Yesterday, Freddie Mac announced that the Streamlined Modification program, an initiative that was originally scheduled to start July 1, 2013, is now available to all eligible borrowers nationwide. Under this program, borrowers with loans backed by Freddie Mac that are at least 90 – but no more than 720 – days delinquent may qualify for a loan modification without having to submit financial or hardship documentation to their servicer. 

Here’s how the Streamlined Modification Program will work: all eligible borrowers will receive a letter with a modification offer from their servicers that will include details of a three-month trial period plan. The borrower can then choose to accept the offer by submitting a first trial period payment; if the borrower demonstrates their ability to pay their mortgage payments on time for three months, the modification will then become permanent.

The streamlined modification “offers” can reduce your monthly mortgage payment in a variety of ways, including adjusting interest rates, extending payment terms to 40 years, or, in some cases, providing principal forbearance. While counselors at our HOPE Hotline cannot tell you if you qualify for the program before Freddie Mac has contacted you, they can walk you through the various modification possibilities to make sure that it would make sense for your unique circumstances. To speak to an HPF counselor for free about the various Streamline Modification terms, call 888-995-HOPE (4673).

Additionally, if you would like to find out whether Freddie Mac owns your loan, use this self-service lookup tool.

For additional resources and more information on the Streamlined Modification Program, please click here or see this Freddie Mac FAQ sheet.

Real estate website Zillow yesterday released results from its Mortgage Marketplace Survey, which found that one-third of homebuyers do not fully understand the basic terms of a mortgage, like down payments, lender rules, and mortgage rates. According to the survey, around 25 percent of homebuyers incorrectly believe that they are required to close their loan with the lender that pre-approved them.  In reality, prospective homebuyers should shop around for a loan that fits their unique financial needs rather than always go with the first bank that pre-approved them.

The survey also reported that one in five – or roughly 14 million homeowners –believe that underwater borrowers are unable to refinance their home loans. This is simply not true – to date, a significant portion of the 2.3 million homeowners who refinanced their mortgages via the Home Affordable Refinance Program (HARP) were underwater. Information about HARP, which has been extended through December 2015, is available by speaking with an HPF counselor at 888-995-HOPE (4673).

In addition to the evidence provided in the Zillow survey, last week’s HPF blog post discussed a recent academic study published by the Yale Law Journal, which found that, when presented with mortgage documents, homebuyers’ eyes focus more closely on language that is easy to comprehend rather than on the more complicated information. This leaves homebuyers’ susceptible to agree to terms they don’t understand, which could potentially harm them in the long run.

As with any other important financial decision, HPF urges homeowners to do their homework before taking out a mortgage. Taking the time to fully understand the terms of your mortgage and what the details of your loan entail is one of the first steps to take on the path to sustainable homeownership.

A new academic study, reported on last week by Chicago Tribune ‘Homefront’ reporter Mary Ellen Podmolik, found that, when presented with financial documents, people’s eyes focus more closely on the language that is easiest to understand while glossing over the more complicated information. For example, a homeowner may decide on an adjustable-rate mortgage (ARM) after eyeing the initial low monthly payment, never fully realizing that the interest rate reset will result in a higher payment a few years down the road. An ARM reset, coupled with an unforeseen job loss or wage reduction, could challenge a homeowner’s ability to make their mortgage payment. This was the unfortunate scenario that put many homeowners in danger of losing their homes over the last few years.

The academics behind the study suggest that homeowners be required to pass a financial literary test before securing a mortgage – those who fail the test would then be required to undergo housing counseling. Counseling prior to taking out a mortgage, otherwise known as pre-purchase counseling and education, has proven to be an effective tool in preparing people for homeownership; in fact, a recent study found that those who completed pre-purchase counseling and education are one-third less likely to become seriously delinquent on their mortgage within two years of the loan origination. Similarly, another recent study from Freddie Mac found that pre-purchase financial counseling may reduce the delinquency rate of first-time homebuyers by an average of 29 percent.

These two studies, together with the newly released academic study, illuminate a greater need to help homebuyers understand the terms of a mortgage before they sign the dotted line. With this in mind, HPF urges all prospective homebuyers to do the homework and research they need to make the most appropriate mortgage decision in order to achieve sustainable homeownership.

Since the announcement, we’ve received many comments from blog readers who have questions regarding what they can expect from the payments. First and foremost, we strongly urge anyone with questions about their eligibility for the payments to call Rust Consulting at 1-888-952-9105; Rust is the paying agent responsible for sending out the checks and will be able to verify eligibility as well as make any necessary mailing address changes.

Many of those whose credit scores may have been negatively affected by foreclosure proceedings have asked whether their credit reports will be adjusted as part of the settlement. In most cases, the IFR agreement does not include determinations of errors on individual credit reports – the exceptions are for military members whose foreclosures violated the Servicemembers Civil Relief Act (SCRA) and for those who were foreclosed on despite being current on their payments. Those who believe that there is an error in their credit report can contact their servicer or speak to a customer service representative at one of the following organizations:

• Office of the Comptroller of the Currency (OCC): 800-613-6743 or helpwithmybank.gov
• Federal Reserve: 888-851-1920 or federalreserve.gov
• Consumer Financial Protection Bureau (CFPB): 855-411-2372 or consumerfinance.gov

For those who would like to talk to an expert about the ways in which they can begin addressing the financial ramifications of a foreclosure, including tactics to start rebuilding credit, we suggest speaking with one of our housing counselors by calling 888-995-HOPE (4673). There are also online resources that offer tips on how to rebuild credit, including this worksheet from Freddie Mac.

