Chermack Law

Tag Archives: Making Home Affordable

Review of the Help for Homeowners Community Event

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This past Saturday, my husband and I attended the Help for Homeowners Community Event that I referred to in this post. The event took place at the Minneapolis Hilton. We got there at around 10 a.m., and a lot of people were there already. When I saw how many people were there, I couldn’t help but feel sad. I even felt myself choke up, because I was thinking about the emotions that everyone must be going through as they worried about losing their homes.

As we entered the event, volunteers wearing blue shirts guided people along. Mortgage lenders had individual tables set up. Fannie Mae and Freddie Mac also had tables. Participants went to their mortgage lender’s table and got a ticket. Their tickets had the mortgage lender’s name and a number on them. From there, the participants were led into another room, where they sat and listened to different speakers talking about loan modifications and FHA loans. Volunteers would come into the room and call out the names of mortgage lenders and a number, and then the homeowners with the corresponding tickets were brought into another room; a room full of tables. In that room, homeowners sat at a table, face-to-face, with someone from their mortgage bank.

Many homeowners who have been trying to obtain assistance under the Making Home Affordable plan have had difficulty reaching people at their banks over the phone. This event gave homeowners an opportunity to talk face-to-face with a real person from their bank. This was a great opportunity for many people. I hope that, after this event, the mortgage banks are able to help the people they met with so that their homes can be saved.

Fannie Mae threatens “strategic defaulters”

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Fannie Mae recently announced that it plans to punish people who strategically default on their mortgages.  This announcement was met with skepticism by some housing and lending experts.

It’s difficult to blame Fannie Mae for being nervous about people walking away from their mortgages when strategic default is being regularly reported on in the news:

Owners Stop Paying Mortgages, And Stop Fretting.

American Dream 2: Default, Then Rent

I think that it will be difficult for Fannie Mae to decide whether someone strategically defaulted. Many people have applied for the HAMP program, only to end up in foreclosure. Foreclosures are, unfortunately, rising. See More rural, suburban Minnesotans threatened with foreclosure. See also Foreclosures Are Rising.

Fannie Mae’s threats might scare a few people from walking away from their underwater mortgages, but its threats alone will not be enough to fix our nation’s housing mess. Fannie Mae’s energy could be better spent on making sure servicers are following the Making Home Affordable program guidelines in a timely manner.


Options for Homeowners in Underwater Mortgages: Saving Your House

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What do you do if you can’t sell your house for the amount that you owe on the mortgage? In the current economy, this is a common problem. When you owe more than your house is worth, you are considered to be “underwater” or “upside down”. Another name for this situation is “having negative equity”. This post is the first of two about homeowners in underwater mortgages. In this post, I will discuss some of the options that are available for homeowners who are able to save their homes.

Live there and continue paying your mortgage. If you can afford your mortgage payments, and you don’t have to move, then you should stay in your house and continue to pay your mortgage. Try not to focus on your home’s financial value. Instead, focus on the fact that you have a place to live, and that eventually you will have your house paid off.

Rent it out. If you absolutely have to move, and you can’t afford to sell your home, you can become a landlord and rent it out. The rental income may not be enough to cover all of the expenses, so you should be prepared to have to pay some money out of pocket. You also might want to hire a property management company to maintain your rental property for you.

Some cities require you to have a rental license, and you will also want to look into getting insurance. You should also make sure that your mortgage and your townhouse or condo association allow you to rent out your property.

If you decide to rent out your house, you should be prepared to do some legwork on your own. I also recommend consulting with an attorney who specializes in landlord/tenant law before deciding to become a landlord.

Making Home Affordable Plan Refinance or Modification. Because of the current housing crisis, the Obama administration launched the Making Home Affordable plan. Under this plan, certain homeowners qualify to refinance or modify their mortgages despite being underwater.

If you determine that you may qualify for a refinance or modification under this plan, you will need to contact your mortgage servicer or lender. This will likely require a great deal of patience, but it will be worthwhile if you are able to get your mortgage refinanced or modified under the program.