Mortgage Modification

Apache is functioning normally

I suppose Citigroup is too big to fail after all…

Citi today reached an agreement with the Treasury, Federal Reverse, and FDIC, aimed at strengthening capital ratios, reducing risk, and boosting liquidity at the ailing bank.

The Treasury will invest $20 billion in the bank via preferred stock under the Troubled Asset Relief Program (TARP), on top of the $25 billion initially invested.

Citi will also issue an incremental $7 billion in preferred stock warrants to the Treasury and FDIC in exchange for a government guarantee on up to $306 billion in bad mortgage-related securities, loans, and other assets.

The bank and mortgage lender will assume losses on the troubled portfolio up to $29 billion, with the government responsible for 90 percent of losses beyond that level, and Citi assuming the balance.

The Treasury will be responsible for up to $5 billion in losses beyond what Citi covers, and the FDIC will take on up to an additional $10 billion in losses if the Treasury’s are exhausted.

The U.S. government will provide Citi with a template to manage the guaranteed assets, which includes adhering to mortgage modification procedures adopted by the FDIC.

Citi has also been provided “expanded access” to the Fed discount window and primary credit facility to further ease liquidity concerns.

As a result of the agreement, Citi will not pay out a common stock dividend exceeding one penny for the next three years, effective the next quarter.

Shares of Citi (C) climbed $2.17, or 57.56%, to $5.94 in early morning trading on Wall Street.

The company’s shares had fallen as low as $3.05 in the past week as concerns about its viability dragged down the broader market.

(photo: oimax)

Source: thetruthaboutmortgage.com

Apache is functioning normally

As if things couldn’t get any worse for BankUnited, its stock trading at a mere 32 cents, its regulator demanding it raise a hefty amount of capital, and now this.

The Coral Gables, Florida-based bank and mortgage lender was the victim of what they say was a fake press release, involving a handful of companies claiming to be working with BankUnited on loan modifications.

The press release claims, “BankUnited through Eagle Nationwide Mortgage Company’s affiliate offices, along with Ryan Boyajian, President of Mortgage Modification Legal Network, announced a partnership to stop foreclosures and move homeowners into loans that both the bank and the homeowner can comfortably live with.”

However, just hours later, a BankUnited spokesperson said the release was false and that the bank had no agreement in place or any intention to sign one.

It turns out Eagle Nationwide Mortgage was simply an approved broker with BankUnited when it launched its loan modification program, while “MMLN was never approved to work with BankUnited in any way.”

The spokesperson even noted that the quote attributed to Eric Darmanin, Senior vice President of BankUnited, was fake (perhaps the use of exclamation should have tipped us off).

BankUnited has requested that Business Wire remove the press release, though it still appears to be available via Marketwatch.

In early August, BankUnited legitimately launched a loan modification program aimed at refinancing borrowers out of risky option arms and into more stable loan programs.

A month later, the OTS reclassified the bank as “adequately capitalized” and demanded that it terminate its option arm lending program and raise at least $400 million in capital.

The future is still unknown for BankUnited, but it’s hard to say it looks bright.

Update: Monica Peterson, an outside spokeswoman for MMLN, said the company obtained permission to run the release, but not the quote from Darmanin.

She added that MMLN is working with Eagle Nationwide, but not directly with BankUnited, and apologized for the confusion.

(photo: senorcodo)

Source: thetruthaboutmortgage.com

Apache is functioning normally

“The difference now is, they [the FHA] are making their loan term to 40 years, and that increases your buying power as a purchaser,” one user, who claims to be a lawyer, said in a recent video. “You can go out and get a bigger house now because you have higher borrower power at 3% down because your loan term has increased to 40 years.”

The new FHA regulation is a loss mitigation option geared toward helping homeowners retain their homes after defaulting by allowing mortgagees to further reduce the monthly payment for borrowers.

The 40-year loan modification can assist borrowers in avoiding foreclosure by spreading the outstanding mortgage balance out over a longer period. This makes the monthly payments more affordable, the FHA said in March. 

The Department of Housing and Urban Development (HUD) did not respond to HousingWire’s request for comment on the spread of inaccurate information on the FHA’s 40-year loan modification decision prior to publishing. 

Another video from a TikTok user who claims to be a financial advisor states that HUD introduced a 40-year FHA mortgage.

“Right now, a 30-year FHA loan for $500,000 at 6.7% interest would cost $3,500 a month. What if we allowed a 40 year option that would only be $3280 a month saving them $220?” the TikTok user said in a video where he plays a role of a HUD official.

But while there is content on TikTok that misrepresents the FHA’s loan modification announcement, some users have uploaded videos that warn about inaccurate information. 

“It’s not for new loans (…). The 40-year loan is going to be for people who already had an FHA loan and demonstrate they have need [the] need to modify that loan or make changes to it so they can keep their home and not foreclose,” a user, who claims to be loan originator, said. 

“This is a perfect example of why you have to be careful of clickbait content,” the user noted.

The FHA’s final rule also aligns the FHA modification option requirements available for Fannie Mae– and Freddie Mac-backed mortgages, both of which provide a 40-year loan modification option. 

Borrowers who choose a 40-year loan modification would see additional interest payments over the course of the extended term, but HUD noted that the opportunity for borrowers to retain their homes with a more sustainable payment plan outweighs the drawbacks.

“While rising interest rates may keep the 40-year loan modification from providing significant payment reduction, HUD believes that rising interest rates make the 40-year loan modification more critical in circumstances where the 30-year loan modification does not sufficiently decrease the monthly payment to an amount that the borrower could afford to retain their home,” the HUD said in its final ruling in March. 

Source: housingwire.com