We’ve heard from many people who are also concerned that they may have been placed in the wrong payment category. The IFR payment amount received is considered final and there is no appeals process in place, however accepting this payment does not prevent anyone from taking or continuing in other legal actions regarding their foreclosure experience.

HPF strongly encourages all those who were in foreclosure in 2009 or 2010 to check their mailboxes for IFR agreement checks and to call Rust Consulting at 1-888-952-0105 with any questions or concerns. We also urge those who are struggling financially to speak with an HPF counselor regarding their situation – counselors, who are available 24/7 by calling 888-995-HOPE (4673), can help families build budgets and address the various debt issues that may be affecting their financial stability.

Tip #1 | Check to see if you qualify for the various government-sponsored programs for homeowners

There are several government programs available to homeowners who have been affected by the housing crisis. For example, the Obama Administration’s Making Home Affordable (MHA) program offers a refinancing option for homeowners who are underwater on their mortgage as well as a modification program for those who are struggling financially and may qualify for a modified payment plan. Both of these programs expire at the end of 2013, so now is the time to see if you qualify.

There are also special programs for service members, those who are unemployed, and homeowners who may be looking to make a graceful exit from their home via a short sale. HPF counselors, who are available by calling 888-995-HOPE (4673), can walk homeowners through all of these programs and their corresponding application processes.

Tip #2 | Use free online resources to evaluate your finances

Take advantage of the financial tools and information that are available for free online. Money Management International (MMI), one of HPF’s counseling agency partners, created FinancialLiteracyMonth.com, a website that supports Financial Literacy Month by offering free financial wellness webinars, worksheets, and eBooks.  Additionally, HPF’s website includes several tips on managing credit cards, utility payments, and education expenses via its “Homeowner’s HOPE Hotline Guide to Saving Money” page; the website also offers a large list of government and financial industry resources that can help struggling borrowers.

Tip #3 | Avoid scams

Unfortunately, there are many unsavory individuals out there who prey on financially-strapped consumers, either by convincing them into financial products that can be harmful or offering “too good to be true” debt rescue schemes. Before entering into any financial agreement with an organization, do your research to make sure that the organization is legitimate. Even a quick “Google” search can reveal negative consumer reviews on a particular organization or an “F” ranking from the Better Business Bureau, which are immediate red flags.

If you believe that you have been the victim of a financial scam, report it to the Consumer Financial Protection Bureau (CFPB). Foreclosure-related scams can also be reported to HPF’s anti-scam team at 888-995-HOPE. These complaints are then used by law enforcement agencies during their investigations into fraudulent activity.

As financial columnist Michelle Singletary mentioned in the Washington Post earlier this month, April is the perfect time to revisit your finances, considering that you’ve likely had to compile all of your financial information in order to file your taxes. We couldn’t agree more, which is why we hope you will use this month to learn more about personal finance and apply the knowledge you gain to make better-informed financial decisions.

Over the past few days, we’ve received several comments on our blog from readers asking about the Independent Foreclosure Review (IFR) agreement and, specifically, the recent mailing of postcards to those who are eligible for compensation. First and foremost, we suggest that all those with questions visit the OCC’s website and read its list of “Independent Foreclosure Review Settlement Frequently Asked Questions,” which provides detailed answers to many of the questions that were posted on our blog. The FAQ also includes a breakdown of the servicers that are participating in the IFR agreement and those that are continuing with the review process.

Many of the questions we received were about the timing of the expected payments stemming from the IFR agreement with 13 major servicers. As we’ve previously posted, the over four million families who are expected to receive settlement checks from the IFR agreement were sent postcards over the last two weeks; these postcards provided further details on the anticipated payments. We urge those who believe they qualify for remediation via the settlement to check their mailboxes and open all mail that may pertain to the settlement. Additionally, it’s important to make sure that the program administrators have your current contact information, which you can verify by calling the payment administrator, Rust Consulting, at 888-952-9105.

Those who have received an IFR agreement check may have noticed that HPF’s Hotline number, 888-995-HOPE, is also listed in the accompanying letter. Homeowners who are still struggling financially or who are not sure how to best use their settlement payments to handle other debt issues are invited to call HPF to speak with a financial counselor. For more information on HPF counseling, read our previous blog post on the subject by clicking here.

But there’s another reason IFR letter recipients — or anyone looking to get their finances back on track — should consider calling our housing counselors at 1-888-995-HOPE for assistance.

