Major mortgage modification plan has been announced
Clark Howard was talking yesterday on his show about how the FDIC Chairwoman, Sheila Bair, and the HOPE NOW initiative have come up with a way to help struggling homeowners facing foreclosure.
Bair has made it known about her belief that the federal government should play a strong role here. After the FDIC took over IndyMac, Bair put a moratorium on foreclosures for the failed bank’s customers. Then she implemented a system to determine if a workout should be done. The jury is still out about the FDIC’s re-dos of mortgages.
Meanwhile, there’s been a big tug of war between the FDIC and members of Bush’s team who resisted the initial mortgage modification plan. So a compromise has been announced, effective Dec. 15.
If you are delinquent, there is a new formula to determine whether or not you can refinance into a more affordable loan. Under the compromise, your payment will be reduced to 38% of pre-tax income. That includes taxes, insurance, HOA/condo fees, etc. All outstanding late fees will be waived.
In order to be eligible, you have to be at least 3 months past due; must be an owner-occupant; and can’t have more than 10% equity in the home. There’s even a flow chart detailing every step of this streamlined modification program. (This is a pdf file.)
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Tags: Clark Howard, fdic, hope now, indymac, sheila bair
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November 14th, 2008 at 6:36 pm
This means 50% of those who do not qualify to get modified, will need help to get out without a foreclosure.Those who do not have the income to stay in their homes can sell to an ethical investor. Government needs to build programs to get buyers into these houses before foreclosure.