More Light at the End of the Tunnel?
by. Henry Meier
The Federal Housing Finance Agency (FHFA), the regulator that oversees Fannie and Freddie, announced that, starting in July, servicers of Fannie and Freddie mortgages will be offering homeowners who are 90 days or more delinquent on first lien mortgages an expedited loan modification program. Servicers will be responsible for proactively informing borrowers if they are eligible for the program. The new terms will generally include principal forbearance and extending mortgages to as long as 40 years. Eligible borrowers would have to demonstrate a willingness to pay under the new terms by making three on-time trial payments. If they do so, the mortgage will be permanently modified. The new terms will be offered to borrowers who are between 90 days to 24 months delinquent on a first lien mortgage that is at least one year old with a loan to value ratio equal to or greater than 80%.
As I posted in previous blogs, the FHFA has been a good steward of the public fisk. So, why the sudden shift? Because under the new servicing regulations promulgated by the CFPB and taking effect in January, servicers must have policies and procedures in place for expedited loss-mitigation efforts. This program gives servicers of Fannie and Freddie mortgages, which comprise more than half of the outstanding mortgages in the country, an efficient means of complying with this mandate. Even though this just applies to Fannie and Freddie mortgages, if you hold your mortgages in house you should take a look at this program because at some point you will be asked if it’s good enough for Fannie and Freddie, why isn’t it good enough for you. Are we rearranging the deck chairs on the Titanic? In many cases, we probably are, but that seems to be what Congress wants.
NCUA Trims Projected Corporate Losses by $900 million
NCUA announced yesterday that its total projected assessments associated with credit union payments into the temporary Corporate Credit Union Stabilization Fund declined by $900 million in the last six months of 2012, meaning that the potential tab on the final bill for repaying costs associated with the corporate bailout is now in the range of $1.9 billion and $4.8 billion. However, NCUA stressed that its projected assessment for 2013 of between 8 and 11 basis points of insured shares remains unchanged. On the bright side, if the downward trend continues it is possible that the assessments will end before 2021, the deadline for repaying the government loan.
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