New American Funding is a HUD
approved FHA direct lender. We staff
an expert team of loan specialists that
can help you get out of your existing
adjustable rate mortgage into an
affordable 30 year government insured
loan. In addition, we staff a full team
of loan modification specialists to
assists you in saving your home from
foreclosure.
approved FHA direct lender. We staff
an expert team of loan specialists that
can help you get out of your existing
adjustable rate mortgage into an
affordable 30 year government insured
loan. In addition, we staff a full team
of loan modification specialists to
assists you in saving your home from
foreclosure.
More Information..
Irvine, CA (PRWEB) May 25, 2008 -- The President of New American Funding,
Rick Arvielo, says there is a ‘Perfect Storm’ brewing when it comes to borrowers
qualifying for a new home loan, but unfortunately, this storm is blowing people
right out of their homes. He says to truly appreciate where the average mortgage
holder is going, it’s important to understand where they have been.
Rick Arvielo, says there is a ‘Perfect Storm’ brewing when it comes to borrowers
qualifying for a new home loan, but unfortunately, this storm is blowing people
right out of their homes. He says to truly appreciate where the average mortgage
holder is going, it’s important to understand where they have been.
| About New American Funding |
According to Arvielo, qualifying for a loan one year ago couldn’t have been
easier. Stated/Stated 100% financing for Subprime borrowers meant buyers didn’
t have to qualify from an income or asset perspective and they could borrow
100% of the value of their loan. Investors were saved because homes were
worth more six months later. Borrowers in trouble could bail themselves out with
a new loan. Now, declining values coupled with yesterday’s loose lending
guidelines and high Loan to Value’s have borrowers stranded without a new loan
option as their loans race towards unmanageable interest rate resets. “There
simply is no new loan for these people,” says Arvielo.
Arvielo goes on to state, “The only solution is for someone to spearhead an effort
to organize the current note holders of these loans and create a streamlined
work-out opportunity for lenders to work on the borrowers behalf to qualify them
in a ‘what if’ scenario. Considering some debt forgiveness or providing seconds
to accommodate the shortfall would circumvent the ultimate outcome of taking the
loans back. I am sure these current note holders would gladly consider this
option. There is plenty of pent up capacity within the lending community to
conduct the qualifying diligence.”
Arvielo observes, when the borrower’s loan resets and they stop making
payments, the scenario is grim for everyone. “The borrower’s credit and dream of
homeownership is ruined. The foreclosed property becomes blight on the
neighborhood furthering the declination of value which casts other borrowers into
this same dilemma and the Note holder’s fare worst of all. Typically, they have to
evict and foreclose, then rehab and REO, paying full commission on a reduced
fire sale price. The ‘All-In’ cost can easily climb to 50 or 60% of the note. And,
with an unprecedented volume of foreclosures, the lenders ability to assimilate
these houses serves to push out the cycle leading to mounting losses for them
and prolonged degradation of the neighborhoods.”
Arvielo says FHA is being touted as a bailout option. “FHASecure and the
proposed FHAModernization will help, but unless someone comes up with a
solution to declining values and the Debt to Income dilemma, it will fall well short
of heading off this pending doom. We are already talking to thousands of
borrowers that are desperate and disqualified due to these issues.”
To further the pain, Arvielo observes, major investors are now imposing their own
Fico overlays to FHA. FHA has long maintained that Fico isn’t used to determine
eligebilty. Unfortunately, major large investors on which the industry relies to sell
their loans are now imposing their own restriction to things like Fico scores which
serves to further the entrapment. Borrowers that qualify but also have lower Fico
scores are out of luck and out of options. And, in many cases forced out of their
homes,” says Arvielo.
At New American we are doing what we can to qualify borrowers interested in
FHA financing. And, for borrowers trapped, we are working to negotiate with their
current investors to alter their existing notes to free the borrower. We have had
success doing so with several loan servicing companies. Our hope is that the
industry can get together and agree on a protocol to work this out or increasing
foreclosures will certainly be the result
About New American Funding
New American Funding is committed to providing top quality service. The
company offers a wide range of loan programs that are competitively priced.
