"Just a Few Questions, Your Honor..."

Yesterday the US Treasury announced the much anticipated details of the Obama loan modification plan. This program is the broadest program to date targeting foreclosure prevention. The Home Affordable Refinance program is projected to provide government assistance to 7 to 9 million homeowners. The mortgage modification plan is focused on homeowners that have a solid payment history and have their loans owned or serviced by Fannie Mae or Freddie Mac.

The new government refinance program is expected to help homeowners that are unable to refinance in a traditional manner due to significant losses in home equity. The economic depreciation of most housing markets has driven loan to value ratios much higher than the customary 80 percent required to refinance.

Millions of borrowers are facing pending hardship because of job loss or resetting adjustable-rate mortgages. The Home Affordable Refinance program is designed to efficiently renegotiate these mortgages into less risky 30-year fixed-rate loans taking advantage of low mortgage rates to lower monthly payments.

Early details of the government mortgage modification program include these eligibility guidelines:

• Mortgages were originated on or before January 1, 2009
• Loans must be first-lien loans on owner-occupied properties
  Principal balance must not exceed $729,750. Higher limits for owner-occupied 2-4 unit properties
• Borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship
• Property owner occupancy status will be verified; no investor-owned, vacant, or condemned properties
• Incentives will be provided to lenders and servicers to modify at risk borrowers who have not yet missed payments
• Loan modifications will begin immediately and be available until December 31, 2012. Loans can be modified only once

Here are my questions:

1. How easy will it be for homeowners to find out if Fannie or Freddie owns their mortgage? When was the last time you tried to get a final payoff of your mortgage? Be prepared to have your patience tested.
2. What is the definition of a “solid payment history?” Never been late? Currently no more than 30 days past due? How about “Now current, but was 90 days past due in the last 12 months.”
3. How will the borrower’s credit report be impacted? Back in the day, when I did a zillion loan modifications in the early 90’s, we actually had to change account numbers on the loan record so that the new loan terms would be accurately reflected on the borrower’s credit report going forward. (With credit scoring so essential in today’s lending world, this is a key question for me.)
4. How quickly can this get done? Will Fannie / Freddie freeze the credit reporting of the loan while it travels through the modification process?
   
   I’m just asking….