I just got this article from Jerry Kayser, my broker at Sharp Concepts Realty and one of my SREC coaches, and I had to pass it along to you – this is really big news!
Right now, Freddie Mac and Fannie Mae own 3.3 million of the 11.1 million mortgages where borrowers own more than the house is worth. Worried about the unintended, secondary consequence of homeowners entering into strategic default to get a principle reduction, the GSEs and their regulator, the Federal Housing Finance Agency, have long avoided any sort of principle reduction. New reports are showing that, in actuality, such a move could work for the GSEs under a new version of HAMP – the Home Affordable Modification program. The Treasury said it would “triple incentive payments to investors who allow principle reduction in HAMP workouts.” Freddie Mac’s CEO, Ed Haldeman, said, “The Treasury sweetened the program and tremendously increased the incentive payments in their offer to us. We will reevaluate that to see what may be in our economic best interest. If there are very large incentive payments — which could be 50% of what you could write down — it may be in our economic self-interest to participate in that.”
Bottom line: the Treasury is willing to triple incentive payments to investors, now between 18-63% to the investor behind a loan for a principle write down, instead of 6-21%. For investors, that’s tremendous news.
To read the entire article, click here.