Using the latest technology, the company has made the borrowing process
simple and convenient. New American Funding offers competitive rates and
eliminates fees associated with a loan arranged through a broker. The company’
s loan consultants listen to clients’ needs and make sure they understand
completely, then discuss the options and make sure clients thoroughly
understand them. From application through funding, New American Funding
makes the loan process simple and convenient. For more information, please
visit www.newamericanfunding.com.
Media Contact:
Rick Arvielo
President of New American Funding
1-800-426-5626
rarvielo@nafinc.com
easier. Stated/Stated 100% financing for Subprime borrowers meant buyers didn’
t have to qualify from an income or asset perspective and they could borrow
100% of the value of their loan. Investors were saved because homes were
worth more six months later. Borrowers in trouble could bail themselves out with
a new loan. Now, declining values coupled with yesterday’s loose lending
guidelines and high Loan to Value’s have borrowers stranded without a new loan
option as their loans race towards unmanageable interest rate resets. “There
simply is no new loan for these people,” says Arvielo.
Arvielo goes on to state, “The only solution is for someone to spearhead an effort
to organize the current note holders of these loans and create a streamlined
work-out opportunity for lenders to work on the borrowers behalf to qualify them
in a ‘what if’ scenario. Considering some debt forgiveness or providing seconds
to accommodate the shortfall would circumvent the ultimate outcome of taking the
loans back. I am sure these current note holders would gladly consider this
option. There is plenty of pent up capacity within the lending community to
conduct the qualifying diligence.”
Arvielo observes, when the borrower’s loan resets and they stop making
payments, the scenario is grim for everyone. “The borrower’s credit and dream of
homeownership is ruined. The foreclosed property becomes blight on the
neighborhood furthering the declination of value which casts other borrowers into
this same dilemma and the Note holder’s fare worst of all. Typically, they have to
evict and foreclose, then rehab and REO, paying full commission on a reduced
fire sale price. The ‘All-In’ cost can easily climb to 50 or 60% of the note. And,
with an unprecedented volume of foreclosures, the lenders ability to assimilate
these houses serves to push out the cycle leading to mounting losses for them
and prolonged degradation of the neighborhoods.”
Arvielo says FHA is being touted as a bailout option. “FHASecure and the
proposed FHAModernization will help, but unless someone comes up with a
solution to declining values and the Debt to Income dilemma, it will fall well short
of heading off this pending doom. We are already talking to thousands of
borrowers that are desperate and disqualified due to these issues.”
To further the pain, Arvielo observes, major investors are now imposing their own
Fico overlays to FHA. FHA has long maintained that Fico isn’t used to determine
eligebilty. Unfortunately, major large investors on which the industry relies to sell
their loans are now imposing their own restriction to things like Fico scores which
serves to further the entrapment. Borrowers that qualify but also have lower Fico
scores are out of luck and out of options. And, in many cases forced out of their
homes,” says Arvielo.
At New American we are doing what we can to qualify borrowers interested in
FHA financing. And, for borrowers trapped, we are working to negotiate with their
current investors to alter their existing notes to free the borrower. We have had
success doing so with several loan servicing companies. Our hope is that the
industry can get together and agree on a protocol to work this out or increasing
foreclosures will certainly be the result
About New American Funding
New American Funding is committed to providing top quality service. The
company offers a wide range of loan programs that are competitively priced.
Using the latest technology, the company has made the borrowing process
simple and convenient. New American Funding offers competitive rates and
eliminates fees associated with a loan arranged through a broker. The company’
s loan consultants listen to clients’ needs and make sure they understand
completely, then discuss the options and make sure clients thoroughly
understand them. From application through funding, New American Funding
makes the loan process simple and convenient. For more information, please
visit www.newamericanfunding.com.
Media Contact:
Rick Arvielo
President of New American Funding
1-800-426-5626
rarvielo@nafinc.com
CURRENT NEWS STORIES
A Beacon of Sanity in Subprime
HSBC got slammed earlier than most—and moved aggressively to minimize
the pain
Housing Crisis June 26, 2008, 5:00PM EST
by Mara Der Hovanesian – Business Week Magazine
"Send money." That was Brendan McDonagh's plea to top brass after he was
tapped last year to clean up HSBC's mortgage mess in the U.S. (HBC) McDonagh,
49, had just inherited a massive pile of troubled loans, and as he saw it, the cash
was critical to staving off a wave of foreclosures at the world's second-largest bank
by assets. "It's an economic fact," says the Irish native, who favors pin-striped suits
with bright ties. "The more people we can keep in their homes, the better it is for
them, the bank, and the country."
