Ginnie Mae will now allow servicers to buy out delinquent loans at the end of a successful trial payment plan rather than requiring three months of missed payments before the buyout. This move is in keeping with recently released Federal Housing Administration (FHA) guidelines that require a three-to-four-month trial payment period before a loan modification can be made permanent. The new FHA rules go into effect October of this year and are intended to prevent lenders from modifying loans and then selling them right back into the Ginnie Mae pool[1]. Once the trial period is over the loan can be “re-pooled.”
The agencies believe that these new requirements will “serve to strengthen the performance of Ginnie Mae pools”[2]. In the event that loans fail during the trial payment period, the regulations are designed to protect both the servicer and the loan purchaser to some degree.
Do you think that these regulations will help or hurt matters?
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[1] http://www.dsnews.com/articles/ginnie-may-allows-buyouts-after-trial-payment-plans-2011-08-30
[2] http://reversemortgagedaily.com/2011/08/30/ginnie-mae-expands-loan-repurchase-policy-for-trial-modifications/
I am wondering why we keep hearing about loan mods when so few are accepted after a trial period anyway. To me this isn’t news at all because this new rule seems to protect the bank and investor and nothing to do with the loan mod program or it’s success. I’m all for helping the homeowners, but this little tidbit of news has nothing to do with that.
I hear everyday, when I talk to struggling homeowners who have successfully completed a trial loan mod, that the bank has decided to cancel the modification. The owners do not understand and can’t get answers until I explain to them what is happening and why (IMHO of course). Damn them for leading everyone on in this way–it does not benefit the bank to do this when they are being compensated for their failures.
I have been one on here who is realistic about this whole banking crisis thing going on; i.e. the responsibility belongs to greedy people in all aspects of the business and isn’t just the ‘greedy big banks’ fault. The people who signed for something they couldn’t pay for are also assigned some blame. Fixing the problem will take people with integrity and an insight into what is right for all parties. I am sorry to say, those with the money and power do not seem to possess that integrity for doing the right thing. Maybe someday, but it ain’t t’day!!
What does that mean? Reselling them back to the pool? Exactly what are the steps for loan modification?
My office has a client that did a loan mod 5 years ago, then now sold their home. Upon the listing appt. the seller called from our office for the payoff of their loan. The list price was set according to the verbal payoff received+normal closing costs.
Closing day came and lo and behold the payoff was $25000 short! It found out that the “loan mod” had cost them $25000! Interest on the amount modified plus the modified amount was added back into the payoff, hence the $25000 short fall!
Interesting in reading over all their paperwork, NOTHING was said about the additional costs!
Bad deal!