"Underwater" homes

I was reading this on Newsday today:

http://www.newsday.com/business/struggling-homeowners-may-get-relief-with-new-program-1.1833586


I feel like DH and I SHOULD quailify for something like this, but I am thinking we probably won't because of our income.

*Sigh*.


I am optimistic that the housing market on LI will go back up though by the time we are looking to sell and move on.

Anyone in a similar "boat" so to speak?

I posted last weekend I believe about how we got denied for HELOC.

Re: "Underwater" homes

I think a shame that some people who are struggling aren't able to renegotiate their loans based on current market values.

Re: "Underwater" homes

I can't see the article. Could you possibly post it?

Re: "Underwater" homes

The federal government threw potential life jackets Friday to struggling homeowners who haven't gotten much of a break: "underwater" borrowers who owe more than their homes are worth and the jobless.

Officials said the new moves, along with other tinkering of the year-old federal rescue plan, are aimed at the new waves of prime and jobless borrowers in the weak economy.

On Long Island, it could affect thousands of homeowners, who could have some mortgage debt written off or get a break from monthly payments. Last year, lenders started foreclosure proceedings on more than 13,000 homes and took back almost 900, according to RealtyTrac, which tracks foreclosures.

At the end of 2009, about 37,000 Long Island homes, or 7.2 percent of mortgaged properties, were under water or close to it, according to First American CoreLogic, a real estate data company. Company officials said Long Island is better off than most places when it comes to borrowers who have no equity.

Under the plan, underwater borrowers must be current on payments, must owe at least 15 percent more than their home's current value and have a FICO score of at least 500. Lenders would lower their monthly payments to about 31 percent of monthly income. The primary loan would be reduced by at least 10 percent, and that amount would be refinanced into a Federal Housing Administration loan, taking the risk off lenders' books.

If there's a second mortgage, lenders would get up to 20 cents for every dollar written off; old rules gave them only a dime.

Qualified unemployed homeowners would get temporary help while they look for employment. Lenders would bring monthly payments down to 31 percent or less of monthly income for three months, and possibly six months, by tacking payments to the end of the loan.

For Lisa and Brian Gerstein of Centereach, the announcement offers a glimmer of hope.

They paid $355,000 for their house in 2005 but now owe $327,000 on a home valued at only $275,000.

They kept up on payments but have been struggling since Brian's temporary layoff in 2006 and the added costs of day care and commuting to Manhattan.

Just four days ago, the couple was denied a loan modification because they didn't meet income guidelines.

"It kind of just defeated us," said Gerstein, who said she worries about putting food on the table. "I'm concerned that I'm going to max out on credit cards and I'll never be able to get out."


The new changes and the current programs are expected to bring relief to up to 4 million borrowers, federal officials said. But the lending and real estate industries on Long Island have mixed views of the impact.

Peter Elkowitz, president and chief executive of the Hauppauge-based Long Island Housing Partnership, was optimistic.

"This will be another tool in the toolbox that will help our counselors to help work with families to keep homeowners in their homes," he said.

Mary Adams, a managing partner at Century 21 American Homes in Babylon, worries that the effort will fail if lenders don't embrace changes.

" . . . If these homeowners are going to apply for loan modifications and the banks are going to say 'no,' you'll be right back in the same spot," she said.

Still, others say that by focusing first on delinquent homeowners, the program is too little, too late.

"They took the people who were bad and they rewarded them," said mortgage broker Rich Biondi, whose office is in Farmingdale. "But the guy who struggles and hasn't been late, you can't help them."

Re: "Underwater" homes

Re: "Underwater" homes

Yeah, I ran the #s last night and our DTI is too low.

It sucks because DH is IN construction so this totally devastates him when he does home improvement for a living, but can't get approved for his OWN house.

(I know different topic).

Message edited 3/28/2010 8:11:52 AM.

Re: "Underwater" homes

our DTI is under that as well, so we wouldn't qualify. I doubt our value has dropped that much as well.

What annoys me the most is that DH and I could have stretched to buy a nicer home closer to work in 2006, but we choose to buy well within our means and it feels like we get penalized for making a smart decision. I said no to the brokers pushing me to spend more and take a 40 year mortgage.

oh well, at least I can sleep at nite knowing my bills can be paid.

Re: "Underwater" homes

Re: "Underwater" homes

Re: "Underwater" homes

Thanks for posting the article. I am horrible with stuff like this but it sounds like we might qualify. How would I find out? Who do you contact to get help with this program?