McDonagh, since named chief of the bank's U.S. operations, got his wish. "The
mother ship," as he calls headquarters back in London, O.K.'d a $2.6 billion cash
injection in the first quarter of this year. (It's a pittance compared with the massive
sums many big banks have been forced to raise from outside investors since the
mortgage meltdown began, something HSBC hasn't had to do.) The funds have
boosted reserves and fueled McDonagh's fix-it strategy: namely, a command
center launched eight months ago in Tampa where roughly 640 employees work
with troubled borrowers 24 hours a day, seven days a week to modify their
mortgages so they don't lose their homes. These so-called loan workouts are his
No. 1 priority for the bank, which handles the processing for what is one of the
largest portfolios of subprime loans. One in 20 of its borrowers is two months or
more behind on payments—and delinquencies are climbing.
Across much of the industry, workouts simply aren't happening. Instead, mortgage
lenders, servicers, investors, and regulators are battling over who has to take the
financial lumps when the loan terms change. The average servicer—the outfit
charged with collecting payments from homeowners and distributing the money to
the investors or banks that own the loans—has modified less than 1% of its
troubled loan portfolio, according to estimates by the Office of Thrift Supervision.
As a result, more homes are falling into foreclosure, exacerbating the plunge in
housing prices.
"COMPLETE FLEXIBILITY"
HSBC, which has already suffered $21.5 billion in loan-related losses and
writedowns, has an advantage. Unlike its U.S. rivals, the bank keeps the bulk of its
loans on its books instead of repackaging them into pools and selling them off to
Wall Street. That's a big reason HSBC reported a hit from mortgages earlier than
most major banks—its February 2007 announcement about increased losses sent
one of the first subprime shivers through the market. But it's also why the bank has
been able to move more quickly to fix the problems: It doesn't need anybody's
permission to tinker with loan terms. "We have complete flexibility," says
McDonagh, who has also tightened lending standards, stopped buying loans from
third-party brokers, and made cost-cutting moves since taking the helm. "We're
dealing with this entirely internally, within our bank."
The initiative seems to be working. HSBC has restructured or modified $18.2 billion
worth of loans, or about 20% of its entire portfolio as of Mar. 31. "They have been
way ahead of the curve in terms of realizing that they need to lower rates
significantly and forgive principal," says Mike Shea, executive director of nonprofit
advocacy group ACORN Housing, a longtime critic of the subprime industry that
won a class action against HSBC in 2003 for predatory lending. "We know from
their record they won't leave people stranded."
The war room for HSBC's effort is a 66,000-square-foot space in a former strip mall
14 miles from downtown Tampa. It's a traditional call center: Staffers from college
students to retirees talk on headsets in identical putty-colored cubicles. But the
former customer service center has been repurposed as the bank's intensive-care
unit for sick loans. Three large open-air rooms are divided by aisles with names like
"Motivation Way" and "Integrity Row." Employees are trained for six weeks to
become "loan mitigation specialists"—part touchy-feely counselors and part nitty-
gritty lenders who work directly with homeowners. " The first thing you want to do
when you are working out a bad loan is say: 'I'm listening, I hear what you're
saying,'" says Toni Nadolski, HSBC's head of collections in Tampa.
Besides dealing with homeowners who are already behind on their payments,
HSBC is being proactive, scouring its files for the most at-risk customers whose
adjustable-rate mortgages are due to jump to higher rates. The bank initially sends
letters to borrowers 120 days before the increase, then phones them 60 days
before.
Many borrowers don't realize such mortgage relief is even an option. As a result,
they often don't respond to HSBC or other lenders' communications for fear that
callers will demand payments. To help get the message out, HSBC is working with
nine community groups, including Detroit HOPE Center and the Center for NYC
Neighborhoods.
Before HSBC could begin to attack the problem, a small team spent six months
developing processes and technologies to automate loan workouts. Each
homeowner is sorted by three characteristics: geography, credit profile, and type of
loan. The system allows HSBC to rank borrowers into seven different risk
categories and decide the best course of action. That could be anything from a
short-term loan modification, which lowers the interest rate on a temporary basis, to
selling the property.
