MCP Help Blog

I created a previous post called “Second Mortgage Holder Jerking You Around?” that addressed the difficulties homeowners were having getting mortgages modified or short sales approved, despite the intentions of their first mortgage holders.That’s because no matter what was done to save the homeowner (and 50% of problem mortgages have second liens attached on there too) from foreclosure, the second lien holders were going to be screwed and so there was no reason for them to cooperate. And there was always some small chance that they might recover something if they dug in their heels. That’s changed.

An update to the Making Home Affordable program addresses this difficulty. The Second Lien Program was designed to help those whose first mortgages could be saved with cooperation from the second lien holder. The updated program includes a lot of complicated formulas and carrots and sticks—designed to entice or force the second lender to cooperate, force the first lender to take a proportionate share of the losses, and minimize the risk / loss to taxpayers. It includes but isn’t limited to the following:

• Shared Efforts with Lenders to Reduce Second Mortgage Payments
• Pay-for-Success Incentives for Servicers, Investors and Borrowers
• Payment Schedule for Extinguishing Second Mortgages
• Automatic Modification of a Second Lien When a First Lien is Modified
• Second mortgage holders will share the costs of reducing interest rates and payments with the first mortgage holders.
• The term (years remaining) on the second mortgage will be stretched out to equal that of the modified first mortgage.

While no one is crowing “mission accomplished” just yet, there are early signs that these updates are accomplishing their goals. Since the launch of Making Home Affordable, more than one million Americans have now refinanced, due to historically low interest rates, and thousands of underwater borrowers have refinanced under the Home Affordable Refinance Program. To see if you qualify, try www.makinghomeaffordable.com and answer a few simple questions. But if you don’t need government help, get it yourself by running numbers through loan calculators and checking rates and programs right here. There are many good loan pros ready to help you DIYers.

And while it seems only expected that the taxpayers will ultimately take a hit it this program, that aint necessarily true. During the Great Depression, the government implemented an emergency measure to keep people in their homes. It was called the Home Owners’ Loan Corporation. Interestingly, after all the bailing out, HOLC managed to turn a profit in the end. So today’s efforts may in fact turn a profit for taxpayers as well.