added a provision that included junior mortgages, as well. It was often the junior lenders that were holding up short sales by demanding the right to pursue the borrower after. So at first this new law sounded great, but many of us were worried that the unintended consequence would be that more junior lenders would turn short sales down outright rather than give up their right to pursue for the deficiency after. Many junior lenders have the right to pursue the borrower after a foreclosure, so sometimes they’ll hold out for more money during a short sale, knowing that if the short sale falls through, they will have four years to pursue the borrower after a foreclosure.

Well, I am happy to report that so far I’m not seeing this as a problem. Since this new law came out, it seems like I’m having MORE success getting junior lenders to agree to the short sale than before. I even had one VERY difficult junior lender earlier this year who absolutely would NOT give up their right to pursue the borrower after the short sale. We went back to them after the new law passed and they approved it without a whimper!

I’m sure there will be some lenders who will decline short sales because of this new law. I just haven’t run across any yet. So the continuing good news about this new law is that if you have any junior liens, you need to really consider a short sale in your list of options. If you let the home foreclose, and you have a junior lien, they may be able to pursue you later, where you may have been able to avoid that in a short sale. Bankruptcy does usually address junior liens, but it can be devastating to your credit, and emotionally very taxing. Short sales aren’t “easy,” but they are definitely worth a look. THIS ARTICLE IS NOT LEGAL ADVICE. PLEASE CONSULT AN ATTORNEY.


Distressed homeowners are easy prey for scam artists. They are confused, stressed out and often under a time deadline to try to hold off foreclosure on their homes. What further complicates things is that the information about all the different government and lender programs that are supposed to “help” is confusing and ever-changing. It’s hard to know who is telling you the truth.
The first wave of scams was the loan modification business, where someone would take your $3,000 to $5,000 to get your loan modified. But in the end all most of them did was take your $3,000 to $5,000. The newest scam is called a “Mass Joinder” lawsuit. They sound suspiciously like a class action lawsuit, but they are quite different and the odds of success or a settlement are often much lower. They will demand money from you to protect your rights in the suit, as much as $5,000 to $10,000. Mass joinder lawsuits are legal, it’s just that some firms are making wild, illegal guarantees that they can “save” your home, get your loan modified, or even get your mortgage wiped off altogether. But then once they take your money, nothing happens.
The State of California has recently sued 14 different law firms and attorneys over this practice. They claim that they have mailed over 2 million solicitation letters in this scam, and that they have collected millions in bogus fees.
If you are considering joining any lawsuit over your mortgage, here are some tips to protect yourself. Check the attorney out with the state bar association. Then check with the Better Business Bureau. Also do an Internet search on their names looking for past victims posting warnings. Ask for references to other clients that they have successfully modified loans for. Ask for copies of successful past lawsuits and copies of news articles announcing their successes in the past. And be wary if they demand large fees up front.


If your loan is owned by Freddie Mac, I have some good news for you. First, let me explain what Freddie Mac is briefly. They may own your loan, even though you make your payments to someone else. The company you make your monthly check out to is your “servicer.” The company that actually gets your money is the “investor.” Sometimes they are the same, but most of the time they are different entities.

To find out if your loan is owned by Freddie Mac, go to this website: www.freddiemac.com/mymortgage.

Starting on January 1, 2012, all homeowners with a Freddie Mac loan that apply for a loan modification must be considered for their new program, called the “Standard Modification.” The old program was called the “Debt Coverage Ratio” and was ONLY concerned about getting your debt ratio in line. The new program will look at dropping your payment AND your mortgage principal by 10% to make your loan more affordable. To qualify, you must either be at least 60 days behind on your mortgage, or you can prove that you are in imminent danger of default. You can prove this through documenting your hardship and proof of income to show that you can’t afford the payment. Another way they will make the payment more affordable is stretch the term out to 40 years from the date of the modification.

Even though they HAVE to consider you for this program starting on January 1, your lender MAY consider for this program as of October 1. So if you are having trouble making your payments, or soon will, and your loan is owned by Freddie Mac, call your servicer up and see if they will consider you for the new “Standard Modification” and let me know if you are successful!

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