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Making Home Affordable

Making Home Affordable. Presentation for the National League of Cities. Making Home Affordable Overview. MHA is part of the comprehensive approach to promoting stability for the housing market, and homeowners.

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Making Home Affordable

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  1. Making Home Affordable Presentation for the National League of Cities March 2011 l Making Home Affordable

  2. Making Home Affordable Overview MHA is part of the comprehensive approach to promoting stability for the housing market, and homeowners. • MHA is a key part of the Administration's comprehensive strategy to stabilize the nation’s housing market and prevent avoidable foreclosures. • The Home Affordable Modification Program (HAMP), has provided sustainable modifications for over 600,000 borrowers. • By setting affordability standards, HAMP has changed the way mortgage servicing provides assistance to struggling borrowers. March 2011 l Making Home Affordable

  3. MHA Programs Offer Help MHA and related programs work together to prevent avoidable foreclosures. • HAMP modifications lower mortgage payments, creating more affordable homeownership for struggling homeowners. • MHA and related programs are also designed to provide relief to those who are unemployed; those who owe more than their homes are worth; and those with second liens causing a strain on affordability. • MHA offers a range of programs that can help homeowners; from taking advantage of today’s historically-low interest rates to exiting gracefully when homeownership is no longer affordable or desirable. March 2011 l Making Home Affordable

  4. HAMP Requirements Changed Servicer practices with respect to foreclosure prevention. • Modification at top of waterfall before repayment plans or other options • Defined requirements for borrower outreach and limitations on dual-tracking • Standard process for modification evaluation • Fixed Debt-to-Income (DTI) • Verified ability to repay • Trial period • Net Present Value (NPV) test • Incorporated 2nd liens and principal reduction March 2011 l Making Home Affordable

  5. Relief for Struggling Homeowners Over 600,000 homeowners have permanently modified their mortgage under HAMP, with a median savings of over $500 every month. March 2011 l Making Home Affordable

  6. Sustainable Affordability for Homeowners Homeowners in permanent modifications realize real savings. Source: MHA Program Servicer Performance Report Through January 2011 March 2011 l Making Home Affordable

  7. HAMP Modifications Performing Well HAMP permanent modifications are outperforming industry norms. Table 32. Performance of HAMP Modifications Compared with Other Modifications* Source: OCC and OTS Mortgage Metrics Report Third Quarter 2010 March 2011 l Making Home Affordable

  8. Reaching Distressed Homeowners Most MHA participants are: • Moderate and middle income • Financially-distressed • “Underwater" on their mortgages Borrowers in permanent HAMP modifications have: • Median annual income of approximately $46,000 • Median credit score of 570 at entering trial period • Post-modification loan balance just over $232,000 • Median LTV of 118% Of borrowers reporting race and ethnicity: • African-Americans 18% • Hispanics 26% MHA is providing assistance to moderate and middle income homeowners. March 2011 l Making Home Affordable

  9. HAMP Has Helped Catalyze Mortgage Servicing HAMP has changed the way the mortgage servicing industry works. • HAMP catalyzed the mortgage servicing industry in providing more sustainable solutions to struggling homeowners. • In the 1st quarter of 2009, nearly half ofmodifications increased borrowers’ monthly payments or left them unchanged. • By the 3rd quarter of 2010, close to 90% of modifications lowered payments for borrowers. • OCC reports servicers are generally following HAMP protocol for non-HAMP modifications resulting in average savings for borrowersof $332 per month. March 2011 l Making Home Affordable

  10. Developments • Second Lien Modification Program (2MP), designed to facilitate the modification of second liens simultaneously with the first, becoming fully operational. • 17 servicers, including the 4 largest, participating and covering over 60% of second liens. • Principal Reduction Alternative (PRA) provides incentives to reduce principal on loans greater than 115% loan-to-value (LTV). • NPV model became effective Oct. 1, 2010. • Hardest Hit Fund: $7.6 billion to 18 states and DC HFAs for innovative programs around unemployment and negative equity. MHA and related programs offer a comprehensive range of options for struggling homeowners. March 2011 l Making Home Affordable

  11. Questions Thank You March 2011 l Making Home Affordable

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