Archive for March, 2009

Homeowner Affordability and Stability Plan – A Glance

On Feb 18, 2009, Obama Administration introduced  the Homeowner Affordability and Stability(HAS) Plan. It is designed in a motive to bring relief to homeowners struggling with their mortgage payments and to help prevent the negative effects of foreclosures on neighborhoods and communities.


As part of this plan, the U.S. Treasury Department has outlined a detail loan modification process to reduce the mortgage payments for at-risk customers and announced the plan details on Mar 4, 2009.


Here are some details about the Home Affordable Modification (HMP) program. 

  • Mortgage loans originated on or before January 1, 2009, are eligible for the HMP program, and the amount owed on the loan must be less than or equal to $729,750.
  • The program applies only to the primary residence. It does not apply to second homes or investment properties, and the house cannot be vacant or condemned.
  • To be considered for a loan modification under this program, homeowners are required to provide a hardship affidavit and proof of income.
  • Participating servicers and lenders must lower interest rates, extend loan terms, and/or forbear principal to reduce a customer’s mortgage payment. If the servicer or lender cuts the payment to 38% of the household’s monthly gross income, the Treasury Department will share the cost to further reduce the payment to 31%.
  • Eligible borrower must complete a 90-day trial modification period at the new interest rate and payment. If the customer is current at the end of the trial period, the servicer or lender will execute a permanent modification agreement.
  • The Treasury Department will pay servicers and lenders $1,000 for every loan modified under the program and another $1,000 a year for up to three years if the homeowner remains current on the loan.
  • Customers who make timely mortgage payments will also receive $1,000 a year for up to five years. This money must go toward reducing the principal balance on the loan.
  • Incentive payments will only be made after the customer successfully completes the trial period.
  • Loans can only be modified once under the program; redefaulting loans will be terminated from the program, and no additional incentive payments will be made.
  • Participating servicers and lenders are required to service all eligible loans under the program’s guidelines unless explicitly prohibited by existing investor contracts.


Vijai’s 2cents: Is HAS Plan really helpful?


There is always 2 sides to a story. On one side many are echoing, Home Affordable Modification program will help stabilize the housing and mortgage industries by making mortgage payments affordable for distressed homeownwers in a optimistic tone.


But on the other side they think it is just a short term solution and it is going to get the customer/borrower after 5 year modification period. It is not a true solution to help borrowers. Also not may homeowners who bought their house rightly and paying right on time are happy about the notion slackers are getting help.


Check out this article which found on the net talking about different views.


http://seekingalpha.com/article/124736-obama-s-homeowner-stability-plan-how-helpful-will-it-be


HAS Program Tools


If you want to know whether you are eligible for loan mod or refinance option thru this program, check out this website http://wwww.homeaffordplan.com and it will give the result.


Other websites to check are,


http://www.making-home-affordable.com
http://www.financialstability.gov


What do you think about this HAS Plan? Share your thoughts as comments.

SHRED YOUR FINANCIAL FAT

I had to skip my last week blog post because of a death in my family in India. I lost my very close uncle. I was devastated and couldn’t concentrate on anything for few days lastweek. May God rest his soul in peace and harmony. Let me get back to the money life for now.

It is already Mid of March. You are either on target in reducing weight successfully as your newyear’s resolutions or tired and blown out already.  Don’t you worry, you will get another opportunity to try them out next year again. But for now lets spend sometime thinking about shredding your financial fat. It is now or never.  

It is not the usual agenda of to do’s. A sure deal – quick list of things you can think about shredding from your current expenses and save on your budget.



Insurances

These days we spend lot of money just to insure our assets and even ourselves. If you take a well secured person for example, you will end up with whole list of insurances paid by him like Home, Auto, Health, Life, Disability and more. According to statistics, we spend atleast 3-5% of our gross earnings every year on insurance. It is about time for a quick check of our insurance coverages.

