Tag Archives: Federal Housing Finance Agency



U.S. Secretary of the Treasury Jack Lew announced Thursday that Treasury is extending the Making Home Affordable Program for another two years. The new expiration date is now set for December 31, 2015. (EMPHASIS ADDED)

The program offers help to homeowners through solutions including the Home Affordable Modification Program (HAMP), Home Affordable Foreclosure Alternatives (HAFA), and the Second Lien Modification Program.

As of March, an estimated 1.1 million struggling homeowners have received a permanent modification through HAMP.

The move aligns with the Federal Housing Finance Agency’s (FHFA) extension for the Home Affordable Refinance Program (HARP), which was first announced in April.

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Home Affordable Modification Program (“HAMP”) to Be Extended and Expanded

Friday, the administration announced its plans to expand the eligibility for its Home Affordable Modification Program (“HAMP”).

Didn’t Work As Planned

In February 2009, HAMP was introduced as a plan designed to help 4 million mortgage borrowers. However, HAMP has helped fewer than 1 million homeowners.

Banks Encouraged to Reduce Loan Principal

To encourage the implementation of the expanded plan, incentives will be tripled to pay banks that reduce principal on loans.

Lenders will be paid between 18 cents and 63 cents for every dollar the lenders take off the mortgage principal. The prior amounts were between 6 cents and 21 cents for every dollar.

Freddie Mac and Fannie Mae Included

The expanded plan will include incentives for Fannie Mae and Freddie Mac to reduce principal on loans.

Until now, only private lenders and banks were offered incentives to reduce principal on loans.

Calculation of Debt to Income Ratios Will Be More Flexible

HAMP was designed to lower the debt ratio of mortgage borrowers to 31% of their income. Homeowners with mortgage payments below that ratio did not qualify for a loan modification. New guidelines will permit a more flexible calculation of debt to income ratios.

Expanded Umbrella

Previously, only mortgage holders of owner-occupied homes qualified. Now owners of rental properties may also qualify, thereby expanding the number of people this can affect.

Program Extended

The program is extended to December 2013. It was initially set to expire at the end of this year.

The changes in HAMP do not take effect until the end of April 2012.

How does the Federal Housing Finance Agency View the Changes?

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued a statement that said it would consider the changes to HAMP.

However, it noted that an analysis it recently conducted found “that principal forgiveness did not provide benefits that were greater than principal forbearance,” signaling that the housing authority may not support reducing the principal on loans as a way to help homeowners.

Questions For You

What do you think about the Federal Housing Finance Authority Agency Study?

Do you think real estate investors should be subsidized with taxpayer money while rents are rising in this economy?

Do you think it is a good idea to subsidize the real estate investor in an effort to prevent housing vacancies and lower housing values?

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Treasury Department To Pay Servicers For Quicker Loan Modifications

The Treasury Department will pay mortgage servicers more for modifying loans in an earlier stage of delinquency and less the longer the process takes, according to guidelines released July 6, 2011.

The guidelines, effective October 1, will be adopted by Fannie Mae when the Federal Housing Finance Agency releases the new mortgage servicing fee structures.

Through HAMP, a servicer receives $1,000 when a homeowner is placed in a verified income trial modification for three months before becoming permanent. Effective October 1, mortgage servicers will receive $1,600 if the trial starts before a loan becomes more than 120 days delinquent, $1,200 for loans between 121 days and 210 days delinquent and $400.00 for loans placed in the trial stage after being 210 days delinquent.

Servicers are prohibited from requiring borrowers to make past due payments before entering a trial modification which would result in a higher fee for the servicer.

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