A homeowner in Pennsylvania with a $277,800 mortgage whose rate is scheduled
to jump from 7.5% to 9%, for example, was offered a fixed rate of 8% for the life of
the loan. In North Carolina, where housing prices have held up relatively well, a
borrower got only a six-month break on interest. "Without a framework, we couldn't
understand what we're dealing with or how to deploy solutions," says Grant Miles,
HSBC's head of default services, a 25-year risk-management veteran for the bank.
Of course, there can be kinks in the system. Rick Arvielo, president of New
American Funding in Irvine, Calif., a brokerage firm that works with homeowners to
help restructure their loans, hit a dead end when he contacted HSBC using the
normal channels. Arvielo says he made more than 50 phone calls to several
different departments. Only after he heard about the bank's centralized effort
through the industry grapevine did he make any headway. "Most of the time with
lenders, it's like trying to call the Pentagon to find someone who will answer
questions about a legitimate offer," he says.
A RETIREE'S RELIEF
Despite the hiccups, even Arvielo concedes the bank is among the most
responsive lenders in the industry. Back in 2005, his client, Calvin Croom, a retired
public school teacher, refinanced the $220,000 mortgage on his three-bedroom
ranch house in Stone Mountain, Ga. After fees, his new adjustable-rate mortgage
ballooned to $251,000. Earlier this year, with rates that had already jumped once
and were set to explode again, Croom was on the verge of losing his home of 16
years.
Arvielo intervened with HSBC on Croom's behalf in mid- February. Eight days later,
Croom had a new, less onerous mortgage. His fixed monthly payment is $1,200—
less than half the amount he was struggling to pay before. The bank has also cut
the balance on his mortgage to $186,000. Says Croom of the workout: "I just
wanted to break into tears."
Der Hovanesian is Banking editor for BusinessWeek in New York .
HSBC got slammed earlier than most—and moved aggressively to minimize
the pain
Housing Crisis June 26, 2008, 5:00PM EST
by Mara Der Hovanesian – Business Week Magazine
"Send money." That was Brendan McDonagh's plea to top brass after he was
tapped last year to clean up HSBC's mortgage mess in the U.S. (HBC) McDonagh,
49, had just inherited a massive pile of troubled loans, and as he saw it, the cash
was critical to staving off a wave of foreclosures at the world's second-largest bank
by assets. "It's an economic fact," says the Irish native, who favors pin-striped suits
with bright ties. "The more people we can keep in their homes, the better it is for
them, the bank, and the country."
McDonagh, since named chief of the bank's U.S. operations, got his wish. "The
mother ship," as he calls headquarters back in London, O.K.'d a $2.6 billion cash
injection in the first quarter of this year. (It's a pittance compared with the massive
sums many big banks have been forced to raise from outside investors since the
mortgage meltdown began, something HSBC hasn't had to do.) The funds have
boosted reserves and fueled McDonagh's fix-it strategy: namely, a command
center launched eight months ago in Tampa where roughly 640 employees work
with troubled borrowers 24 hours a day, seven days a week to modify their
mortgages so they don't lose their homes. These so-called loan workouts are his
No. 1 priority for the bank, which handles the processing for what is one of the
largest portfolios of subprime loans. One in 20 of its borrowers is two months or
more behind on payments—and delinquencies are climbing.
Across much of the industry, workouts simply aren't happening. Instead, mortgage
lenders, servicers, investors, and regulators are battling over who has to take the
financial lumps when the loan terms change. The average servicer—the outfit
charged with collecting payments from homeowners and distributing the money to
the investors or banks that own the loans—has modified less than 1% of its
troubled loan portfolio, according to estimates by the Office of Thrift Supervision.
As a result, more homes are falling into foreclosure, exacerbating the plunge in
housing prices.
"COMPLETE FLEXIBILITY"
HSBC, which has already suffered $21.5 billion in loan-related losses and
writedowns, has an advantage. Unlike its U.S. rivals, the bank keeps the bulk of its
loans on its books instead of repackaging them into pools and selling them off to
Wall Street. That's a big reason HSBC reported a hit from mortgages earlier than
most major banks—its February 2007 announcement about increased losses sent
one of the first subprime shivers through the market. But it's also why the bank has
been able to move more quickly to fix the problems: It doesn't need anybody's
permission to tinker with loan terms. "We have complete flexibility," says
McDonagh, who has also tightened lending standards, stopped buying loans from
third-party brokers, and made cost-cutting moves since taking the helm. "We're
dealing with this entirely internally, within our bank."
