This is a link to the new handbook provided by the government for servicers to comply with the Home Affordability Modification Program.

Previously, I had directed students to Supplemental Directives, which detail requirements in each individual topic. This handbook should minimize the need to read Supplemental Directives because it reorganizes the topics coherently for functionality and practicality. As always, stay tuned to new versions, which will of course optimize this product.

A brand new program by FHA, click here to learn more.

To learn about mortgagee (lender) guidelines, click here.

This new program expires 12/31/2012.

Here are the requirements for participation:

1. The homeowner must be in a negative equity position;


2. The homeowner must be current on the existing mortgage to be refinanced;

3. The homeowner must occupy the subject property (1-4 units) as their primary residence;

4. The homeowner must qualify for the new loan under standard FHA underwriting

requirements and possess a “FICO based” decision credit score greater than or equal to 500;

5. The existing loan to be refinanced must not be a FHA-insured loan;

6. The existing first lien holder must write off at least 10 percent of the unpaid principal balance;

7. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent;

8. Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent;

9. For loans that receive a “refer” risk classification from TOTAL Mortgage Scorecard (TOTAL) and/or are manually underwritten, the homeowner’s total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income;

10. FHA mortgagees are not permitted to use premium pricing to pay off existing debt obligations to qualify the borrower for the new loan;

11. FHA mortgagees are not permitted to make mortgage payments on behalf of the borrowers or otherwise bring the existing loan current to make it eligible for FHA insurance; and

12. The existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification as described below.

My firm recently was confronted from a loan servicer (mortgagee and / or agent) that we needed our authorizations to have specific names of individuals rather than the firm's name as the authorized agent. This requirement conflicts with what I have been suggesting to students at my classes at both the Real Estate School and while teaching MCLEs for First American. I always advise using the firm's or business' name (broad authorization) so you can easily have coverage in negotiating with a servicer if you are unavailable personally, but a colleague is available.

I hate giving out bad advice, so I looked into it further and learned the applicable definitions under the Power of Attorney Laws. I know that an authorization is not necessarily a Power of Attorney and that a servicer can require what they want, but if they do not like your authorization, simply using a Power of Attorney would also do the trick and servicers cannot reject a properly executed Power of Attorney under law.

To find the applicable rule, look under Title 15 of Article 5 of the General Obligations Law, Section 5-1508(4). This section provides that "any person, other than an estate or trust, may act as an agent, co-agent or successor agent under a power of attorney". A "Person" is defined in Section 5-1501 as being "an individual, whether acting for himself or herself, or as a fiduciary or as an official of any legal, governmental or commercial entity (including, but not limited to, any such entity identified in this subdivision), corporation, business trust, estate, venture, government, governmental subdivision, government agency, government entity, government instrumentality, public corporation, or any other legal or commercial entity."

Therefore, an entity can be designated as an agent under the Power of Attorney Law and I stand by my recommendation to use your business entity if you are performing Foreclosure Defense, Short Sales or Modifications and need to negotiate with the servicer on your client's behalf.

To read an interesting article on the topic click here.

Here is some food for thought - What is the legality of these types of searches with respect to NY Criminal Procedure Law under the Aerial Surveillance Doctrine in the first place?

The general rule is that warrantless aerial surveillance of an open field does not violate the Fourth Amendment rights of the occupier of the land. So why are they changing their practice in Riverhead? Perhaps lobbying works.

While some in the industry may find this video offensive as it offers a negative perspective of real estate agents, it was put on the Real Estate Section's listserve from the NY Bar Association to illustrate the misnomer that a modification application stops foreclosure. Simply put - It does NOT!!!

Homeowners must be made aware that the only thing that stops a foreclosure is a written modification agreement coupled with a discontinuance of the foreclosure action. Hopefully all industry players can come together to educate homeowners on this important fact.

To view the video, click here

Please provide your thoughts.