Friday, October 31, 2008

Lenders Join HOPE for Homeowners Program

(Housing Wire) The HOPE for Homeowners program that went into effect Oct. 1 finally has a list of lenders willing to participate. Released midday Friday, the list continues for 25 pages and contains mortgage lenders licensed in various states that are willing to refinance loans under the HOPE for Homeowners (H4H) program, which was part of a the housing bill passed back in July. Read the list of participating lenders.

Although three months has passed since the creation of the Act, Department of Housing and Urban Development spokesman Lemar Wooley said in an interview the delay is often exaggerated.

“The way we look at it, it hasn’t been that long,” he said. “It’s only been four weeks.”

People who question the speed of a program that was signed into law in July and began rolling out only hours before calendars roll into November don’t consider that the H4H program went into effect on Oct. 1, Wooley said.

“Under the law, we were mandated to put the program together along with three other agencies working together on it - that was in late July - and we were told to have it ready to roll Oct. 1 and we met that deadline,” Wooley said. “The problem is all the details relating to it obviously came out Oct. 1 and the lenders have to get the word and so on.”

But the too-little-too-late sentiments circulating among participating lenders argues that the program may not be of much use if investors aren’t willing to buy the loans of struggling borrowers who want to take advantage of H4H.

John Sorgenfrei, president of Assurance Home Loan, Inc. - which is licensed in Florida - said he receives calls from eight to 10 borrowers daily about participation in the program. For the time being, he has been forced to make them wait, as no investors so far have bought into the program.

“I wish I could say we have something in the works,” he said. “We’re waiting for the investors to decide whether it’s going to be a third-party participation or just exclusively held for the lenders.”

Robert Paduano, managing director at Allegro Funding Corp. - which is licensed to operate in 24 states and signed up on the H4H list - also said in an interview that the hold-up on the program has resulted from investors unwilling to accept rewrites on existing loans.

“The (H4H) program is a joke,” Paduano. “It’s not going to materialize into what we had hoped for because most lenders are unable or unwilling to write down the principle balance to 90 percent because their investors won’t let them.”

Few loans have been redone because no one has signed up to buy them, he said.

“Everybody’s been waiting since Oct. 1 and nobody can help them because nobody’s buying the loans - even though the government’s insuring them,” he said.

Allegro receives hundreds of calls a day from borrowers wanting to rewrite their loans. Paduano said the company sends out a package and a simple statement: “As soon as something’s about to be rolled out, we’ll give you a call.” Although most of the borrowers who call Allegro are learned in the program and have already contacted their existing lenders and received permission to participate, Paduano said he cannot help them until investors step forward to buy the loans.

Efforts by the Federal Deposit Insurance Corp. to guarantee $40 to $60 million in distressed mortgages will not address the looming foreclosures, either, he said.

“The government’s not going to get ahead of this,” he said. “Foreclosures are going to double in the next two years and what they’re proposing to do now is what IndyMac did, which was to lower the interest rates.”

But borrowers who owe $100,000 more than what their homes are worth are not going to care about lower interest rates when it’s cheaper to rent, Paduano said. People will start walking out of their homes and the government will not keep ahead of the foreclosure rates unless immediate action is taken to get lenders on board with the H4H program.

“We should be pushing for the government to insist that whoever got money from the bailout has to participate in HOPE for Homeowners,” he said. “It shouldn’t be optional.”

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