The initiative seems to be working. HSBC has restructured or modified $18.2 billion
worth of loans, or about 20% of its entire portfolio as of Mar. 31. "They have been
way ahead of the curve in terms of realizing that they need to lower rates
significantly and forgive principal," says Mike Shea, executive director of nonprofit
advocacy group ACORN Housing, a longtime critic of the subprime industry that
won a class action against HSBC in 2003 for predatory lending. "We know from
their record they won't leave people stranded."
The war room for HSBC's effort is a 66,000-square-foot space in a former strip mall
14 miles from downtown Tampa. It's a traditional call center: Staffers from college
students to retirees talk on headsets in identical putty-colored cubicles. But the
former customer service center has been repurposed as the bank's intensive-care
unit for sick loans. Three large open-air rooms are divided by aisles with names like
"Motivation Way" and "Integrity Row." Employees are trained for six weeks to
become "loan mitigation specialists"—part touchy-feely counselors and part nitty-
gritty lenders who work directly with homeowners. " The first thing you want to do
when you are working out a bad loan is say: 'I'm listening, I hear what you're
saying,'" says Toni Nadolski, HSBC's head of collections in Tampa.
Besides dealing with homeowners who are already behind on their payments,
HSBC is being proactive, scouring its files for the most at-risk customers whose
adjustable-rate mortgages are due to jump to higher rates. The bank initially sends
letters to borrowers 120 days before the increase, then phones them 60 days
before.
Many borrowers don't realize such mortgage relief is even an option. As a result,
they often don't respond to HSBC or other lenders' communications for fear that
callers will demand payments. To help get the message out, HSBC is working with
nine community groups, including Detroit HOPE Center and the Center for NYC
Neighborhoods.
Before HSBC could begin to attack the problem, a small team spent six months
developing processes and technologies to automate loan workouts. Each
homeowner is sorted by three characteristics: geography, credit profile, and type of
loan. The system allows HSBC to rank borrowers into seven different risk
categories and decide the best course of action. That could be anything from a
short-term loan modification, which lowers the interest rate on a temporary basis, to
selling the property.
A homeowner in Pennsylvania with a $277,800 mortgage whose rate is scheduled
to jump from 7.5% to 9%, for example, was offered a fixed rate of 8% for the life of
the loan. In North Carolina, where housing prices have held up relatively well, a
borrower got only a six-month break on interest. "Without a framework, we couldn't
understand what we're dealing with or how to deploy solutions," says Grant Miles,
HSBC's head of default services, a 25-year risk-management veteran for the bank.
Of course, there can be kinks in the system. Rick Arvielo, president of New
American Funding in Irvine, Calif., a brokerage firm that works with homeowners to
help restructure their loans, hit a dead end when he contacted HSBC using the
normal channels. Arvielo says he made more than 50 phone calls to several
different departments. Only after he heard about the bank's centralized effort
through the industry grapevine did he make any headway. "Most of the time with
lenders, it's like trying to call the Pentagon to find someone who will answer
questions about a legitimate offer," he says.
A RETIREE'S RELIEF
Despite the hiccups, even Arvielo concedes the bank is among the most
responsive lenders in the industry. Back in 2005, his client, Calvin Croom, a retired
public school teacher, refinanced the $220,000 mortgage on his three-bedroom
ranch house in Stone Mountain, Ga. After fees, his new adjustable-rate mortgage
ballooned to $251,000. Earlier this year, with rates that had already jumped once
and were set to explode again, Croom was on the verge of losing his home of 16
years.
Arvielo intervened with HSBC on Croom's behalf in mid- February. Eight days later,
Croom had a new, less onerous mortgage. His fixed monthly payment is $1,200—
less than half the amount he was struggling to pay before. The bank has also cut
the balance on his mortgage to $186,000. Says Croom of the workout: "I just
wanted to break into tears."
Der Hovanesian is Banking editor for BusinessWeek in New York .
