WSJ: Beware of Fannie's help. NINJA loans are back!!

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Submitted by pnilesh on March 1, 2008 - 6:44pm

Heard of NINJA loans? After the subprime mess, FNMA is doing just that.

According to WSJ: The company is offering borrowers who are behind their mortgage payments as much as $15000 each to clear their arrears. The money comes --get this-- as a 15yr unsecured personal loan, and "verbal confirmation of financial capacity" is aceptable." To be ffair, there are a few other criteria. And it's billed as a way to help homeowners over a hump.

Does anybody have more info?

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Yes, this is akin to the FHA
Submitted by Deal Hunter on March 1, 2008 - 8:52pm.

Yes, this is akin to the FHA partial claim. This used to be unallowed for loan modifications, but that has changed in the "modernization" of FHA. The FHA originated loan is supposed to be interest-free, but I thought it was a separate lien (secured) on the property.

Of course, conventional lenders have been offering the unsecured loan on the arrears as part of their loan "modifications" under the HOPE Now and Project Lifeline operations. It's not far fetched to see FNMA partaking.

There should be some uproar from consumer advocacy groups pretty soon about these horrible loans. It's just plain preying on the desperate.

I should add that there are
Submitted by Deal Hunter on March 1, 2008 - 10:16pm.

I should add that there are significant consequences to borrower's credit with this type of unsecured note as compared to a lien or 2nd, 3rd mortgage on the property. Technically this loan is like a credit card debt.

With a secured type loan, if the borrower eventually defaults, the loan is extinguised by the foreclosure or acknowledged as paid in full in a short sale. Being an unsecured debt, the default is recorded on their credit as a collection and may keep popping up again for years. Some states statue of limitations on unsecured debt can be as long as 25 years.

If you know anyone considering this, they should be duly warned.