If you got a loan between 2004 and 2009, chances are you got a toxic loan that has become hard to pay. If you've tried on your own to get a loan modification, you know how powerless your lender can make you feel. On the telephone, someone promises you that all you need to do is stop paying your mortgage and you can get a modification. After you stop paying, they avoid your calls and foreclose on you. You may have reached out for help and encountered the many scams that prey on desperate borrowers. If you need an advocate with skill and integrity call me 818-425-3877
Why is it so hard and take so long to get approved for a loan modification? Because it is by design! Your loan servicer is financially rewarded to delay and complicate the modification process for as long as possible. In fact your loan servicer is paid thousands of dollars per loan modification application every time you apply which is why you probably have or will end up applying for a loan modification multiple times!
What are my chances of being approved for a loan modification on my own? According to the Federal Housing and Urban Development (HUD) office, homeowners applying for a loan modification on their own OR using a HUD certified counselor have less than a 15% chance of being approved for any loan modification.
Is my loan servicer supposed to help me get approved for a loan modification? NO! This is the biggest lie told to homeowners! Your loan servicer is a debt collector which is why they have to legally tell you: “we are a debt collector attempting to collect a debt and any information will be used for that purpose.” They are putting you on notice that you are the DEBTOR and they are the COLLECTOR. They do not represent you or your best interests and they are not required to help you get approved for a loan modification. If they think more money will be made off of you by delaying your loan modification approval and then foreclosing on your home that is what they will do unless you seek immediate FREE professional help from me.
How do I know if my loan modification application is NOT in an active review status?
· If you receive a Notice of Intent to Accelerate Foreclosure, Notice of Default or Notice of Trustee Sale after you have submitted your loan modification application, your modification application is NOT in active review!
· If your account representative is requesting additional documents such as bank statements, pay stubs, updated forms, applications, letters of explanation, etc., your modification application is NOT in active review!
· If your loan modification has not been approved within 30 days of application submission, your modification application is NOT in active review!
· If you have not been approved for a trial payment plan within 45 days of application submission, your modification application is NOT in active review!
· If your account representative is not returning your telephone messages within 2 business days, your modification application is NOT in active review!
· If you do not receive a confirmation of documents sent within 5 days, your modification application is NOT in active review!
If you are behind in your mortgage payments and if your home loan is not in an active review status, your home loan is in active foreclosure and is subject to sale WITHOUT FURTHER NOTICE.
What are the signs of a foreclosure rescue or loan modification scam?
Anyone (including attorneys) who:
· Requires an up-front fee to work with your lender/loan servicer to modify, refinance or reinstate your mortgage
· Guarantees they can stop your foreclosure or modify your mortgage for an up-front fee
· Advises you to stop paying your mortgage payment and pay them instead
· Pressures you to sign over the deed to your home or sign any paperwork you don’t understand
· Claims to offer “government approved” or “official government” loan modifications
· Asks you to release personal financial information online or even over the telephone
· Claims a bankruptcy filing will stop your foreclosure and eliminate your 2nd mortgage
· Claims filing a lawsuit against your loan servicer will force them to modify your mortgage
· Claims a REST Report or forensic loan audit will force your loan servicer to modify your mortgage
DON’T GET SCAMMED!
Contact me today for FREE HELP and FREE INFORMATION to save your home from foreclosure and to lower your house payment (even if you have been declined)
Worldfundingla@yahoo.com
Patty Schultz.com
This is not a solicitation for a listing on your home. The person presenting this information to you is a licensed realtor. If your home is currently listed by a real estate professional, this is for informational purposes only. If you are reading this fine print and you are serious about saving your home from foreclosure and lowering your house payment, contact me today.
For eligible unemployed homeowners.
Mortgage assistance of up to $3,000 per month for unemployed homeowners who are collecting or approved to receive unemployment benefits.
Mortgage Reinstatement Assistance Program
For eligible homeowners who have fallen behind on their mortgage payments.
Funding of up to $25,000 to help qualified homeowners catch up on their mortgage payments.
Principal Reduction Program
For eligible homeowners who have suffered a financial hardship and owe more than their home is worth.
Financial assistance to help pay down the principal balance of a mortgage loan.
