This article is just too wonderful and jam packed with useful information and website links -- so with all respect and credit to Bloomberg.com, I am posting it here for your information.
FICO Web Site May Help Homeowners Seeking Loan Modifications
By Alexis Leondis
April 17 (Bloomberg) -- FICO, owner of the credit-scoring formula that many lenders use in making mortgages, is now helping homeowners figure out if they can keep them.
The Minneapolis-based credit-rating company is unveiling a new Web site today, mortgagereliefonline.com, to help struggling homeowners avoid foreclosure. Borrowers complete a confidential online form and should find out within seconds whether they may qualify for loan modifications or refinancing, according to a statement from the company. A free credit counselor approved by the U.S. Housing and Urban Development department will contact the eligible borrower within 48 hours, FICO said.
“This site enables consumers to come to one place and have almost immediate feedback in terms of what they’re eligible for,” said Lisa Nelson, vice president of global scoring for FICO. The company partnered with nonprofit organizations Minneapolis-based Homeownership Preservation Foundation and Houston-based Money Management International, which will provide the credit counseling at no cost to homeowners.
U.S. foreclosure filings rose 24 percent in the first quarter from a year earlier, Irvine, California-based RealtyTrac Inc., a seller of default data, said yesterday. The unemployment rate jumped to 8.5 percent in March, the highest since 1983, as 663,000 jobs were lost, according to the Labor Department.
The initiative by FICO, formerly known as Fair Isaac Corp., follows President Barack Obama’s Making Home Affordable plan to assess who is likely to qualify for foreclosure prevention.
Government Web Site
A government Web site, Makinghomeaffordable.gov, created by the Obama administration in March, also provides an online questionnaire, which analyzes a homeowner’s eligibility for loan modification or refinancing. Links to free HUD-approved counselors are listed on the government’s site for homeowners to contact.
The housing-rescue plan is intended to help as many as 9 million homeowners who may be close to default refinance into cheaper loans. It has two main parts: having lenders lower monthly payments for 3 million to 4 million homeowners by modifying their loan terms; and refinancing the loans of 4 million to 5 million Americans whose properties have dropped in value and may owe more than their homes are worth.
Loan servicers and non-profit credit counseling agencies have been inundated with calls from homeowners concerned about defaulting on their mortgages, said Barry Zigas, director of housing policy for the Washington-based Consumer Federation of America. “The site may be a way to cut through waiting on hold,” Zigas said.
Homeowners should keep in mind that a loan modification or refinancing is ultimately decided by the loan servicer, Zigas said.
Federal Aid
Banks receiving federal aid through the U.S. Troubled Asset Relief Program must also take part in the government’s mortgage modification initiatives, HUD Secretary Shaun Donovan said in an April 9 interview on Bloomberg television.
The mortgage servicing divisions of JPMorgan Chase & Co., Citigroup Inc., GMAC LLC, Morgan Stanley, Credit Suisse Group AG and Wells Fargo & Co. have signed contracts to participate, according to the Making Home Affordable Web site.
Borrowers struggling with their mortgages are better served by working directly with their loan servicer or a nonprofit agency than with for-profit companies that charge fees, said Thomas Kelly, a spokesman for New York-based JPMorgan.
Lenders such as JPMorgan will benefit from the new FICO site because it will streamline the number of consumers looking to modify or refinance their loans, said Nelson of FICO.
Seek Counseling
Homeowners who do not meet the government’s guidelines for foreclosure prevention and are deemed ineligible by FICO’s online form will be recommended to seek debt counseling and also be contacted by a counselor, Nelson said.
About 7.6 million mortgage holders don’t qualify because their mortgages are more than 105 percent of the value of their homes, according to real estate valuation service Zillow.com.
“Without congressional action to allow bankruptcy judges to modify the mortgage on a person’s primary residence, voluntary efforts by lenders will continue to fall short and be outpaced by the rising tide of foreclosures that’s at the root of the recession,” said Charlene Crowell, communications manager for the Center for Responsible Lending, a consumer group in Durham, North Carolina.
-- With reporting by Dan Levy in San Francisco and Dawn Kopecki in Washington. Editors: Rick Levinson, William Ahearn.
To contact the reporter on this story: Alexis Leondis in New York aleondis@bloomberg.net.
Last Updated: April 17, 2009 00:01 EDT
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