WASHINGTON |
WASHINGTON Feb 9 (Reuters) ? The housing settlement
announced Thursday should make it easier for troubled homeowners
to modify their mortgages and escape foreclosure, but it won?t
make everyone whole, consumer advocates say.
Those who have already lost their home to foreclosure could
get payments of between $1,500 and $2,000. And though the
settlement calls for mortgage servicers to reach out to troubled
borrowers, it wouldn?t hurt for those waiting homeowners to be a
little bit pushy to make sure their issues get addressed
quickly.
?People can?t wait, they need to act,? said Alys Cohen, a
staff attorney with the National Consumer Law Center, an
advocacy group. Borrowers have to modify their mortgages before
the end of the year to qualify for the tax break which expires
at the end of 2012.
There are a few key points for borrowers to note:
- Unless their mortgages are serviced by one of the five
banks that were part of the agreement, they will have to wait
for a subsequent agreement expected with other lenders.
- The relief will not come quickly; the plan documents say
that mortgage servicers will be reaching out to borrowers over
the next six to nine months, and they have allowed three years
for the process to work.
- Furthermore, homeowners whose mortgages are backed by
Fannie Mae or Freddie Mac will not qualify for the principal
reductions that are part of the day. And of the 50 states, only
Oklahoma ultimately opted out of the agreement, so borrowers who
live there will not receive every advantage of the settlement.
So, what should troubled borrowers do now? That depends on
how troubled they are. Here is some guidance.
FOR HOMEOWNERS HANGING BY A THREAD
If you have stopped making mortgage payments, and you owe
more than your home is worth, you are the target person this
settlement is designed to help first. You may be able to
negotiate a reduction in the amount you owe on your loan.
Start with the new national website set up by the federal
government for the settlement ().
Each servicer has set up a website to handle your case. Go
there and start the process. The lenders in today?s agreement
are: Bank of America (); Ally
Financial Inc (); Citigroup
Inc (); J.P. Morgan Chase
() and Wells Fargo Co
().
Document your efforts, and ? if your case is complex or you
don?t think you are being treated right ? find a housing
counselor to help you. You can find one on the website of the
Department of Housing and Urban Development ().
Servicers will be subject to new requirements that will
limit the extra fees they can charge and will press them to
negotiate principal reductions on a case-by-case basis. If you
do win a principal reduction, you will not owe income taxes on
it if the paperwork is completed in 2012.
You may not get everything you need or want. Some $17
billion was set aside for principal reductions and related
relief, but the nation?s homeowners are as much as $700 billion
underwater, by some estimates.
IF YOU?RE UNDERWATER, BUT ON TIME
Homeowners who have been making payments on mortgages that
are bigger than the value of the loan won?t be able to win
principal reductions under this program. But they may be able to
refinance to more favorable mortgages.
Again, contact your servicer directly and request that
refinance.
Should you stop making payments on your loan so you can
qualify for the bigger relief? That could backfire in the form
of a damaged credit score and a less-than-satisfactory
settlement anyway. ?We always say people should keep paying
their mortgage,? says Cohen.
IF IT?S TOO LATE TO SAVE YOUR HOUSE
If you have already been foreclosed upon, contact your state
attorney general?s office and make sure you are put on whatever
list they are building for the cash payments. Some states will
have more money than others.
The $1,500 to $2,000 average payment is ?obviously not
enough money to deal with the pain of losing your home,? says
Ira Rheingold, executive director of the National Association of
Consumer Advocates. But it will help.
The best part about that payoff is that it does not restrict
your right to go after your servicer or lender if you feel like
your foreclosure was not handled legally.
If you want to file a claim on a foreclosure that has
already occurred ? or fight one that is imminent ? you can find
an attorney on the NACA website ().
Source: http://paydayloans-uk.org/personal-finance-will-that-housing-deal-help-you/
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