Transition Assistance Program
For eligible homeowners who are undergoing a short sale or deed-in-lieu of foreclosure program.
Financial help to make a smooth transition into stable and affordable housing.
Unemployment Mortgage Assistance
For eligible unemployed homeowners.
Mortgage assistance of up to $3,000 per month for unemployed homeowners who are collecting or approved to receive unemployment benefits.
Mortgage Reinstatement Assistance Program
For eligible homeowners who have fallen behind on their mortgage payments.
Funding of up to $25,000 to help qualified homeowners catch up on their mortgage payments.
Principal Reduction Program
For eligible homeowners who have suffered a financial hardship and owe more than their home is worth.
Financial assistance to help pay down the principal balance of a mortgage loan.
Transition Assistance Program
For eligible homeowners who are undergoing a short sale or deed-in-lieu of foreclosure program.
Financial help to make a smooth transition into stable and affordable housing.
FANNIE MAE RELEASES 2014 NATIONAL HOUSING SURVEY RESULTS Americans’ concerns about the direction of the economy and their household income appear to be weighing on housing growth, according to results from Fannie Mae’s May 2014 National Housing Survey. The share of respondents who believe the economy is headed in the wrong direction remained at 57 percent last month, and those who said their household income is significantly higher than it was at the same time last year decreased four percentage points to 21 percent.
Although respondents’ attitudes toward housing have been generally positive during the past few months, their reluctance to enter the home buying or selling market has restrained activity below typical seasonal trends.
Amir Sufi, a professor of finance at the University of Chicago’s Booth School of Business, contends that “Failure to more adequately address the housing crisis was the biggest policy mistake made by the Department of Treasury under Secretary Timothy Geithner’s leadership.” Sufi argues this mistake stems from the Obama Administration’s narrow focus on saving banks, which led to unwise decisions on housing and household debt and kept homeowners from being helped. Read the full story
How much salary do you need to earn in order to afford the principal, interest, taxes and insurance payments on a median-priced home in your metro area?
The state of California is one of the most interesting real estate markets in the country currently, mainly because demand is as hot as ever. Despite home prices that would be out of reach for most in this country, Los Angeles had the second-best improvement in required salary (behind Sacramento, of course).
Home sales and housing starts have weakened in recent months, at a time when many in the industry had expected a seasonal pick-up. Federal Reserve Chair Janet Yellen told Congress last week that the recent housing slowdown “could prove more protracted” than expected, particularly with sluggish household formation from young adults who are grappling with large student debt and living with their parents to cut costs.
“My expectation is that as the job market strengthens … we’ll see household formation pick up, but it’s hard to know here what exactly the new normal is,” Yellen told the Joint Economic Committee last week. Indeed, 423,000 new households formed in the 12 months ending in March compared to an average of 1.3 million a year from 2002 to 2006, according to Census Bureau data.
Forty of the top economists recently surveyed by USA Today say that while they are more concerned about the housing recovery than they were six months ago, they do not expect the rebound – which started in 2011 – to reverse course. The majority said they expect housing’s turnaround to be more gradual in 2014.
Stuart Hoffman, PNC Financial Services Group economist, told USA Today he expects housing to make up some ground this year as job growth allows more buyers to qualify for loans.
“Credit availability is key for the continued housing recovery,” writes economists Hui Shan and Eli Hackel in a recent Goldman Sachs report. The economists note in the report that measures – such as credit scores, product choices, income-verification levels – have made lending standards “exceedingly tight.” They estimate that around half of the decline in the household turnover rate between 2001 and 2012 is due to tighter lending standards; the other half of decline from demographic changes or cyclical changes.
Federal Reserve Chairwoman Janet L. Yellen testified on Wednesday to lawmakers that a slowdown in housing could pose a risk to the economic recovery.
“Readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching,” Yellen said at a hearing of the Joint Economic Committee. “Another risk — domestic in origin — is that the recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”
Weak job and salary growth remain big challenges for housing and the economy, Yellen noted. The government's jobs report in April did show some improvement, with the unemployment rate falling to 6.3 percent — the lowest level since September 2008.
“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen told lawmakers. “The share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly — another signal that a substantial amount of slack remains in the labor market.”
