Wednesday, September 21, 2016

What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."




ARTICLE LINK (CLICK HERE)
A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 
These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.
Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.
Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.
"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."
Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.
Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.
Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.
Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.
While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.
Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."
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What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."




ARTICLE LINK (CLICK HERE)
A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 
These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.
Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.
Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.
"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."
Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.
Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.
Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.
Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.
While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.
Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."
  • . . . . . . . . . . . . . . . . .

  • Please contact us if you need help or resources as we are here and happy to help!

  • Respectfully,

  • Dana Shafman
  • Managing Member
  • END Consulting
  • (888) 234-7006 Ext 101
  • Dana@ConsultingEND.com

  • www.TheDailyComplaint.com






What to Watch Out for with Your Mortgage Servicing Company

"Problems with payments head the list of consumer complaints about the companies that service home mortgages."




ARTICLE LINK (CLICK HERE)
A Virginia borrower complained that after making a monthly mortgage payment via credit union electronic transfer the bank servicing the mortgage denied receiving payment despite two confirmation faxes from the credit union. In Texas, a borrower said a new servicer took over a loan, never sent a bill or responded to attempts to set up an account and make payments and then posted the home for foreclosure. 
These are two of 3,910 complaints about mortgages sent to the Consumer Financial Protection Bureau in July 2016. Mortgages represent the third-biggest category of complaints to the CFPB, behind debt collection and credit reporting. As of April 1, 2016, CFPB's online complaint system had handled nearly 860,000 complaints since it opened 2011, of which mortgages accounted for more than 223,000.
Mortgage complaints spiked during the last recession and housing downturn before falling to about their current level. Now they may be heading up again. During the first quarter of 2016, average monthly mortgage complaints were up 21% from the same period a year earlier, according to the CFPB.
Rocke Andrews, president of the Plano, Texas-based National Association of Mortgage Brokers, says during the downturn complaints tended to be about brokers but more recently concern servicers. One reason is that pricing pressure is causing servicer consolidation and efforts to reduce costs, he says.
"What you see now is there are probably five servicers that handle 75% of all servicing," Andrews says. "To make it profitable, you have to scale it up and do as much as you can automated. As a result, as a consumer, more than likely you're going to wind up with one of those automated systems when you call in for information."
Andrews says consumers with a problem can increase chances of a successful resolution by bypassing the automated systems -- often by pressing the "0" key -- and asking the human rep to speak with a supervisor. If that doesn't work, try hanging up and calling back, he suggests.
Complaints come in many varieties, but since 2011, most (51%) are "problems when you are unable to pay," according to the CFPB. Next is "making payments," cited by 31%. Complaints about applying, signing the agreement and receiving a credit offer are all single digit percentages.
Some problems are caused by borrowers confusing the servicer, which collects payments and disburses taxes and insurance, and the holder of the mortgage note. Borrowers may be upset that a servicer won't approve skipping a payment, when the borrower has to approve that, Andrews says.
Another common problem regards partial payments. Sometimes, such as during foreclosure proceedings, the amount owed may change after a payment is mailed and before it is received. The borrower may think payment has been made, when in fact it's been disallowed as a partial payment. New rules require servicers to tell borrowers upfront whether they will accept partial payments may help this problem, Andrews says.
While nearly a quarter of a million complaints to regulators sounds like a lot, Marina Walsh, a vice president with the Washington, D.C.-based Mortgage Bankers Association, notes that problems are typically handled before reaching the CFPB, and the complaint count is modest compared to the number of borrowers. "There are approximately 50 million outstanding mortgages in the U.S. and many more customer escalations or complaints are tracked and logged, then resolved directly by the mortgage servicer," Walsh says.
Walsh said dedicated phone numbers, customer service-friendly websites and better call center monitoring is helping to improve borrowers' experiences with servicers. "On the technology side, servicers have woken up and realized that they need to go digital especially for millennial borrowers," Walsh says. "This means revamping websites to provide more capabilities, offering seamless mobile options and generally moving toward a self-service and self-monitoring model preferred by some many borrowers, particularly Millenials."
  • . . . . . . . . . . . . . . . . .

  • Please contact us if you need help or resources as we are here and happy to help!