Although many people know about HPF for the foreclosure counseling work we do, our mission is quite broader than that. It’s about helping homeowners get all their finances back on track. After all, rarely is it just the mortgage keeping distressed homeowners awake at night. It’s also the maxed-out credit cards, dwindled savings account, high-interest-rate store credit card balances, the unavoidable student loan payments, the unpaid utility bills, and past-due car loan obligations, too. Such daily financial stress is an all-too-common reality for many American households.

Ideally, to help fix the one is to address the others — and that’s what HPF counselors do through our comprehensive counseling service (which is also free of charge).  And it truly can help.

What exactly is comprehensive financial counseling (or as we prefer to call it, “financial coaching”)?

At HPF, it means working with a trained, professional financial coach over the phone to figure out a realistic budget and action plan that takes into account all your expenses and gets you to your financial goals at a pace that makes sense for you. HPF’s coaches can help you figure out which bills to pay down first, which credit cards to use only in emergencies, and help create a realistic monthly budget that allows homeowners to remain current on all of their monthly obligations. The coaches’ insights can be of particular benefit to consumers who receive one-time, lump-sum funds — such as an IFR settlement check, to bring this discussion back full circle — and aren’t sure how best to allocate them across their financial obligations.

While the coach helps with the immediate need of making a workable plan, it’s equally important to point out that he or she also gives you the insights and financial wisdom you need to make better educated decisions on your own about your personal finances for the long term.

If financial coaching sounds like it can help you, please give us a call.  There are no lectures or harsh judgments on how you’re spending your money — just independent, confidential guidance and support.

As a partner of the Loan Modification Scam Prevention Network – a national anti-scam effort comprised of multiple organizations that runs the Loan Modification Scam Alert Campaign – HPF is supporting NCPW by educating homeowners on loan modification scams and directing them to free, legitimate mortgage resources, including our HOPE Hotline.

HPF reminds consumers that one of the leading signs of a loan modification scam is when an individual or organization requires an upfront fee for a loan modification service; doing so is illegal, which is why consumers can call our professionally trained counselors to receive loan modification counseling free of charge.

HPF also encourages consumers to be wary of web-based loan modification services that “guarantee” modifications, since only lenders can guarantee a mortgage solution.

If you or someone you know has been the victim of a scam, call 888-995-HOPE (4673) to speak with an HPF counselor for free. You can also visit our scam warning signs page to learn more about how to avoid being scammed.

Click here to read the news release about the Loan Modification Scam Prevention Network’s support of National Consumer Protection Week.

Unfortunately, online loan scams like these continue to trip up struggling homeowners. HPF’s anti-scam counselors have collected nearly 30,000 scam complaints in total and continue to receive hundreds of calls each week from homeowners who suspect they are the victim of a foreclosure rescue scam, many of which involve a company that operates online. While scam organizations use a wide range of tactics to get in front of distressed homeowners, including traditional marketing methods like sending out flyers or making cold calls, they’ve become increasingly aggressive online, where they use targeted advertising to zero in on consumers searching with keywords like “loan modification” or “foreclosure help.” And as scam organizations get smarter about how to digitally target homeowners, consumers continue to live more and more of their lives online – and that include managing their finances or searching for mortgage solutions.

When searching online for mortgage help, HPF has several tips. If an organization is claiming to be affiliated with the government or a nonprofit, check to see if the web address ends in “.gov” or “.org.,” respectively. That’s an easy way to weed out many unscrupulous for-profit companies that may use a “.com” address.  Additionally, check to see if the company is accredited with the Better Business Bureau (BBB); if not, or if the company has complaints or negative reviews on BBB or other consumer review websites, it may be a red flag. Other warning signs of foreclosure avoidance scams can be found online here.

The very, very best way for homeowners to protect themselves against scam organizations is to avoid them entirely by calling an HPF counselor – not only can counselors guide you through all of the options that are available for your unique housing circumstances, but they do it all for FREE. Call HPF at 888-995-HOPE (4673) today to get started.

We understand that your house is more than just an investment. It’s where memories are made, children are raised, future life plans dreamed up… it is so, so much more than just a mortgage, it’s a home. So, when distressed homeowners reach out to HPF’s housing counselors for assistance on how to possibly prevent foreclosure, we look at every conceivable option available to them to try to help them find a sustainable solution to stay in their home. And we take great pride in our success rate.  Seventy percent of those who were counseled by HPF reported that they were still in their homes one year later, having successfully avoided foreclosure.

Regrettably, however, holding onto the home may not be feasible for every caller — but that doesn’t necessarily mean foreclosure is inevitable.  There are alternative options, including:

Short Sale:  Under this arrangement, the homeowner and lender agree to sell the home for less than the balance due on the loan.

Deed in Lieu:  This option gives the property rights of the home back to the lender; it has a less negative effect on your credit score and may include borrower relocation assistance.

To learn more about these alternatives to foreclosure, please call our Homeowner’s HOPE Hotline at 888-995-HOPE (4673) today — our counselors are available every hour of every day to answer your questions and explain your options. When staying in your home is no longer an option, they have the requisite experience, expertise, and compassion to help you figure out the best path to exit the home and put this difficult time behind you. They can also help you begin the process of getting back on your financial feet.