Yellen noted that there was overall stagnant economic growth in the first three months of the year, but attributed some of that weakness to temporary factors like weather. Yellen said she expects the recovery to pick up for the rest of the year.
"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter," Yellen said.
Federal Reserve Chairwoman Janet L. Yellen testified on Wednesday to lawmakers that a slowdown in housing could pose a risk to the economic recovery.
“Readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching,” Yellen said at a hearing of the Joint Economic Committee. “Another risk — domestic in origin — is that the recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”
Weak job and salary growth remain big challenges for housing and the economy, Yellen noted. The government's jobs report in April did show some improvement, with the unemployment rate falling to 6.3 percent — the lowest level since September 2008.
“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen told lawmakers. “The share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly — another signal that a substantial amount of slack remains in the labor market.”
Yellen noted that there was overall stagnant economic growth in the first three months of the year, but attributed some of that weakness to temporary factors like weather. Yellen said she expects the recovery to pick up for the rest of the year.
"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter," Yellen said.
Federal Reserve Chairwoman Janet L. Yellen testified on Wednesday to lawmakers that a slowdown in housing could pose a risk to the economic recovery.
“Readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching,” Yellen said at a hearing of the Joint Economic Committee. “Another risk — domestic in origin — is that the recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”
Weak job and salary growth remain big challenges for housing and the economy, Yellen noted. The government's jobs report in April did show some improvement, with the unemployment rate falling to 6.3 percent — the lowest level since September 2008.
“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen told lawmakers. “The share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly — another signal that a substantial amount of slack remains in the labor market.”
Yellen noted that there was overall stagnant economic growth in the first three months of the year, but attributed some of that weakness to temporary factors like weather. Yellen said she expects the recovery to pick up for the rest of the year.
"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter," Yellen said.
Federal Reserve Chairwoman Janet L. Yellen testified on Wednesday to lawmakers that a slowdown in housing could pose a risk to the economic recovery.
“Readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching,” Yellen said at a hearing of the Joint Economic Committee. “Another risk — domestic in origin — is that the recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”
Weak job and salary growth remain big challenges for housing and the economy, Yellen noted. The government's jobs report in April did show some improvement, with the unemployment rate falling to 6.3 percent — the lowest level since September 2008.
“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen told lawmakers. “The share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly — another signal that a substantial amount of slack remains in the labor market.”
Yellen noted that there was overall stagnant economic growth in the first three months of the year, but attributed some of that weakness to temporary factors like weather. Yellen said she expects the recovery to pick up for the rest of the year.
"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter," Yellen said.
Federal Reserve Chairwoman Janet L. Yellen testified on Wednesday to lawmakers that a slowdown in housing could pose a risk to the economic recovery.
“Readings on housing activity, a sector that has been recovering since 2011, have remained disappointing so far this year and will bear watching,” Yellen said at a hearing of the Joint Economic Committee. “Another risk — domestic in origin — is that the recent flattening out in housing activity could prove more protracted than currently expected, rather than resuming its earlier pace of recovery.”
Weak job and salary growth remain big challenges for housing and the economy, Yellen noted. The government's jobs report in April did show some improvement, with the unemployment rate falling to 6.3 percent — the lowest level since September 2008.
“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen told lawmakers. “The share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly — another signal that a substantial amount of slack remains in the labor market.”
Yellen noted that there was overall stagnant economic growth in the first three months of the year, but attributed some of that weakness to temporary factors like weather. Yellen said she expects the recovery to pick up for the rest of the year.
"With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already underway, putting the overall economy on track for solid growth in the current quarter," Yellen said.
Jacalyn Blank, a real estate short sale negotiator, at foreclosed condominium that started out as a short sale in Rancho Penasquitos. — Howard Lipin
Is mortgage titan Fannie Mae overpricing homes throughout California?
Real estate agents and sellers have raised that question in a growing number of deals that have fallen apart with the taxpayer-supported company because of price disputes.
In those deals, sellers who had hoped for a more graceful exit from homeownership are pushed toward foreclosure.
Fannie Mae — which owns or backs about half of the home loans in California along with fellow mortgage-finance giant Freddie Mac — is trying to juggle two goals that appear to be at odds with each other.
