The New: U.S. mortgage modification plan eligibility requirements

The Obama administration on Wednesday gave lenders a green light to begin modifying home mortgages under a new $75 billion program aimed primarily at people facing imminent financial hardship.

The $75 billion mortgage modification plan is part of a larger Obama administration effort announced on Feb. 18 to support the U.S. housing market and distressed homeowners. Eligibility requirements for the mortgage modification program include the following:


* Borrowers must represent that they do not have sufficient liquid assets to make their monthly mortgage payments. These assets will not include retirement accounts.

* Every borrower who seeks a modification must be screened for financial hardship. Borrowers must demonstrate a change in circumstances that causes hardship, such as a drop in income or an imminent payment increase.

* Delinquency is not a requirement, and households that are at imminent risk of default are eligible.

* Borrowers with high total debt may qualify but only after they enter government-certified debt counseling.

* The mortgage to be modified must have been originated on or before Jan. 1, 2009, and homes must be owner-occupied, 1-4 unit family dwellings that are primary residences.

* Loans must have unpaid principal balance up to $729,750 for a single-family home, $934,200 for a two-unit home, $1.129 million for a three-unit home, and $1.403 million for a four-unit home.

* New applications for the program will be accepted until Dec. 31, 2012. There is no borrower cost to obtain a modification.

* There is no minimum or maximum loan-to-value ratio.

* Borrowers in bankruptcy are not automatically eliminated from consideration for modification, and borrowers in litigation regarding their mortgage can qualify for a modification without waiving their legal rights.

* Foreclosure actions are temporarily suspended while borrowers are considered for foreclosure prevention options. Loans can only be modified once under the program.

* Eligibility for the program will sunset at the end of three years.


* The U.S. Treasury will share with lenders and mortgage servicers part of the cost of reducing monthly payments.

* The lender is responsible for reducing payments to 38 percent of the borrower's monthly income through interest-rate reductions or other means. The Treasury will match dollar-for-dollar further reductions that bring payments down to 31 percent of the borrower's monthly income.

* Loan servicers that modify loans according to the program guidelines will receive a $1,000 up-front fee for each modification and a $1,000 annual fee for each still-performing loan.

* Home owners who make modified payments on time will receive a $1,000 reduction in their loan principal each year, up to $5,000.

* Lenders and investors will receive a one-time bonus of $1,500 for each loan modified before borrowers miss any payments. Servicers will receive a $500 bonus on these loans.

* The U.S. Treasury is developing additional incentives to encourage extinguishing second-lien home equity loans to reduce a borrower's overall indebtedness.

* The program sets an interest rate floor of 2 percent on modified loans. The modified rate must remain in place for five years.

* After five years, the rate increases 1 percent per year up to a cap that is intended to reflect market rates at the time the loan was modified.


* Program targets 4 million to 5 million borrowers with solid payment histories on mortgages owned or guaranteed by Fannie Mae (FNM.N: Quote, Profile, Research) or Freddie Mac (FRE.N: Quote, Profile, Research) that were originated with a loan-to-value ratio of 80 percent or less.

* Lenders can refinance these loans with guarantees by Fannie Mae or Freddie Mac even if the loan-to-value ratio has risen to up to 105 percent. No additional credit enhancement is needed.

* Borrowers are responsible for paying lender fees, points and other closing costs.

* Interest rates are prevailing market rates for 15-year and 30-year fixed-rate mortgages. (Compiled by Mark Felsenthal and David Lawder; Editing by Leslie Adler)

White House Announces Homeowner Affordability And Stability Plan

Note: Details of the plan below will not be annouced until first week of March, stay posted to find out more details.

Carlos Samaniego

President Obama has released details of the $75 billion Homeowner Affordability and Stability Plan, which will provide access to low-cost mortgage refinancing for homeowners hurt by falling home
prices, as well as create an initiative to aid approximately 3 million
to 4 million homeowners at severe risk of losing their homes.

