All Forum Posts by: Mark Horn

Looks like HUD/FHA has already set this in stone regarding presidential declared major disaster areas.

List of resources:

https://www.hud.gov/program_offices/housing/sfh/nsc/lmmltrs

Can someone else give this doc a read and tell me if they read the same. This is specific to FHA.

https://www.hud.gov/sites/dfiles/OCHCO/documents/19-14hsgml.pdf

(1) Eligibility for Disaster Loan Modification
The Mortgagee must ensure that Borrowers and their FHA-insured Mortgages
meet the following eligibility and term requirements for a Disaster Loan
Modification:
• The Mortgage was current or less than 30 Days past due as of the date
of the applicable Disaster Declaration.
• The Mortgagee confirms Borrower income is equal to or greater than
it was prior to the Disaster using a recent pay stub for income, W-2,
bank statement or other documentation reflecting the amount of
income.
• As an alternative to providing income documentation, the Borrower
can complete a three month Trial Payment Plan (TPP), which will
confirm that their income has returned to pre-disaster levels. The TPP
does not have to be signed by the Borrower.
• The Property is owner-occupied.

(2) Terms of the Disaster Loan Modification
The Mortgagee must modify the Mortgage as follows:
• The total Principal and Interest (P&I) amount of a Borrower’s
monthly Mortgage Payment does not change.
• The Mortgagee must capitalize into a modified mortgage balance:
o the accumulated arrearages for unpaid accrued interest; and
o eligible unreimbursed Mortgagee advances and related fees
and costs chargeable to the Mortgage.
• The Mortgagee waives the Borrower’s accumulated late fees.
• The Mortgagee sets the interest rate at no greater than the Market
Rate1
as defined by HUD.
• The term for the modified loan is 360 months. The term may be less
than 360 months if (i) requested by the Borrower and (ii) a term that is
less than 360 does not result in the modified P&I being greater than
current P&I.
• Borrower(s) can only receive one Permanent Loss Mitigation Home
Retention Option for a PDMDA.

@Patricia Steiner

Timely post, I just got off the phone with Caliber after being on hold for 2+ hours.  I read the CARE act the same way, in terms of intent.  The intent is to provide relief and avoid foreclosure.  The wording itself only calls for forbearance periods, which on their own, sound like a delay.  It's the adding onto the backend/loan modification stuff that ends up putting the intent of the act into practice. 

Caliber is only offering 3 months forbearance off the top, verbal/no paperwork required type deal. But they are saying that they expect the lump sum then. You can continue to request extensions on this, and eventually you end up talking to "single point of contact" team who are responsible for loss mitigation. I was told that partially this is specific to my loan being FHA. But regardless, when I pressed about the loan modification she had zero information about what makes me eligible and did imply that although right now a simple 3 month forbearance was on the table "no questions asked" the loan modification would be subject to review. When I asked to get in touch with that team, I was transferred and the line was dropped with a pre-recorded "we have technical difficulties message".

Maybe I just have a big box/subpar servicer, but I did state the hardship was due to vacancy/future rent issues/loss of income.  All I could get a firm commitment on was that there would be a review of the options when/if I can't pay in full at end of forbearance. Sadly, I think that's largely compliant with the letter of the law regarding the CARE act.  

What would really be helpful is information regarding the FHA loss mitigation review process. I.e. would having a healthy W2, 401k balance, and a cash reserve > lump sump due, mean they can hold me to the fire and REQUIRE that I pay in full, before offering loan modification?

@Eva Mackowski 

For me, my mortgage is not something I want to play with, it's the foundation of my financial future as it's the vehicle that is providing me access to passive income.   The ability to use the stimulus bill to bolster cash reserves is enticing, but I personally think it needs to be a well defined process in writing to make sense for me.  I suppose a case can be made to park the funds in an account and pay the lump sum if required with no other option.  I do believe the way the CARE's act is written, that has to be allowed.  But if that results in no payment history for some # of months, despite the current status, I suspect it will be a filter for future loans.  If there isn't a clear and binding path to loan modification that nets me cash in hand, it just doesn't seem to be worth it. 

@Patricia Steiner 

So Caliber Loans is directly stating they want a lump sum, but will re-evaluate if unable to pay. For me, this is an FHA loan on an owner occupied 3 unit. It looks like traditionally, FHA loans go through a "waterfall" from forbearance, to repayment plan, to loan modification, and it would appear this is largely at the discretion of the bank.

My understanding of the CARE act is that it only mandates forbearance.  So it is safe to say that unless you get in writing that loan modification/back end terms are on the table, you legally may still be on the hook for the lump sum if the servicer refuses to offer loan modification?

I want to use this as a tool to build cash reserves, so in a fully transparent environment I would have to basically state that "I want to not pay principle/interest on my loan so I can build cash reserves, sorry"

Thoughts?

@Kyle J. Have you seen anything that confirms this would not also apply to anyone receiving a HUD subsidy? I.e. Section 8 voucher?

@Antonio Cucciniello As posted above, I believe we may have access to a Small Business Disaster Loan if it comes to it.  

https://www.businessinsider.com/hud-halts-evictions-and-foreclosures-coronavirus-2020-3

This appears to say that it applies to HUD owned properties period. So local evictions on non HUD owned or subsidized property can continue. Unsure if this applies to voucher programs or not, but its *some* clarity.

Very curious how this plays out. I am in a tough spot.  New landlord in MA, 3 unit, had one remaining tenant with an ongoing eviction when I closed.  I was able to get an agreement for possession signed by the judge the day after I closed.  It extended 5 months with no right to appeal or stay.  So as of March 30th, my tenant is supposed to be out.  The execution order for possession would be mailed out that day on Monday, at which point I could evict via constable if needed.  The tenant is Section 8, and been violating the voucher terms.  I took the housing authority to task over this as they had been turning a blind eye.  The voucher will now be cut off as of May 1st, unless they appeal.  So now potentially I will be unable to finalize the eviction, while also losing the Section 8 voucher payment.  

I will follow up as I find out more about the HUD decision and any local rulings in MA.

I am closing on a 3 unit FHA deal (my first) this week. Call it foolish but I am already thinking about strategy how I will pull off my next deal. Here is my question.

If I live on this property for a year or two, I will be documenting about 2/3 of its potential rental income on my tax returns. 

My girlfriend will be buying the "next" purchase, which will be another FHA loan in her name. I would then live with her in her unit, while my property converts to an investment property, and I can start documenting its full rental potential. Her property would become my primary residence via "renting" and I would have no ownership interest in it.

The tricky part is my next deal. I will likely still have the original FHA loan, as I won't have 20% LTV till around 8 years of payments if appreciation stays flat/I don't make extra payments. I know I can justify a second FHA loan due to work/my commute, given that my office is 100miles+ from the house I just bought.

My concern is the rental income and my DTI. Will I be able to use the tax returns to document my rental income offsetting the mortgage? I've heard something about needing to have 25% equity before they will qualify it.

I've also read about potentially doing a 203k loan to build equity in a SFR, but I fear I would have the same issues with DTI.

Thoughts?

Yes I am working right now on getting the details of how the current eviction is worded.  The seller mentioned "breach of lease" but if its tenant at will I am not sure what lease they can be in breach of, so I suspect he is using 30 day no fault.  It's also a little tricky in in Ma as you can legally grow 6 plants, but I am unclear on how that works for renters vs home owners. I am guessing pot might not trigger "drug use" as it is is fully legal in this state.  I am hoping there is some other violation documented so that we can lean on the eviction for cause angle to make it a peaceful voluntary end to tenancy.