The Plan to Assist Mortgage Borrowers: Loan Modification

I thought this would be a good piece of information for home owners.

by Jack M. Guttentag
Posted on Tuesday, April 14, 2009, 12:00AM

My previous articles in this series criticized the administration's new program for Making Home Affordable (MHA) because it ignored negative equity -- which is the major factor underlying the currently horrendous foreclosure rate -- and because it offered refinance relief only to borrowers lucky enough to have their mortgages owned or guaranteed by Fannie Mae or Freddie Mac. This article is about the loan contract modification part of the program, which covers loans owned by any investor.

Like the refinance program, the loan modification part of MHA ignores negative equity and offers help only to owner-occupants. Investors are not eligible. Those negatives aside, the modification program is well designed. Its architects have taken note of a number of problems that have bedeviled existing modification programs, and have fashioned sensible remedies to deal with them.

Shortages of Trained Staff: The shortage of qualified staff by servicers, as well as the high cost of modifying loans, has resulted in many needless foreclosures that timely modifications could have prevented. The MHA remedy is to provide financial incentives to servicers to do more modifications.

Under the program, servicers are paid $1,000 for each eligible loan they modify, provided that the modified loan remains current through a trial period of at least 90 days. In addition, the servicer collects $1,000 a year for three years if the borrower stays current for that period.
High Incidence of Redefault: In the past, many borrowers with modified loans have subsequently defaulted. Many early modifications, however, did not reduce the borrower's payment, and in some cases the payment increased.

Under MHA, the interest rate is reduced to a level where payments for principal, interest, taxes, and insurance make up no more than 31 percent of the borrower's gross income. In addition, a borrower who stays current will receive $1,000 a year for up to five years in the form of balance reductions.

Restriction to Borrowers in Default: For the most part, servicers have limited modifications to borrowers who are two or more payments behind. This rule assured compliance with investor requirements that modifications were allowed only to avoid more-costly foreclosures, and it also helped servicers allocate their limited staff to the most urgent situations. But it had the unfortunate effect of encouraging borrowers to default so they could get help.

The new program attempts to remedy this by establishing "hardship" criteria for eligibility that does not require the borrower to be in default in order to qualify for a modification. In addition, bonuses of $1,500 to the investor and $500 to the servicer are offered for each modification that is executed while the borrower facing hardship is still in good standing.

Multiplicity of Modification Standards: Different servicers have applied different standards to the modification process, both in terms of assessing eligibility and in establishing the type and scope of modification. The result has been vastly different treatment of borrowers, depending on who happened to be servicing their loan. The new program attempts to remedy this by setting out standards for determining eligibility, the type and amount of assistance provided, the documentation required, and other factors.

In brief, eligible borrowers must be able to document financial hardship, defined as a monthly housing expense (mortgage payment plus taxes and insurance) in excess of 31 percent of gross income. If borrowers who qualify under this rule have a total expense ratio, which includes all other debt payments, of 55 percent or more, they must agree to obtain counseling. The mortgage payment of eligible borrowers is reduced to 31 percent primarily through temporary interest rate reductions, following procedures detailed by the government.
Unfortunately, on modifications that are not MHA eligible, the multiplicity of standards will remain.

The Second Mortgage Problem: Second mortgages are a potential barrier to modifying first mortgages because of the threat that the second mortgage lender can always foreclose if the second mortgage payment is not made. Some servicers work with second mortgage lenders, while others require the borrower to make a deal with the second mortgage lender that gets them out of the way. Under the program, "incentives will be provided to extinguish junior liens on homes with first liens that are modified under the program." No detail is provided on this part of the program, which is one of several loose ends that await clarification. It is hoped that, in tying up these loose ends, the Treasury will also reconsider its exclusion of investors from the program, which could be easily remedied, and think about developing another program directed to the problem of negative equity.

Thanks once again...till next time...hang in there.