Take out your insurance documents and try to see whether you can trim down your coverages or ask for some discounts to cut down your cost. Many insurance companies these days are looking for new customers and don’t want to lose their current ones. They are more than happy to help out on saving you some money by adding discounts or shaving off few things which you really don’t need to bring down the cost. Be careful on not losing the important coverages.

Example, Home insurance – replacement coverage most of time its enough to cover the actual value of the dwellings cost instead of going overboard to have big figures to cover your dwellings. Similarly, if you have enough liquidity in the bank you can increase your deductible to reduce your premiums. Tip on Auto insurance, you don’t need a property coverage of $50,000 if your car is only worth $25000. Talk to your agent and try to take out things which you really don’t use it in your area. Average saving – $45/month


UTILITIES

Electricity and Gas are the biggest expense in a household, bills go even bigger during summer times. Your safe bet, Install a electronic thermostat and set up the auto settings according to the timings. If you are using manual, turn it down when you go out and turn it up when you needed. Your furnitures don’t need air condition. Being green is not a bad thing by reducing electricity usage and help save the environment and as well your bills.

Shop around for electricity rates year if you live in deregulated statesevery  and don’t just settle with one provider. They usually are expensive for long time customers(no courtesy these days) taking advantage of customers laziness.  Go extra mile, by changing your blubs to compact fluorecent ones which are way cheaper then before and saves 2/3 of your electric usage. Average savings – $25/month

Cable TV/Dish are another place you can cut down expense. If you own the plan either to Cable or Dish Network, you don’t need 150 channels plan. You don’t even watch 2-5 channels every day. So why waste money by paying for what you don’t use. Take a plan which have channels which covers your and families need. Average savings – $30/month

If you have high speed internet, you don’t need it. High speed is only for people who watch online movies and games. If you are an average user like me checking emails and few websites, you don’t need high speed. You can low down the speed and pay lesser and you won’t notice the difference. Average Savings – $25/month

Telephone Charges – VOIP or Digital Phones whatever you want to call it. They are now common in many households and are much cheaper compared to landlines. All features comes for just $30 compared to regular landline. I know there are few disadvantages with digital phones and people are sticking with Landlines. For those with landlines, atleast try to trim down your plan to have only bare minimium since we don’t use many features and you most probably have a cell phone which can back you up. Average savings – $15/month

Cellphone Plans – I am sure we can’t survive without cellphones these days. So I am not going to suggesting to give up. I am just suggesting to take only minute plans which you use and don’t go overboard by adding up features which you normaly don’t use like messaging, data etc., You can use this website www.overmyminutes.com to alert when you going over your minutes limit. Nowadays prepaid phones are affordable and don’t have obligation to pay every month. 

Another important thing, avoid making 411 calls to get business info using cellphone. I think each calls averages around 75 cents to $1.25. There are free 411 services like 1-800-FREE-411 or 800-GOOG-411 which you don’t have to pay any penny instead might have to hear some ads. Average Savings – $10-15

OFF-SEASON SHOPPING

Last but not the least. Your appereal shopping. Every year there is the spring, summer, fall and winter. It is going to repeat again next year. You obviously need same type of clothes every year. Nobody is going to look us whether we are out of fashion unless your work in the model industry. Try shopping after each season for the next year during the clearance sale. This way you can save big. 

Say NO to Catalog shopping. Many people are addicted to catalog shopping just because they get delivered to your door. Just imagine, you are getting charged double or triple for this convinence. You can get the same item on store for half the price. Just opt out of catalogs using CatalogChoice and you won’t be tempted again. You can also opt out of junk mails using the below websites,
https://www.optoutprescreen.com/?rf=t 
http://www.stopthejunkmail.com/
http://www.catalogchoice.org/
http://www.greendimes.com/

Hope these tips and tricks help you to shred some of your fat to make you fit for this economy. You better try it out.

Note: I am leaving to India in few days to attend his 16th day ceremony. I don’t know whether I will have time to post blogs in India, but I will try. Keep checking it out.

Courtesy: Thanks for the title. I got it from money segment by Manisha Thakor, CFP’s on the Houston sunny 99.1 radio.

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