  • Respectfully,

  • Dana Shafman
  • Managing Member
  • END Consulting
  • (888) 234-7006 Ext 101
  • Dana@ConsultingEND.com

  • www.TheDailyComplaint.com





Thursday, August 4, 2016

Consumer Financial Protection Bureau Expands Foreclosure Protections

 Category:Press Release

Consumer Financial Protection Bureau Expands Foreclosure Protections

Updated Servicing Rule Provides Surviving Family Members and Other Homeowners with Same Protections as Original Borrowers
 
Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized new measures to ensure that homeowners and struggling borrowers are treated fairly by mortgage servicers. The updated rule requires servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan, clarifies borrower protections when the servicing of a loan is transferred, and provides important loan information to borrowers in bankruptcy. The changes also help ensure that surviving family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower.
“The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon,” said CFPB Director Richard Cordray. “These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.”
Mortgage servicers are responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. They typically handle customer service, collections, loan modifications, and foreclosures. To address widespread mortgage servicing problems, the CFPB established common-sense rules for servicers that went into effect on January 10, 2014.
The CFPB issued proposed amendments to those rules in November 2014, and the final rule issued today adopts many of the proposed provisions. However, the Bureau made a number of changes in the final rule after considering comments received from the public.
The rule issued today establishes new protections for consumers, including:
  • Requiring servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan: Under the CFPB’s existing rules, a mortgage servicer must give borrowers certain foreclosure protections, including the right to be evaluated under the CFPB’s requirements for options to avoid foreclosure, only once during the life of the loan. Today’s final rule will require that servicers give those protections again for borrowers who have brought their loans current at any time since submitting the prior complete loss mitigation application. This change will be particularly helpful for borrowers who obtain a permanent loan modification and later suffer an unrelated hardship – such as the loss of a job or the death of a family member – that could otherwise cause them to face foreclosure.
  • Expanding consumer protections to surviving family members and other homeowners: If a borrower dies, existing CFPB rules require that servicers have policies and procedures in place to promptly identify and communicate with family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home. Today’s final rule establishes a broad definition of successor in interest that generally includes persons who receive property upon the death of a relative or joint tenant; as a result of a divorce or legal separation; through certain trusts; or from a spouse or parent. The final rule ensures that those confirmed as successors in interest will generally receive the same protections under the CFPB’s mortgage servicing rules as the original borrower. 
  • Providing more information to borrowers in bankruptcy: Under the CFPB’s existing mortgage rules, servicers do not have to provide periodic statements or early intervention loss mitigation information to borrowers in bankruptcy. Today’s final rule generally requires, subject to certain exemptions, that servicers provide those borrowers periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options. Servicers also currently do not have to provide early intervention loss mitigation information to borrowers who have told the servicer to stop contacting them under the Fair Debt Collection Practices Act. Today’s final rule generally requires servicers to provide modified written early intervention notices to let those borrowers also know about loss mitigation options.
  • Requiring servicers to notify borrowers when loss mitigation applications are complete: Whether a borrower is entitled to key foreclosure protections depends in part on the date a borrower completes a loss mitigation application. If consumers do not know the status of their application, they cannot know the status of those foreclosure protections. Today’s final rule requires servicers to notify borrowers promptly and in writing that the application is complete, so that borrowers know the status of the application and have more information about their protections.
  • Protecting struggling borrowers during servicing transfers: When mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation may not know where they stand with the new servicer. Today’s final rule clarifies that generally the new servicer must comply with the loss mitigation requirements within the same timeframes that applied to the transferor servicer, but provides limited extensions to these timeframes under certain circumstances. If a borrower submits an application shortly before transfer, the new servicer must send an acknowledgment notice within 10 business days of the transfer date. If the borrower’s application was complete prior to transfer, the new servicer must evaluate it within 30 days of the transfer date. If the new servicer needs more information to evaluate the application, the borrower would retain some foreclosure protections in the meantime. If the borrower submits an appeal, the new servicer has 30 days to make a determination on the appeal.
  • Clarifying servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures: The CFPB’s existing rules prohibit servicers from taking certain actions in foreclosure once they receive a complete loss mitigation application from a borrower more than 37 days prior to a scheduled sale. However, in some cases, borrowers are not receiving this protection, and servicers’ foreclosure counsel may not be taking adequate steps to delay foreclosure proceedings or sales. The CFPB’s new rule clarifies that, if a servicer has already made the first foreclosure notice or filing and receives a timely complete application, servicers and their foreclosure counsel must not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, even if a third party conducts the sale proceedings, unless the borrower’s loss mitigation application is properly denied, withdrawn, or the borrower fails to perform on a loss mitigation agreement. The clarifications will aid servicers in complying with, and assist courts in applying, the dual-tracking prohibitions in foreclosure proceedings to prevent wrongful foreclosures.
  • Clarifying when a borrower becomes delinquent: Several of the consumer protections under the CFPB’s existing rules depend upon how long a consumer has been delinquent on a mortgage. Today’s final rule clarifies that delinquency, for purposes of the servicing rules, begins on the date a borrower’s periodic payment becomes due and unpaid. When a borrower misses a periodic payment but later makes it up, if the servicer applies that payment to the oldest outstanding periodic payment, the date the borrower’s delinquency began advances. The final rule also allows servicers the discretion, under certain circumstances, to consider a borrower as having made a timely payment even if the borrower’s payment falls short of a full periodic payment. The increased clarity will help ensure borrowers are treated uniformly and fairly.
Today’s final rule makes additional changes to the CFPB’s mortgage servicing rules. These changes include providing flexibility for servicers to comply with certain force-placed insurance and periodic statement disclosure requirements. The changes also clarify several requirements regarding early intervention, loss mitigation, information requests, and prompt crediting of payments, as well as the small servicer exemption. Further, the changes exempt servicers from providing periodic statements under certain circumstances when the servicer has charged off the mortgage. Finally, concurrently with the final rule, the CFPB is issuing an interpretive rule under the Fair Debt Collection Practices Act relating to servicers’ compliance with certain mortgage servicing provisions as amended by the final rule.
Most of the provisions of the final rule will take effect 12 months after publication in the Federal Register. The provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will take effect 18 months after publication in the Federal Register.
###

