All these great loan modification programs and I keep getting turned down. I was reading about this great program from the FDIC about loan principal forbearance and reduced interest rates. I was thinking, "That sounds fantastic!". So I was looking for the registration link to get my deal but you can't but help to notice all the criteria for this special deal. Let us go through those criteria:
* Eligible Borrowers: The program will be limited to loans secured by owner-occupied properties.
CHECK
* Exclusion for Early Payment Default: To promote sustainable mortgages, government loss sharing would be available only after the borrower has made six payments on the modified mortgage.
OK Loss sharing after 6 payments - ok but I plan on paying so NOT APPLICABLE
* Standard NPV Test: In order to promote consistency and simplicity in implementation and audit, a standard test comparing the expected net present value (NPV) of modifying past due loans compared to the strategy of foreclosing on them will be applied. Under this NPV test, standard assumptions will be used to ensure that a consistent standard for affordability is provided based on a 31% borrower mortgage debt-to-income ratio.
OK have better then a 31% debt-to-income ration - GOOD
* Systematic Loan Review by Participating Servicers: Participating servicers would be required to undertake a systematic review of all of the loans under their management, to subject each loan to a standard NPV test to determine whether it is a suitable candidate for modification, and to modify all loans that pass this test. The penalty for failing to undertake such a systematic review and to carry out modifications where they are justified would be disqualification from further participation in the program until such a systematic program was introduced.
This applies to servicers so NOT APPLICABLE
* Reduced Loss Share Percentage for "Underwater Loans": For LTVs above 100%, the government loss share will be progressively reduced from 50% to 20% as the current LTV rises.1 If the LTV for the first lien exceeds 150%, no loss sharing would be provided.
CHECK - my LTV is well less than even 100% - this sure would be a horrible deal for the government (i.e. taxpayers) if they were crazy enough to take on loans with LTV rations even near 100%. Government isn't that stupid right?
* Simplified Loss Share Calculation: In order to ensure the administrative efficiency of this program, the calculation of loss share basis would be as simple as possible. In general terms, the calculation would be based on the difference between the net present value of the modified loan and the amount of recoveries obtained in a disposition by refinancing, short sale or REO sale, net of disposal costs as estimated according to industry standards. Interim modifications would be allowed.
Again, this applies to servicers and I plan on paying so NOT APPLICABLE
* De minimis Test: To lower administrative costs, a de minimis test excludes from loss sharing any modification that did not lower the monthly payment at least 10 percent.
Sweet, looks like I am going to be getting at least 10%. That sounds to good to be true!
* Eight-year Limit on Loss Sharing Payments: The loss sharing guarantee ends eight years of the modification.
Well in eight years - unless you modified loans in Las Vegas, California, or Florida how could there even be a need for loss sharing? NOT APPLICABLE
So, where is the sign up link? Weird! No Link. Hmmm, look at the "fine print" - you have to be 60-90 days past due! I am not past due. What a crappy deal for the people who pay their mortgages and anyone crazy enough to pay their taxes.
This is insane even for the government.
The FDIC thinks it is going to take on 2.2 million crappy loans and only lose 5%. Those sure are favorable estimates considering the median price is (was) well over $200,000. This is a great deal - for the imprudent.
And the really annoying thing is, that as a taxpayer, I get stuck with the (woefully underestimated) loss sharing.
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