The first is to help homeowners avert foreclosure through short sales.
For sellers, short sales — which allow borrowers to sell their homes for less than they owe as long as the owners of the mortgages say OK — are considered better than foreclosures because they shave off fewer points from credit scores and are sometimes more cost effective for banks.
READERS
If you’re struggling through the Fannie Mae short sale process, email reporter Lily Leung with your name, city, phone number, a short description of your circumstance and the best time to call. Email:lily.leung@utsandiego.com
Sellers also benefit because they can re-join the housing market faster, often cutting the wait time to as little as two years instead of seven for a foreclosure.
However, Fannie Mae also must price properties appropriately so that taxpayers, who have floated the company for four years, are getting a good deal.
The result of those competing goals?
Fannie Mae would agree to start the short sale process but would price those homes 20 percent to 40 percent above neighboring comparable sales, said Don Faught, president of the California Association of Realtors. The association is one of the largest trade groups in the state.
The disagreement in pricing has left homebuyers feeling ripped off, and at times, has caused short sales to fail. When short sales fail, home sellers could get stuck with foreclosure auction dates.
“Obviously this is a problem because the agent has to (re-)market the property with the Fannie Mae property price,” Faught said. “And often, there’s no time to re-market the property before a foreclosure (auction date.)”
The disputed values, which Fannie Mae says are justified, are based on several factors, said Fannie Mae spokesman Andrew Wilson. They include past sales, the opinions of contract real estate brokers, and sometimes appraisals.
Those factors yield a minimum amount for each property being considered for a short sale.
“We’re comfortable in the values we set,” Wilson said.
At times, the requested price is more than the highest comparable home sale and requested at the eleventh hour, say people involved in these deals.
A DEAL GONE SOUR
Mark DePlachett, a 62-year-old plumber, was trying to short sell his home in Rancho Peñasquitos during the holidays.
DePlachett wanted to get out of his mortgage because he could no longer afford it, he said. He was hurt on the job and lost a huge source of income.
The buyer interested in the property offered $191,000 for the condo, which appeared to be a fair price because a sampling of condos in the same building were being listed at or had sold below $200,000, said Jacalyn Blank, the short sale negotiator in that deal. Analyzing comparable units is a common practice in the housing world.
Fannie Mae’s asking price: $260,000, or roughly 30 percent above the highest comparable sale in that area.
That offer was actually made by Bank of America on behalf of Fannie Mae. As with many loans, one company can own the loan and another company can service it. Servicing a loan means accepting and managing mortgage payments from borrowers.
Fannie Mae gives loan servicers a minimum price that it’s willing to take in a short sale. The mortgage-finance company says it will even consider “close” offers, Wilson said.
If the buyer’s offer doesn’t meet the minimum, then servicers like Bank of America negotiate on Fannie’s behalf. This delegated responsibility, in fact, was expanded in the fall as a way to speed up short sales.
If a buyer wants to dispute the Fannie Mae value, then the servicer can send it to Fannie Mae for review.
That happened in DePlachett’s case. Analysis of comparable condos, either listed at or sold for sub-$200,000, were turned in along with other market details.
Fannie Mae ultimately rejected the offer and the buyer walked. The property was later re-listed at $260,000, the Fannie Mae request. Months passed. No bites.
A new buyer in December offered $251,000. But by then, it was too late.
“That was declined because the foreclosure sale was weeks away,” said Bank of America spokewoman Jumana Bauwens.
Eventually, the property sold at foreclosure auction for $240,000. That’s about 4 percent less than what the second buyer offered.
However, in some cases, owners of home loans can make more money through a foreclosure because they don’t have to pay real estate fees, such as commissions, escrow and title, said Blank, the short sale negotiator.
“It’s not fair to homeowners who don’t want the foreclosure in their records,” Blank said. “... It’s not fair to the buyer. It means they are overpaying ... Sometimes, you have to pay $10,000 more.”
DePlachett now has a black mark on his borrowing history for about seven years.
“Bottom line ... just move on,” he said. “What else can you do?”
If a Fannie Mae short sale goes to foreclosure, then it is listed for sale at public auction. Proceeds of that sale would go to Fannie Mae.