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.


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Tuesday, May 10, 2016

Why HAMP and HARP Have Run Their Course

Why HAMP and HARP Have Run Their Course | Carrington Real Estate – News



“HAMP was developed to address a crisis and we’re really not in a crisis,” said Eric Selk, executive director of the Hope Now Alliance.

The Obama administration’s Making Home Affordable program has been extended and expanded so many times that it’s gotten hard to imagine life without it. But the days may be numbered for MHA and its two primary initiatives, the Home Affordable Modification Program and Home Affordable Refinance Program.

As the housing market’s recovery continues to solidify, the number of underwater borrowers that MHA was designed to help has receded, not to mention the fact that a new administration will occupy the White House following the upcoming elections.

In one sense, the scheduled Dec. 31 end date of Making Home Affordable is a nonevent because nationally, the volume of loans flowing through HAMP and HARP has slowed considerably. But the programs are still a force to be reckoned with. The refinance program’s volume has been significant in the past and remains so in certain regions. And there’s no denying that the modification program, while small in size now, has had a huge influence over the way loss mitigation is handled in the market.

“MHA has left a lasting impact on the industry,” said Mark McArdle, deputy assistant secretary of the Treasury Department’s Office of Financial Stability. “Previously, modifications were typically about kicking the can down the road and ultimately did not reduce payments. HAMP has introduced a standardized loss mitigation waterfall as a common expectation. The question is, when we go away, how much of that will remain?”

The Federal Housing Finance Agency is weighing options for a refinance program to succeed HARP, but any plan would be limited to loans purchased by its primary charges, Fannie Mae and Freddie Mac. And it’s so far been silent on any plans for a new modification program to take HAMP’s place.

But HAMP’s influence will continue long after servicers stop taking requests for new workouts. The runoff of previously modified loans will last for years, while other forms of loss mitigation will continue to incorporate procedures that were rare, or even nonexistent, prior to its existence — not to mention how history will view Making Home Affordable’s legacy in the broader context of the Great Recession.

“What the expiration of this means will be a matter of how you view economics,” said Les Parker, an industry veteran and contributing writer to The Mortgage Professional’s Handbook, a guidebook on the inner-workings and history of the mortgage industry published earlier this year. “It is government intervention, and the questions people will look at is, was that government intervention good or bad?”

With that in mind, let’s take a look at what the mortgage industry might look like once HAMP and HARP have come to an end.

A Political Question

Both Republican and Democratic presidents have shown a willingness to let government intervene in the mortgage markets in the past. It’s unclear where the current slate of presidential candidates stand on the issue, but generally, Parker said, “I think the odds are Making Home Affordable is not going to be extended if a Republican is coming in.”

Some Republicans and investors, as well as the special inspector general for the Troubled Asset Relief Program that funds MHA, have been critical of HAMP’s redefault rate or the program’s inability to reach more borrowers. Critics also have showed concern about the potential moral hazard it presents in lowering delinquent borrowers payments in standardized ways that don’t account more granularly for individuals’ merits, while leaving performing borrowers’ unchanged, Parker noted.

