So instead of working 60 hours, I was only working 20 hours. I went from taking on three contracts per month to just one. I stopped aggressively looking for new freelance consulting work. But the biggest downside that no one talks about is the complete loss of motivation to take on calculated risks and to work as hard as you can to grow your wealth.Īfter being mortgage-free, my and wife and I lived comfortably off the severance checks that we negotiated when we quit our six-figure jobs in finance (by that time, we had amassed a net worth of $3 million), and the $150,000 in annual passive income - mostly from real estate, dividend stocks and bonds.īut my entire attitude slowly changed once I sent that final mortgage check. “The truth is that too many FHA approved mortgage loan servicers have not been honest and transparent about the FHA’s protections for borrowers.There are several studies citing the psychological benefits of paying off debt early, such as emotional relief and the strength to avoid slipping back into debt.Īll of that is true. “The purpose of the federal program is to reduce the displacement of families from their homes, and, as a result, thwart homelessness during the pandemic,” said Racine. In a statement, Racine called the mortgage servicers’ misdeeds “illegal, unacceptable, and dangerous.” He added that they discriminate against low-income borrowers and borrowers of color, groups the FHA disproportionately serves. “HAF should be a fund of last resort and should not replace servicers’ obligations to evaluate homeowners for all loss mitigation options,” the attorneys general write. The state attorneys general also raised concerns that servicers adequately evaluate borrowers for loss-mitigation, even as they await the $10 billion in federal aid from the Homeowners Assistance Fund. They also asked FHA to require its lenders to demonstrate their loan servicers are taking affirmative steps to implement the program. The state attorneys general demanded the FHA take “immediate action” to ensure mortgage servicers adhere to the loan modification program. But the program can only be effective if lenders implement it, the letter notes, highlighting a challenge of designing government relief programs that rely on the private sector to carry them out. Attorney General’s Office said “several mortgage loan servicers employed and approved by FHA” had not adhered to the program.įHA’s loan modification plan was envisioned to especially help low-income households, first-time homeowners, and households of color that have been disproportionately impacted by the pandemic. In a press statement accompanying the letter, the Washington, D.C. But according to the attorneys general, they spanned more than one mortgage servicer. It’s unclear how widespread the alleged misdeeds are. “No homeowner with an FHA-insured mortgage who is struggling financially because of the pandemic should be unnecessarily hindered by their mortgage servicer from receiving the assistance for which they are eligible.” “FHA is committed to assisting homeowners struggling because of the pandemic to keep their homes if at all possible, and expects servicers of FHA-insured mortgages to take all necessary steps to work with borrowers, based on their individual situations, to identify the best FHA loss-mitigation home retention option available to them,” a HUD spokesperson said. Servicers also told borrowers that the loan modification option did not exist, the attorneys general claim.Ī spokesperson for the Department of Housing and Urban Development said the agency takes the concerns raised in the letter very seriously. 21, 2021.īut rather than adhering to the program, some mortgage servicers of FHA-insured loans allegedly sent borrowers notices that fail to mention the relief options, requiring paperwork and imposing qualifications that are not necessary under the FHA’s guidelines. FHA required mortgage servicers to implement the program by Oct. The loan modification options allowed eligible borrowers to reduce their principal and interest payments by 25%. 21 letter that a number of mortgage servicers employed by FHA-approved lenders failed to adequately implement loan modification options the FHA introduced in July. Attorney General Karl Racine and 20 other state attorneys general. Some Federal Housing Administration-approved mortgage servicers have routinely flouted the agency’s loan modification program, according to Washington, D.C.
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