ast night in Detroit at the Marriot Renaissance Center, the Obama administration's Making Home Affordable program and the HOPE NOW alliance hosted an event to offer advice to Detroiters struggling with mortgage payments.
Right now there are 6,906 foreclosure properties listed in the city, selling for an average price of $12,151, according to foreclosure listing website RealtyTrac.
Events like this one have been happening in Detroit and across the country since the housing crisis began, and while they can be helpful, they rarely create any meaningful change.
Fortunately for those who have been fortunate enough to hang onto their home through the crisis, a new agreement between the U.S. Department of Justice and five of America’s biggest banks will make real change for homeowners and help them keep their homes.
The Big Four banks-JPMorgan Chase, Wells Fargo, CitiBank and Bank of America-along with Ally Financial have been ordered to provide $25 billion in relief to struggling homeowners.
Bank of America gave $8.6 billion and Chase pledged $4.2 billion in mortgage relief for tens of thousands of borrowers by either reducing the interest rate or the principal owed (or both) on their loans.
The banks made up most of the $25 billion by allowing homeowners to short sell their house instead of face foreclosure, but also agreed to reduce struggling homeowners' mortgage balances by $1.3 billion and give $10.6 billion in relief because of a landmark settlement over foreclosure abuses, reports The Associated Press.
This is great news for anyone with a mortgage through one of the Big Four, or Ally, because it could lower your payment by hundreds of dollars, or even thousands, every month. The best thing about these modifications is that they’re permanent.
This is what Obama’s Housing Affordale Mortgage Program (HAMP) and Housing Affordable Refinance Program (HARP) were supposed to do but couldn’t because the banks wouldn’t cooperate.
A meaningful reduction in foreclosures wasn’t possible unless banks like Chase and BofA were willing to refinance the mortgages and lower principal payments.
Chase has even streamlined the process to refinance the mortgages more quickly. It now reworks the loan terms and simply lays out the new payment plan in a letter to its borrowers. The borrower sees the new rate, or how much principal has been taken off their balance, and what their new payments will be. All they have to do is sign the letter approving the new terms and send it back to the bank.
CNNMoney details the story of one couple that got their notice from Chase in the mail.
To learn more about loan modifications check out this blog from a real estate investor.