| Fannie Mae and Freddie Mac has made a press | | | | forced to have a post petition modification hearing, or |
| releases stating they were establishing framework for | | | | have a voluntary dismissal. The idea of dismissing a |
| loans in their portfolio to be reviewed for a loan | | | | bankruptcy to save your home is very much |
| modification. When this info was released, I was left | | | | conflicting. If the debtor misses payments, and the |
| scratching my head... I'm still pondering why the people | | | | mortgage company moves to lift the debtors stay, |
| who need help the most help are excluded from the | | | | they suddenly become eligable? It does not seem right. |
| mortgage Titan's immediate guidelines? Lets take a | | | | The option of a court intervention of a post petition |
| look at a few of Fannie and Freddie's guidelines | | | | modification is another cost to the debtor. The post |
| for a Loan modifcation package: | | | | petiton modification often times is a disorganized |
| | | | | process for the lender. Most of the Bankruptcy |
| 1. The new plan is designed to keep struggling | | | | department has no idea what loss mitagation is doing |
| borrowers in their homes by reducing their monthly | | | | and vice versa. The most puzzling part is the single |
| payments to no more than 38 percent of the | | | | family home part. Lenders have modified 2 family |
| borrower’s gross monthly household income. | | | | dwellings but the guideline reads as single family home. |
| | | | | |
| (This helps the homeowner and gives the modifying | | | | 3. Fannie and Freedie are the ones that established this |
| attorney a good guideline to work within. The guideline | | | | guideline. |
| for a modified proposal for a new interest rate is | | | | |
| 200bps above the current 10 year T- Bill average. | | | | (Fannie and Freddie are now goverment run agencies. |
| If the client does not have enough disposable income | | | | They do not have investors to pascify. Fannie and |
| they don't qualify. I have no problem with this guideline, it | | | | Freddie have never been know the lend money to |
| makes it clear who qualifies and who does not) | | | | "subprime" borrowers. Fannie and Freddie never really |
| | | | | wrote risky loans. The loans in Fannie Mae and Freddie |
| 2. Borrowers who are in bankruptcy are not eligable | | | | Macs portfolio defaults in comparison to the |
| to participate. The home must be a single family owner | | | | private firms defaults is negligable in comparison. |
| occupied home. All others are not considered in current | | | | Between 2005-2006 65% of loan were securitized |
| guidelines | | | | outside of Fannie Mae and Freddie Mac ( HUD) |
| | | | | “private label securities represent less than 20% of |
| (This is a catch 22. If the borrower is in Bankruptcy | | | | the mortgages but 60% of the serious |
| this is typically because of a "life event" that has | | | | delinquencies.” This is an obvious problem that |
| procluded the debtor from being able to maintain | | | | needs to be addressed. |
| regular monthly payment. A Bankruptcy debtor maybe | | | | |