Altogether, the plan
will help up to 7 million to 9 million families restructure or
refinance their mortgages to avoid foreclosure, according to a fact
sheet released by the White House. Speculators will be ineligible for
all components of the initiative.

"The objective of the Homeowner Affordability and Stability Plan
is to provide creditworthy borrowers who have shown a commitment to
paying their mortgage with affordable payments that are sustainable for
the life of the loan," states an official White House blog post.
"Borrowers whose mortgage interest rates are much higher than the
current market rate should see an immediate reduction in their

Eligible loans for refinancing will include those
where the new first mortgage (including any refinancing costs) will not
exceed 105% of the property's current market value.

servicers will receive an up-front fee of $1,000 for each eligible
mortgage modification meeting guidelines established under this
initiative. They can also obtain "pay for success" fees – which are
awarded monthly as long as the borrower stays current on the loan – of
up to $1,000 each year for three years.

In addition, to further
encourage loan modifications, the Obama administration, together with
the Federal Deposit Insurance Corp. (FDIC), has developed an partial
guarantee initiative.

The insurance fund – to be created by the
Treasury Department at a size of up to $10 billion – will be designed
to discourage lenders from opting to foreclose on mortgages that could
be viable now out of fear that home
prices will fall even further later on. Holders of mortgages modified
under the program would be provided with an additional insurance
payment on each modified loan, linked to declines in the home price index.

Other important measures outlined in the plan
include new oversight, reporting and performance-monitoring
requirements under guidance of the Treasury, the FDIC, the Federal
Reserve and the Department of Housing and Urban Development; allowing
"judicial modifications of home
mortgages during bankruptcy for homeowners who have run out of
options"; providing $1.5 billion in relocation assistance to renters
forced out by foreclosure; increasing the flexibility of certain
Federal Housing Administration programs; and upping funding commitments
to Fannie Mae and Freddie Mac, as well as increasing the size of the
entities' retained portfolios.

Further information on the plan is available at

SOURCE: White House

How to delay your foreclosure as reported by ABC News, Good Morning America

This morning I was watching ABC Good Morning America as usual with my cup of coffee, when I saw a special report about homeowners are delaying there foreclosure on their homes. I had heard about this tactic almost 6 months ago being use in Florida, but didn’t hear much about since then, read the article below and you can also go to the original ABC News, Good Morning America and watch the report at

Your friend,
Carlos Samaniego, CMPS

AMEX will give you $300 to close your account? Is it worth it?

That is right American Express just announced they will pay you to close your account. I just read the article on a great blog called, it must read blog.

The question for you is it worth the money? How will it impact your credit scores?

As you know a huge portion of your credit score is determined by the length of history of your credit and your debt ratios.

This offer could potentially kill your credit score! So before making the decision to move forward with AMEX offer make sure you speak with a credit consultant to review your specific situation.

You can reach us here at our offices at (909) 512-6418

Your friend,
Carlos Samaniego, CMPS
Credit Consultant

Well, this sure is a different kind of deal. Instead of paying you a bonus to join, New York-based American Express will give you a $300 American Express prepaid card if you agree to say goodbye. American Express says that it is making this "deal" so that customers can "simplify" their finances. Sure. The offer, which isn't available to everyone, requires a 14-digit RSVP code. Customers are receiving this offer via U.S. Postal and email. 

Let's get something straight here. If you receive this offer, American Express is telling you something: please leave. Note also that in order to get the $300 prepaid card the customer MUST pay off his or her entire balance by April 30, 2009. If the balance is not paid off by April 30, then you will not receive the $300 card. But your card will still get closed. That's a heck of a deal. 

Here is a picture of the offer from American Express's Web site (click to enlarge):

You can read the fine print here (click to enlarge):

You may be wondering why American Express doesn't just close the accounts of these customers, which would save American Express $300. Here's why: the $300 prepaid card is acting as an incentive for the customer to pay down the balance in an expeditious manner. The customer has exactly two months to get that balance paid off; if he or she does, the $300 card is theirs. Not a bad strategy by American Express. 

