Fortunately, through responses to this blog, my readers are keeping me/us posted with the latest developments of the HASP. As I’ve previously written, the HASP is really two programs; a refinance program and a loan modification program, which I have dubbed HASP ver 1.0 and HASP ver 2.0 respectively.
The HASP ver 2.0 Update
Just yesterday I confirmed that one of my clients obtained a loan modification from his lender Countrywide Mortgage now Bank of America. BTW, the loan modification was unsolicited from my client. (More on this in another posting) That said, from out of the blue he received a phone call from Countrywide offering to modify the loan for one of his rental units located in Colorado.
Skeptical, and aware that there are SO MANY loan modification scams, he asked me to review the offer, which I did, and it turned out to be 100% legitimate and, frankly, quite amazing.
What Was the Modification?
Currently he had a Neg-Am (referred to as a “Pay Option” by Countrywide) 1st mortgage. He also had a second mortgage. We are absolutely certain that he was very “upside down” with these loans, meaning he owed much more than the properties were worth.
Without requiring an appraisal, without providing any income documentation, he was offered a no cost loan modification extending for his first mortgage only and the terms were amazing.
They extend the term of his loan from 30 years to 40 years. They lowered his interest rate to 4.5% and froze that rate for 10 years and they allowed him to make interest-only payment during that 10 years. At the begging of the 11th year the loan will make annual adjustments of no more than 2% and the rate can never exceed 9.95%.
Now, there are many of you that will say “who wants an interest-only adjustable rate mortgage?” While on one level, I will agree that if at all possible we should try to obtain a 30 year fixed rate mortgage today and lock-in these post-depression era rates that are available today. One the other hand, however, locking in a rate for 10 years is a LONG TIME. To put it into perspective, your 6 six year old will be driving before the rate makes it’s first adjustment!
The bottom line is that the HASP is evolving as I predicted and, hopefully, it will continue to evolve and expand to help more and more homeowners.
ONE VERY IMPORTANT NOTE
The client NEVER missed a mortgage payment! I believe that he was selected for the loan modification for this reason, compounded with the fact that his loan was very much at risk for default. The lender, Countrywide/Bank of America, exercised some very good judgment in my opinion because they provided a very nice incentive to keep a reliable borrower as the owner of this property. Frankly, this entire housing debacle could have been prevented or at least minimized had lenders implemented this type strategy 3 years ago when these issues became apparent.
It’s a good life!
Randall A Luebke RMA, RFC
Thanks for the info Randy. I have an option arm with Indymac, and they will not talk to me unless I go 60 days late. I hope they wake up and help me out of it befor it is too late!
I am very sure that they will. Several of my clients have successfully obtained no-cost loan modifications of their Option Arm loans without being late. Keep on them. You will make it to the front of the line and get your turn too.