If the property fails to sell at auction, then it goes into Fannie Mae’s foreclosure portfolio for resale. Mortgages for those homes generally do not require appraisals.
WIDESPREAD DISPUTES
Accusations of value inflation in Fannie Mae deals appear widespread. It became such an issue that the officials with the California Association of Realtors, which has a 115,000-person membership, recently flew to Washington D.C. to meet with Fannie Mae officials.
Faught, the California group’s president, said the meeting was cordial and reps from the company appeared eager to listen. But the bottom line is, price inflation is still very much an issue.
Fannie Mae officials are aware of the pricing disagreements with their short sales. Their answer in February was to create a process that allows agents to send those issues directly to Fannie Mae.
Addressing San Diego resident DePlachett’s short sale, Wilson said, it “would
be a prime example of the kind of issue we’d hope to avoid by allowing agents
and others to escalate short sale cases directly to Fannie Mae.”
Despite the new process in place, real estate agents are still concerned.
Agents fear that prices in certain areas are already artificially inflated.
When Fannie Mae sets minimum prices above the highest comparable home
sale in a neighborhood, it’s creating a new value standard that may not be
justified, said Phil Johnson, a real estate agent is dealing with Fannie Mae
value disputes.
Also, agents say Fannie Mae’s minimum asking prices are driving away
qualified buyers and increasing competition for traditional buyers.
When Fannie Mae asks for higher prices, buyers who have secured financing
would then have to get more financing to cover the difference.
This could be a problem for borrowers because they’d have to justify the
request for more money from the mortgage company, which may not be possible.
Cash buyers, on the other hand, may not have that issue.
They’re typically backed by companies with capital or hard-money loans, so
“they can pay whatever they want,” Johnson said. This could create bidding
wars and other issues for traditional buyers, who are already facing a tight inventory.
San Diego real estate broker Kurt Wannebo says the values that Fannie Mae
officials set make sense because they’re fully aware that the housing market
in areas like San Diego are hot.
Low inventory levels, spurred by high levels of underwater homeowners, have
caused prices to go up. The median price for a local home sold in January was
$350,000, up 15 percent from a year ago.
Competition for limited inventory, especially in the entry-level price range, has
been worsened by declining foreclosures.
Buyers who had typically purchased distressed homes now are forced to enter
the regular home market. This means more competition for traditional buyers.
“Fannie realized that certain market prices are appreciating quickly and offers
are coming in high,” Wannebo said. “ ... It’s wrong in that you know the values
aren’t always there.
“The problem is, let’s say you list a property for $300,000 because that’s what
the comps show,” he added. “I actually get an offer of up to $350,000. Buyers will
overpay for properties if they just want to get into it. (Fannie Mae) is exploiting that aspect.”
Struggling borrowers who relinquish their homes can live in them temporarily without having to make mortgage payments under new guidelines by mortgage giants Fannie Mae and Freddie Mac.
The guidelines, introduced late last year, are set to take full effect by March 1. They're meant to help those facing hardships such as a job loss, illness or the death of a spouse.
On March 1, Fannie Mae and Freddie Mac will roll out a new program allowing underwater homeowners to give up their homes and cancel their mortgages. The new rules for these so-called deed-in-lieu transactions apply to people who are current or less than 90 days late on their payments.
SHUTTERSTOCK.COM
About mortgage release
In a nutshell: Fannie Mae and Freddie Mac, the mortgage enterprises that back most of the home loans in the U.S., are streamlining the process for borrowers who can demonstrate hardships and want to give up their homes and be released from their debt. As part of the new guidelines, some homeowners can stay in their residences for up to three months without making mortgage payments or paying rent.
How to get started: Homeowners interested in the latest mortgage release guidelines should talk to their loan servicers, Fannie Mae and Freddie Mac representatives say.
Additional information: Here are some resources for homeowners:
•Fannie Mae has set up two help centers near Orange County: Call 866-442-8576 (Los Angeles area) or 866-442-9409 (Inland Empire)
•For Freddie Mac, see the Avoiding Foreclosure Resource Center and Deed-in-Lieu pages onfreddiemac.com.
Bottom line: Homeowners can turn over the house keys and erase their debt – even if they are still current on their payments. In the past, borrowers typically had to be delinquent before they could qualify for such help as a loan modification.
