New Program Helps Underwater Homeowners – Followup

Photo (cc) by Jesse Wagstaff

On September 22, we published a story in both print and video about a new federal program designed to help homeowners get their mortgage reduced to less than their home is worth. If you missed that story, check out New Program May Reduce Mortgage Principal for Underwater Homeowners.

Shortly after that story aired on the NBC affiliate in Miami, I was contacted by a viewer there who asked for some additional guidance getting into the program. I gave him more information and requested that he keep in touch and tell me how things worked out. Following is his first email – he does a super job detailing his experiences, and offers shortcuts for others who might follow in his footsteps…

Guinea pig #1 here. Filling you in on my/our ongoing quest. My call today went very well, once I found the right rabbit hole. When I called yesterday (888-995-HOPE…with no info in front of me), I walked away with a case ID# and a (supposedly) inside number (877-369-7284). I called that number today, and, given how long I was on hold, found that the company I was holding way too long for was [redacted]. A cursory glance at their website made me uneasy, even though they are an NFP. So I called the original HOPE number again.

They transferred me to a housing counselor, who turned out to be with CCCS in CA. She was MOST helpful, and I was even able to educate her/them a bit thanks to you. It seems everyone is scrambling along on a learning curve given the newness of the “Short Refi” program. When I asked about adverse credit reporting, she said that would not happen. I begged to differ, reading to her from the HUD mortgagee letter. I had to direct her to the corresponding HUD press release, at which point she put me hold to clarify with her supervisor. She came back and told me what we already surmised…it shows on your credit report as forgiven debt (“acct settled for less than balance”), the degree of negative impact is a) likely minimal given our specific circumstances and b) left to be seen. In 5 years, lenders may look back at this time with an understanding of how screwed up everything and everyone was.

According to the counselor, Chase has been offloading a lot of mtgs, or rather servicing thereof, to LBPS, a relative newcomer to the game. This may be a story unto itself…as it sounds suspiciously like the massive selloff of high risk mortgages that started all this. Not that ours is high risk per se (never missed a pmt), but the negative equity position alone creates a higher degree of risk, esp with the growing “strategic default” movement. Owning this home means we have over $100K of unsecured credit, so walking away has a lot of appeal. For a firm to jump into the mortgage servicing business now seems odd at best, nefarious at worst. I further found that LBPS does not offer refinancing (from their website), but had been pressured (via consumer complaints, according to rep) into partnering with Greentree for refinancing. She went on to say that I was not compelled to use Greentree, suggesting that I call FHA (since approval will come from them anyway) and speak to a loan officer for direction. Play dumb re Greentree…“What lenders is FHA working with for the short refi program?” She also suggested I call FNMA, just to be thorough.

She did a standard loan qualification interview…debts, income, expenses, etc….at the end of which she stated that we likely qualified for the short refi option. She will submit our information to LBPS, which will get back to us with a determination and instructions within 7 business days.

One of the interesting realizations I had was that Chase has absolutely nothing to do with the first mortgage now, with FNMA as the lender and LBPS as the servicer. I believe this to be good news, as FNMA is more likely to bite on a short refi than Chase. We’ll see on the 2nd, according to the rep many lenders are flat writing them off when they are as small ($36K) like ours. One can only hope.

The other thing she mentioned was the Hardest Hit program, but we weren’t sure what effect that would have on me/us personally. Apparently there is (or soon will be) a pilot in Lee County, statewide rollout Feb 2011. Depending on how long our process takes, it may help us. In short, it means “more money to help more people for a longer period of time” For us the question may be “when does it kick in statewide?”

At the end of the call, she thanked me profusely, saying she wished everyone that she worked with was as literate and educated. It felt good, will feel even better if we can pull this off. The 115% thing means total 1st and 2nd loan can’t exceed $95K (using Zillow’s generous $82.5K est, the unit above us about to short sale for $65K). Here’s hoping, h*ll praying.

Hopefully our reader will continue to provide updates so you can learn first-hand what it’s like trying to navigate the government maze of programs designed to reduce the damage from our nation’s ongoing housing crisis. This diary of despair – and hope – is more than just a potential path for others to follow: One day it will become a little bit of history.

Stay tuned!

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
3 Tax Penalties That Can Ding Your Retirement Accounts
3 Tax Penalties That Can Ding Your Retirement Accounts

Protecting a nest egg is tough enough. Don’t make the situation far worse.

19 Things You Should Never Buy at a Grocery Store
19 Things You Should Never Buy at a Grocery Store

These household necessities are overpriced at the grocery store. Get them cheaper at these places instead.

What Brand Makes the Best Rechargeable AA Batteries?
What Brand Makes the Best Rechargeable AA Batteries?

The best battery depends on what you need it for and how big your budget is. Here’s how to find the cheapest brand that will do the job you need.

Big-Ticket Things You Should Never Buy
Big-Ticket Things You Should Never Buy

In this week’s podcast: Are you wasting big money on these common purchases?

Don’t Pay for These 10 Things: They Are Free With a Library Card
Don’t Pay for These 10 Things: They Are Free With a Library Card

Before you spend another dollar on items and services like these, check with your public library.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

8 Federal Income Tax Breaks for Homeowners
8 Federal Income Tax Breaks for Homeowners

Some of these deductions and credits are available to a wide swath of homeowners.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Types of Retirement Income That Are Not Taxable
10 Types of Retirement Income That Are Not Taxable

There are lots of things Uncle Sam can’t touch — so long as you play by the rules.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.