Marriage and Intimacy

Today blog is probably going to sound like a complaint…but please don’t take it the wrong way, because seriously I have to just put this down on paper…sort of speaking. This whole topic on marriage, relationships and yah sex…it's bananas…it’s incredible…and yet the same thing happens on and on and on…couple after couple, marriage after marriage…ok….sorry.


Ok, here it is…so, the other night a few days before this post…I was sitting in the family room with my wife (significant other)…and I say it that way because it is that way…anyways. So I was flipping through the channels…now under stand this is a rarity for us…actually sitting down in the same room….well I was flipping through the channels and sure enough on HBO there was a series on called “Real Sex”. I have seen a few episodes…nothing big…but that episode talked about women and how they can get back that loving feeling, if you know what I mean. These women had issues with sex in there relationships meaning they no longer wanted to have…and when they did it was more to them an obligation than something they enjoyed.

So, this therapist was showing/illustrating techniques on what a women could do to get back that mood while have intercourse, well a few of the women on the show really did not look like they were enjoying themselves at all. There were toys, lubricant, etc. but when the therapist was demonstrating on a volunteer…the women looked like well…her face looked like well…what’s the big deal…no enjoyment. Well about 2 minutes had gone by when all of sounded I heard echo through the room…”Gross, that’s sick”…so of course at that cue I changed the channel. Ok, your probably saying to yourself…yah typical man…why should I blame the women for not wanting to see that…good for her…yada…yada…yada. Why should a woman have to see such disturbing things…well it really wasn’t that bad, but lets just say for the sake of things it was.

Now, here is my beef…why is it that when a women gets older, has children they all of a sudden loose interest…now wait…of course they are married. Ok…Ok…don’t get all bent out of shape…your probably yelling at me saying it could be a number of things, self esteem, menopause, etc…etc…etc. But this is what eats me…when we first met…there wasn’t a time that she wouldn’t see me and would undress me and we would go at it…and then of course she talked about her exes and the things they did, where they did it, how they did it…hey I have an open mind…I like to know what a women likes… anyhow…and these things turned her on before…but today it grosses her out.

Now, wait…before I got married…I have met women that were older…let's just say over 40…and they had kids, been through a divorce and let me tell you…these women new and enjoyed sex very much and did things that well…probably didn’t do with their husbands’ or maybe they did (if they did…those guys are idiots) So there is my thing…do women loose interest in their husband…is it possible that women no longer finds their husband attractive. Because I have to say…that most men…if given the chance… would take sex anytime they could…you know that…lets not say that’s not true guys…if a guy has a women in front her in lingerie, big shirt or whatever and she starts the seduction…come on guys…you know before you know it…your down to your socks. Now, ok I am not putting the blame on women alone…it does happen to men to of course…- but what makes this change -.

Obviously you married the person because you thought they were sexy or gorgeous, handsome, intelligent, funny and when they came over to visit…your stomach would get all filled up with butterflies…so what happens after getting married or being in a relationship so long. My biggest question is…if anyone gets married…they should look back at the time before they got married and remember those incredible moments they had…the crazy things they did, the enjoyment of the first time…I mean yah your life changes when you get married, yah your life changes when you have kids, but your life doesn’t really change…it grows into something better…I think couples should still enjoy themselves…make time for themselves…behind close doors let the inhibitions go…just as you did when you first met. Marriage and kids should not make you life worse…getting married and having kids is just icing on that cake…that cake that you both kneaded, molded and baked during your dating years. it's not always about they kids…yah they are your life, you have a responsibility to your kids, but if you don’t take care of your marriage or relationship…you won’t be able to take care of your family or your kids and then what.

My Perspective:
You know I am probably starting to sound like a broken record, but it is all about the communication…people need to talk. But now that I am writing this again…I come to realize that the majority of the population doesn’t know how to communicate…they can’t express their feelings, their thoughts and well…that just makes things so much more difficult. All I have to say to this is…I wish I knew what makes a man or women loose interest in sex/intimacy with their significant other…and if you look closely at the statistics…this normally only happens during a marriage or a long term relationship. Maybe…it is time to move forward…move on…I am so sure that there is someone out there that will connect with you…and things will be ok.