"We don't view it as 'walking away,'" Fannie Mae spokesman Andrew Wilson said, referring to a term used in the housing industry to describe homeowners who bail on their mortgages. "We view it as taking ... responsible action."
Striking a deal to relinquish a home that's heading for repossession is nothing new; the homeowner gives the lender a "deed in lieu of foreclosure." Or some borrowers just stop making their mortgage payments, and the property is eventually foreclosed.
But now some homeowners can be released from their mortgages with the option of living in the homes payment-free for up to three months, Wilson said. The new guidelines also streamline the process: Banks can green light homeowners who qualify for mortgage release without having to seek case-by-case approval from Fannie Mae or Freddie Mac.
Fannie and Freddie, government-sponsored enterprises chartered by Congress, guarantee about 70 percent of mortgages in the United States. Both are in the process of winding down as policymakers look at revamping the mortgage market.
Wilson said the guidelines aim to avoid protracted foreclosures and get properties on the market more quickly. Homeowners must leave the residences in good condition. In return, a homeowner gets some time to make a transition and takes less of a credit hit. Another part of the program gives the borrower an option that has been available for a few years: Paying rent to stay in the home for up to a year.
If foreclosure can be prevented, Wilson said, "That's good for the borrower, it's good for Fannie Mae, it's good for the taxpayer and it's good for the neighborhood where that home is. We view it as saving money and reducing losses."
Under the guidelines, even someone with a vacation home could apply for a deed-in-lieu transaction on their primary residence. In some cases, homeowners may be asked to make a financial contribution.
California is a non-recourse state. That's means that after a foreclosure or short sale, the lender on a purchase-money mortgage has no right to the borrower's wages or assets. But a lawyer for Freddie Mac said the law does not prohibit contributions from borrowers who engage in deed-in-lieu transactions, according to Freddie Mac spokesman Brad German.
Reactions to the mortgage-release provisions are mixed.
Daren Blomquist of RealtyTrac, a nationwide foreclosure tracking service based in Irvine, said the guidelines may help individual homeowners but could camouflage the still shaky state of the housing industry.
"The bottom line is that these new requirements make it easier for homeowners with negative equity to walk away from their mortgages," Blomquist said. "This is an implicit acknowledgment that many of these homeowners will end up being foreclosed anyway and an attempt to short circuit the lengthy and messy foreclosure process – and possibly the negative press that comes with higher foreclosure numbers."
He said, "In many cases a mortgage release may be the best option for everyone involved, but the danger is that a shift away from completed foreclosures to mortgage releases could mask the fact that the housing market is still extremely fragile."
Blomquist said nearly 11 million homeowners nationwide are "seriously underwater."The number represents 26 percent of all homeowners with a mortgage, "and every mortgage release still represents a distressed homeowner who is losing his or her home."
In Orange County, 91,128 borrowers were underwater at the end of the fourth quarter in 2012, or 19.6 percent of homeowners with a mortgage, according to online home tracker Zillow.com. That fell from 21.3 percent in the third quarter.
Representatives for Fannie Mae and Freddie Mac said the agencies did not have projections on how many homeowners would qualify for mortgage release or how much money would be spent on it.
"The program will undoubtedly be a benefit for some borrowers facing hardship, but it is too soon to tell what impact this will have on the housing market and economy," said Dustin Hobbs of the California Mortgage Bankers Association. "Too many questions (are) left to be answered, including what effect this will have on borrower attitudes and behavior. As with all such programs, the devil is in the details, and we just don't know enough yet."
Jeff Lazerson of Mortgage Grader in Laguna Niguel questioned the timing of the new guidelines in light of the winding down of Fannie Mae and Freddie Mac, which were put into a conservatorship several years ago to help shore up the nation's crashing housing market. He said the Bipartisan Policy Center, a Washington, D.C., think tank, is about to release a blueprint for big changes.
"Why now, why after the eye of the storm has passed, are they inviting on-time paying borrowers who happen to be underwater to mail in their keys?" he said. "This probably has a lot more to do with reducing Fannie and Freddie's balance sheets of perceived toxic loans that are going to be hard to offload."
Mortgage Reinstatement Assistance Program
Principal Reduction Program
Transition Assistance Program
