The Obama administration is set to announce a new program to help troubled borrowers whose mortgages are deemed ineligible for modification.

“Maybe this week but certainly next week,” said Laurie Maggiano of the Treasury Department’s Office of Homeownership Preservation. Speaking at the Mortgage Bankers Association’s annual convention, Ms. Maggiano said Treasury would set out the parameters under which servicers can earn financial incentives if they offer borrowers the option of participating in a short sale and deed in lieu of foreclosure.

“We are hoping to set an industry standard so investors will know exactly what they can expect,” she said. “There’s really no magic. We haven’t reinvented the wheel,” Ms. Maggiano told industry executives in San Diego. To cut down on the paperwork, the program will provide a standardized set of forms.

The program will also cap the amount of money that can be paid to subordinate lien holders who agree to waive their interest in a property. The government expects that some second mortgage investors will “walk away” from the program because the compensation being offered will be too little. But Ms. Maggiano, who is director of policy in the preservation office, told a standing room only session that by setting a limit, the White House is hoping to eliminate time consuming back-and-forth negotiations between servicers, borrowers and investors.

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In October, thanks to U.S. government incentives, there’s more reason than ever for homeowners to remodel their kitchens and bathrooms during National Kitchen & Bath Month. Inspired by the success of the “Cash for Clunkers” program in August, the U.S. Department of Energy will launch a “Cash for Appliances” program this fall, providing nearly $300 million in stimulus funds from the American Recovery and Reinvestment Act to consumers who purchase new energy-efficient kitchen appliances. This new rebate program is in addition to a number of U.S. tax credits on energy-efficient products for homes introduced earlier this year. Many energy-efficient windows, skylights, exterior doors, insulation, and HVAC systems are also eligible for a 30 percent tax credit, up to $1,500 per home.

I guess that all depends on who you ask but I know it isn’t working as well as they had hoped and doing very little for people in South Florida because we had so much depreciation.  Remember, this product is only for primary residences and with so many speculators during the boom years buying second homes and investment properties, few are getting help.

Hopefully more is done about it and according to this article it is supposed to.  “Officials say that the program is expected to ramp up more fully later this year as it irons out technical hurdles. Logistical problems, from difficulty addressing second mortgages to mortgage insurance, have raised confusion and contributed to delays as borrowers work with their lenders who are charged with administering the program.”

http://online.wsj.com/article/SB10001424052970204731804574386683953390334.html#mod=todays_us_marketplace 

If you’ve been waiting, you’re not alone.  All the news focuses on how successful the “Cash For Clunkers” program was… and neglects to mention the dismal performance of the Home Afforadability program.  Bank of America (BoA) has apparently only served 4% of the eligible loans for the home affordability program. JPMorgan Chase apparently did the “best” by serving 20% of eligible loans.  The average for other banks was around 9%.  Wow. How about some more media coverage on this?

In April, Obama’s administration said it is expanding the foreclosure prevention program to cover second mortgages.  Under the new program, second mortgages will be modified as follows:

• Interest rate reduced to 1% on loans where payments cover interest and principal
• Interest rate reduced to 2% for interest-only loans.

The government agreed to subsidize the rate reduction.  Servicers will be paid $500 per modification and an additional $250 annually for three years if the borrower stays current.  Investors can also receive a payment in exchange for entierly extinguishing the second lien. The amount of the subsidy will be determined by the borrowers’ debt level and length of delinquency.

Under the terms of this agreement, servicers who join the new program must modify second loans when a borrower’s first mortgage is adjusted.

The administration said that it will take about a month to implement the new program, and modifications of primary mortgages will not be slowed by the new plan.