------------------------------------------------------------------------------------------------
Bush signs housing bill to provide mortgage relief
By JENNIFER LOVEN, Associated Press Writer
WASHINGTON - President Bush on Wednesday signed a massive housing bill
intended to provide mortgage relief for 400,000 struggling homeowners and
stabilize financial markets.
ADVERTISEMENT
Bush signed the bill without any fanfare or signing ceremony, affixing his signature
to the measure he once threatened to veto, in the Oval Office in the early morning
hours. He was surrounded by top administration officials, including Treasury
Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability
in markets," White House spokesman Tony Fratto said. He said that the Federal
Housing Administration would begin right away to implement new policies "intended
to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets
homeowners who cannot afford their payments refinance into more affordable
government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae
and Freddie Mac and tightens controls over the two government-sponsored
businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the
president.
Bush didn't like the version emerging from Congress, and initially said he would
veto it, particularly over a provision containing $3.9 billion in neighborhood grants.
He contended the money would benefit lenders who helped cause the mortgage
meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not
wait — and even blaming the Democratic Congress' delays in action for forcing an
imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing
woes, were eager to get behind a housing rescue as they looked ahead to tough
re-election contests. Paulson's request for the emergency power to rescue Fannie
Mae and Freddie Mac helped push through the measure. So did the creation of a
regulator with stronger reins on the government-sponsored companies, as
Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a
permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and
the neighborhood grants.
The bill takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom
owe more their houses are worth, from foreclosure by allowing them to get more
affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to
homeowners who showed they could afford a new loan. Banks would first have to
agree to take a large loss on the existing loans in exchange for avoiding an often-
costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold
because of rising defaults and falling home values. To free up safer and more
affordable mortgage credit, the bill permanently would increase to $625,000 the
size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can
insure. They also could buy and back mortgages 15 percent higher than the
median home price in certain areas.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how
high a borrower's payment could get under the terms of his mortgage. It provides
$180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend
money to Fannie Mae and Freddie Mac or buy their stock should they need it. The
Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of
the low-income housing tax credit and a credit of up to $7,500 for first-time home
buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to
become law during what's left of their abbreviated election-year schedule, tacked
on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national
debt.
Conservative Republicans were vehemently opposed to the bill, particularly the
help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish
profits in good times and wield their outsized political clout to resist regulation while
depending on the government to bail them out should they falter.
By JENNIFER LOVEN, Associated Press Writer
WASHINGTON - President Bush on Wednesday signed a massive housing bill
intended to provide mortgage relief for 400,000 struggling homeowners and
stabilize financial markets.
ADVERTISEMENT
Bush signed the bill without any fanfare or signing ceremony, affixing his signature
to the measure he once threatened to veto, in the Oval Office in the early morning
hours. He was surrounded by top administration officials, including Treasury
Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability
in markets," White House spokesman Tony Fratto said. He said that the Federal
Housing Administration would begin right away to implement new policies "intended
to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets
homeowners who cannot afford their payments refinance into more affordable
government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae
and Freddie Mac and tightens controls over the two government-sponsored
businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the
president.
Bush didn't like the version emerging from Congress, and initially said he would
veto it, particularly over a provision containing $3.9 billion in neighborhood grants.
He contended the money would benefit lenders who helped cause the mortgage
meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not
wait — and even blaming the Democratic Congress' delays in action for forcing an
imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing
woes, were eager to get behind a housing rescue as they looked ahead to tough
re-election contests. Paulson's request for the emergency power to rescue Fannie
Mae and Freddie Mac helped push through the measure. So did the creation of a
regulator with stronger reins on the government-sponsored companies, as
Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a
permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and
the neighborhood grants.
The bill takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom
owe more their houses are worth, from foreclosure by allowing them to get more
affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to
homeowners who showed they could afford a new loan. Banks would first have to
agree to take a large loss on the existing loans in exchange for avoiding an often-
costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold
because of rising defaults and falling home values. To free up safer and more
affordable mortgage credit, the bill permanently would increase to $625,000 the
size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can
insure. They also could buy and back mortgages 15 percent higher than the
median home price in certain areas.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how
high a borrower's payment could get under the terms of his mortgage. It provides
$180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend
money to Fannie Mae and Freddie Mac or buy their stock should they need it. The
Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of
the low-income housing tax credit and a credit of up to $7,500 for first-time home
buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to
become law during what's left of their abbreviated election-year schedule, tacked
on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national
debt.