It's time to tie up loose ends, prepare for the inevitable and move on…because your happiness is first and foremost, because if you are not happy…then you can’t make your love one happy or your children and that only continues the cycle…move out, move on…you’ll see that your happiness…even away from your kids, if you have them, will make the difference in their lives and yours.


Thanks for listening, hope to see some comments…till next time...be happy.

Getting Motivated

Hey…glad to see you…well glad you stopped on by to read another crazy post of mine. This one is dedicated to all those individuals that really want to shed off some pounds but struggle to get motivated. You know before I got married I use to hit the gym every day…well maybe not Sundays…but everyday…for at least an hour. I use to work out hard. Now, it has been 13 years of marriage and if I recall the first 2 years of marriage we use to work out together…and well…after those first two years we no longer do. Yah…once again…there that thing about being married…having kids…life changing experiences…yada…yada…yada.

People always make an excuse that well I don’t have anyone to watch the kids, I am working, and a whole bunch of other excuses…probably good ones…yah…ok. But yet…there are millions of single mothers, fathers out there doing the same things we are and still manage to find time to hit the gym…at least 30 minutes a day…or better yet…they go out for a run with their children…ok…so why can’t married couples do it. Ok, not all married couples fall into this scenario…I have heard of couples that take turns watching their kids and hitting the gym. So…my question is…besides all the excuses we come up with, that I know we can resolve…what else does it take to get someone to workout…MOTIVATION.

Motivation is probably the biggest thing...that keeps people away from the gym or just working out. When your single…you have time and you look good…when you are first dating someone…you still workout…to look good for that new love one…but once the relationship gets serious or maybe leads to marriage…you all of a sudden stop working out…why. Now I am not saying everyone, but darn…the majority of the people do fit this scenario. So why…once again when you get married you stop working out…is it simply because you got that person, or is it that you are comfortable with that person and you know that new love will love you no matter what happens to your body, or is there something else that clicks in our minds.

Now that’s funny because in some of my other posts I talk about marriage and why people loose interest in their loved ones or loose interest in their intimacy…and most of the responses I have heard is that they don’t find their love ones attractive anymore…or that their loved ones no longer feel good about themselves. So why not work out…like you use to before you got married and feel good, look good and continue being happy and healthy. I am not saying that you should look like a model, but you know…feel good. Remember after you worked out your body felt good, invigorating…the sweat, the burning muscles…all those things made you feel like…man I accomplished something today.

Motivation…made you do it…back then…so how do we find that motivation again after so many years? Is it that new FINE looking girl/man in your office, book store or your kids karate class…hmmm…yah I know your married, but what would get you, me…us to get back into working out. Could it simply be the fact that you will feel and be healthier…crazy notion huh…maybe if you shed a few pounds and someone notices and compliments you…maybe that could be it. Hmm…I guess what I am asking is what can we do to get that motivation back to hitting the gym or just working out? Yah it should not be about anyone else, but you that motivates you to working out…but what is that motivation?


My Perspective:
I am still looking for that motivation…well I have to say I did find it…there is this fine looking women I know…that is a mother of two, been through a tough marriage and has seen tough times…but she finds the time to work out…and let me tell you…she is HOT…HOT…with all due respect to her…but she is…and maybe I should hit the gym just to keep up with her…lol. But seriously…It really boils down to finding that motivation within yourself, finding that one things that will get you working out…and hopefully it doesn’t take a heart attack, or something else to drive you to it, but something that will get you up and working out.

If anyone out there has found their motivation…please share…maybe someone will hit it right on the spot. Once again as always thanks for reading and till next time…be happy…be true to yourself., because when it comes down to it…when your happy everyone one around you will be happy.