This bill passed in July but it not making a difference. There have been only 42 mortgage applications for it.
I wonder if there will be a flood? I doubt it.
The program began Oct. 1.
The lenders have signed on to the program but those having trouble paying their mortgages aren’t showing much interest. The big issue? Third-party lenders. They’re not willing to sign off on dramatic 10% cuts based on current appraisals.
John Sorgenfrei, president of Florida-based Assurance Home Loan, Inc., 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., 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,” he said. “It’s not going to materialize into what we had hoped for because most lenders are unable or unwilling to write down the principal balance to 90 percent because their investors won’t let them.”
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 have already contacted their existing lenders, and some have even received permission to participate, Paduano said he cannot help them until investors agree to buy the government-insured loans — which he also says simply isn’t happening.