Conservative Republicans were vehemently opposed to the bill, particularly the
help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish
profits in good times and wield their outsized political clout to resist regulation while
depending on the government to bail them out should they falter.
------------------------------------------------------------------------------------------------
Lakeland, Fl. - Mike Rochinich and his wife bought their home in Lakeland in
2006. He thought they were getting a fixed mortgage but got an unwelcome
surprise just before closing. "The only loan that we could be approved for, an
adjustable 8.45%," said Rochinich. And in April, that interest rate jumped to more
than 11%. With the increase in taxes and insurance, Rochinich says his house
payment increased $800 a month from what it had been two years ago. "When we
got the news it was going to go up to 22-hundred, we were just on the verge of
saying it's going to foreclose," said Rochinich. Rochinich convinced his mortgage
holder to freeze the rate for another year, but he knew he needed additional help
getting out of his adjustable mortgage. "I found this New American Funding based
in California," said Rochinich. Rochinich says New American Funding found him a
new FHA loan, but for $55,000 less than what was owed on his original loan from
HSBC. He thought he was going to lose his home, but the company was going to
try one more thing and call him back."My wife was in tears, I was in tears and that
20 minutes was the longest 20 minutes of my life," Rochinich said.
New American Funding worked out a deal Rochinich didn't think was possible. "20
minutes later he called me back, he said the mortgage company agreed to write
off that 55-thousand dollars. That was huge," Rochinich said. Now Rochinich is in
a fixed rate mortgage with payments he can afford. He's avoided foreclosure, and
saved his American dream. Rochinich paid New American Funding $1,000 up
front to find him a new loan. And he says it was worth every penny.
2006. He thought they were getting a fixed mortgage but got an unwelcome
surprise just before closing. "The only loan that we could be approved for, an
adjustable 8.45%," said Rochinich. And in April, that interest rate jumped to more
than 11%. With the increase in taxes and insurance, Rochinich says his house
payment increased $800 a month from what it had been two years ago. "When we
got the news it was going to go up to 22-hundred, we were just on the verge of
saying it's going to foreclose," said Rochinich. Rochinich convinced his mortgage
holder to freeze the rate for another year, but he knew he needed additional help
getting out of his adjustable mortgage. "I found this New American Funding based
in California," said Rochinich. Rochinich says New American Funding found him a
new FHA loan, but for $55,000 less than what was owed on his original loan from
HSBC. He thought he was going to lose his home, but the company was going to
try one more thing and call him back."My wife was in tears, I was in tears and that
20 minutes was the longest 20 minutes of my life," Rochinich said.
New American Funding worked out a deal Rochinich didn't think was possible. "20
minutes later he called me back, he said the mortgage company agreed to write
off that 55-thousand dollars. That was huge," Rochinich said. Now Rochinich is in
a fixed rate mortgage with payments he can afford. He's avoided foreclosure, and
saved his American dream. Rochinich paid New American Funding $1,000 up
front to find him a new loan. And he says it was worth every penny.
Unexpected mortgage write-off saves home
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with other homeowners caught
up in this national epidemic.
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with other homeowners caught
up in this national epidemic.
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Loan Modification Experts with a proven
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| CUSTOMER TIPS |
Advice and Timelines:
EST timeline to completion –
60-120 days.
***Depending on Servicer/Lenders
individual turn times.***
1. Any and all items requested from
your lender should be delivered
within 3 days! Many lenders will
cancel a file for inactivity if items
requested are not received by them in
a very timely fashion and you don’t
want to start over from the beginning.
2. Reference your loan number on
every document page during the
follow up process.
3. Update financials every 30 days
along with cover letter “Updated
Financials”.
4.Be diligent and patient.
EST timeline to completion –
60-120 days.
***Depending on Servicer/Lenders
individual turn times.***
1. Any and all items requested from
your lender should be delivered
within 3 days! Many lenders will
cancel a file for inactivity if items
requested are not received by them in
a very timely fashion and you don’t
want to start over from the beginning.
2. Reference your loan number on
every document page during the
follow up process.
3. Update financials every 30 days
along with cover letter “Updated
Financials”.
4.Be diligent and patient.