The "we want to help you simplify your finances" language is a joke, of course. But, hey, this is American Express. It has never really been good at this sort of thing.

Anyhow, be on the lookout for the offer. If you receive the offer, be sure to let me know. I'd like to see what kinds of balances are being targeted here. 

Here is a direct link to American Express's offer (link).

Shiff pans government’s direction on economy!

Shiff pans government's direction on economy

Let the market be.

This ideology may stray far from that of President Barack Obama's stimulus plan, but according to economist Peter Schiff it is the only way to stop the U.S. economy from spiraling into a bottomless abyss.

"Everything the government has done and is in the process of doing is going to make this much, much worse," said Schiff, the Nostradamus of economics, who was at the forefront of predicting America's economic firestorm. "The president is clueless."

Schiff, founder and president of Darien-based Euro Pacific Capital Inc., has long been claiming that the United States' economy across the past decade was nothing but "a house of cards." Now that the house has crumbled, Schiff claims the federal government's bailouts will eventually leave the entire country paralyzed beneath its rubble.

"I knew we were living in a fool's paradise for most of this decade," he said. "The root of the problem with our economy is that it was based on borrowed money."

Schiff's skepticism was echoed by many on Wall Street on Tuesday as Secretary of the Treasury Timothy F. Geithner unveiled the administration's stimulus plan. While claiming to be more transparent than the bailout plan of the Bush administration, a lack of


details on such matters as mortgages and foreclosures has drawn parallels to his predecessor's vague proposal.

"I know the bailouts are making it worse," said Schiff in a phone interview on the same day the Senate voted 61-37 in favor of the $383 billion economic stimulus bill. "The governments infected us with a disease. The market has the cure and the government doesn't want the cure. . . . They're going to kill the market. Death by inflation."

Many of the tax breaks unveiled in Geithner's plan, such as cuts for first-time homeowners and breaks for new car buyers, are leading Americans to further overvalue the dollar, according to Schiff.

"We need to go back to saving and producing . . . Americans have to stop borrowing money," Schiff, a Westport resident, said. "Consumers should only buy things they can afford."

Geithner's plan will put $2.5 trillion into the financial system — $350 billion of which will come from the bailout fund, while the remained is made up from private investors and the Federal Reserve, making use of its ability to print money.

"The end is going to be a disaster for the dollar," Schiff said. "The world is going to stop enabling us . . . and we're going to be drowning in a sea of our own worthless currency."

Obama has urged Americans of a need to change course, using the analogy of a "bus heading toward a cliff." Seeing the market as capable of recuperating itself, Schiff said, "Barack Obama isn't changing course, he's stepping on the gas pedal."

Change in Schiff's eyes would be straying from America's current credit-based economy and allowing the natural evolution of the market to strengthen the dollar. The short-term effects of such non-action may be debilitating for many, but may be the only solution to for the enduring success of the economy, according to Schiff.

"The market is working for the long-term health of the economy," he said. "If we do not change policy . . . the longer we wait to do it, the more painful it is, which means the less likely the government will do anything."

Schiff, a prominent figure in the world of economics, was somewhat perplexed as to why he was not asked to sit in on any of the discussions regarding the country's economic situation. A frequent guest on many major news networks, including Fox News, CNN and Bloomberg TV, Schiff said he has been forwarded numerous letters constituents have sent their respective congressmen urging the government to involve Schiff in the dialogue about the economy.

"I've talked to congressmen," Schiff said. "No one seeks me out. I'm not hard to find."

His prominence in the financial sector has spurred a grassroots effort, from an outside party, to get Schiff elected to the U.S. Senate in 2010. Schiff, however, does not intend to run against Senator Christopher Dodd (D-CT) in the next election.

"I have no intention to run for Senate. I can probably accomplish more getting people's money out of this economy," he said.

Too much a fan of his day job, Schiff's focus is now on expanding his business from six offices to a possible 30 worldwide. Schiff's plans may be put on hold for now, as his expansion relies heavily on the state of the U.S. economy.

"There might not be enough Americans with money left (to invest)," he said.