Certain Democrats as well as the Treasury, the FHFA and other proponents have meanwhile defended the program. They note that the majority of HAMP loans remain current after modification, that the program was structured to minimize moral hazard and that performance improved over time, with the latest iterations proving generally more effective than proprietary modifications.
That debate will resurface in any contemplation of an extension or successor program to HAMP. But because the next president will take office shortly after MHA’s scheduled expiration, it’s unlikely there will be any change from the current plan to let it sunset, unless it is a simple extension. However, an extension remains a long shot because of the widespread perception that the program was created to respond to a crisis that no longer exists.

“I think it will sunset because how do you justify that there is still a problem?” Parker said.
Ultimately, HAMP could become the model for what some are calling a “mod on a shelf,” which could be revived in the event of a future housing crisis, said Eric Selk, the executive director of Hope Now.

“HAMP was developed to address a crisis and we’re really not in a crisis,” he said.
While the end of Making Home Affordable may serve as fodder for political rhetoric in debates about housing policy, market conditions are generally far better than they were during the crisis, said David Lykken, president and founder of Transformational Mortgage Solutions, a consulting firm in Austin, Texas.

“It’s important to realize as we go into this election cycle that there could be a lot of talk about how the end of Making Home Affordable could destroy homeownership to suggest that we need the programs,” he said.

But delinquencies have returned to normalized levels, noted Lynn Fisher, a vice president of research and economics at the Mortgage Bankers Association. And even though negative equity levels aren’t back to normal, they are far closer to it.
The percentage of underwater homes among people with a mortgage is less than 10%, as opposed to a rate more than twice that during the crisis, according to CoreLogic chief economist Frank Nothaft.

“You would normally expect to see negative equity closer to 2% to 3%. We’re at most two to three years from normality,” Nothaft said.

Overall, the number of underwater homeowners with a GSE loan has dropped by more than 80% since its peak at the end of 2011, and the vast majority of the remaining underwater borrowers are current on their mortgages, according to FHFA Director Mel Watt. About 9% are still seriously delinquent.

While borrower distress associated with crisis-era underwater homes is less of a problem on average, it remains a challenge in certain concentrated regions. So the expiration of a modification program specifically designed to help these borrowers will put some stress on these regions and entities that hold concentrations of loans there.

States with longer foreclosure timelines such as New York, New Jersey and Florida are more likely to feel some impact from HAMP’s expiration, said Michael Fratantoni, the MBA’s chief economist.
And some regions that still lag in home price recovery will be affected more than others when MHA’s refinance program ends. These include Las Vegas, the Inland Empire in California, and parts of Florida, Fratantoni added.

HARP Will Be Replaced

While it was less groundbreaking than HAMP and received the benefit of a number of refinements over time, the Home Affordable Refinance Program didn’t have as tough of a row to hoe.
“HARP was an amazingly successful program,” said Fratantoni. “I think HAMP had some more hurdles to get over.”

And unlike HAMP, there are immediate plans for a GSE successor to HARP.

“As HARP winds down, we are also working to make sure that borrowers with high loan-to-value ratio loans have a refinance option in the future,” Watt said in in a policy speech in March, noting that it “will be important in the event there are regional or localized economic disruptions that lead to negative equity.” However, borrowers who previously participated in HARP would not be eligible to refinance under the new program.

The GSEs have helped more than 3.3 million homeowners refinance their mortgages through HARP, saving them on average $2,200 a year in reduced mortgage payments.

HARP loans accounted for as much as 40% of Fannie Mae and Freddie Mac refinance volume at the program’s height in May 2012, according to Black Knight Financial Services estimates. However, that was an unusual month, and the percentage has fallen drastically over time. While it continues to aggressively target remaining eligible borrowers, the FHFA found HARP accounted for only about 5% of GSE refinances during January 2016 and quarterly averages were no higher than around 27% at the market’s peak.

So what kind of program could succeed HARP at Fannie and Freddie?

One possibility is a Fannie Mae loan modeled off of the Department of Veterans Affairs’ streamline refinance program, said Brent Nyitray, director of capital markets at iServe Residential Lending in Stamford, Conn.

“That’s one thing the government could easily do if they wanted to permanently extend HARP,” he said.

Among other things, the Department of Veterans Affairs does not require an appraisal on its streamline refinances, which would help underwater borrowers overcome any loan-to-value eligibility restrictions.

“The question will be will lenders want to do that? Because there are fears of having the loan put back to you by Fannie Mae,” Nyitray said.



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