September 10th, 2009
In February of this year, the United States government announced a program that was set into motion in order to help homeowners keep their homes and avoid the threat of foreclosure. This program gives every homeowner in financial duress a glimmer of light in an area that seemed so dark and it is called the Home Affordable Modification Program.
President Obama put this plan into effect this year in order to pull people out of potential financial ruin and keep the economy moving. Most homeowners who have a mortgage may be eligible and monthly payments will be greatly reduced to a point where their mortgage payment fits into their budget.
This program has the potential to make great strides in helping both the lenders as well as the homeowners, and seventy five billion dollars has been allotted for it. It not only is it designed to reduce personal debt, but it also helps in alleviating the stress that homeowners facing potential ruin are feeling.
Are you eligible?
Due to the massive number of homeowner’s and the fact that most lenders are not adequately staffed, now is the time to jump in and get help in paying down your mortgage. It will help you avoid foreclosure and the credit issues that will haunt you for the next several years. There are guidelines put into place that will let you know if you qualify for the home affordable modification program.
One of the biggest factors will be when your mortgage started. Any home mortgage that originated before January 1, 2009 may be eligible.
Another major stipulation to being in this program is that your home has to both owner occupied and your primary residence. If the subject property in non-owner occupied, has someone else residing in the home and paying you rent then you cannot qualify for this modification. Your home also has to be the place that you currently live. The best way to prove this fact during the application process is by simply showing a piece of mail that has a recent date, your name, and address.
Your monthly income must meet specific guidelines as does your current unpaid mortgage balance. It is important to speak with a professional before applying for help.
There will likely be a short but thorough verification process where all of your income, assets and expenses will be scrutinized. Be sure that you claim every asset that you have and practice full honesty during the entire process. Lying about any of these issues will get you into trouble at some point during the application process and could cause you to be declined from the program later on.
Don’t worry about not qualifying in case you are in the midst of a bankruptcy filing. This will not necessarily be a deal breaker for you. The important thing is that you are truthful and that you disclose all of the details during the application process.
The program will be ending the end of December 2012, but all payments will continue for several months after the finish.
It is important to mention that the government is currently giving an incentive payment that encourages applicants during the initial process. A definite bonus for those who have found themselves strapped financially.
The home affordable modification program is a great way to get a boost on your home mortgage payments. It will not only help you with reduced mortgage payments, but also keep your home from being foreclosed.
Posted in Loss Mitigation | Comments
August 29th, 2009
Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.
The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac.A Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan to-value ratios above 80%.A Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
GSE lenders and servicers already have much of the borrowers information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary.A This flexibility will make the refinance quicker and less costly for both borrowers and lenders.A The Home Affordable Refinance program ends in June 2010.
The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.A Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications.A This program will work in tandem with an expanded and improved Hope for Homeowners program.
With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.A The detailed guidelines (separate document) provide information on the following:
Eligibility and Verification
- Loans originated on or before January 1, 2009.
- First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
- All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
- Property owner occupancy status will be verified through borrower credit report and other
documentation; no investor-owned, vacant, or condemned properties.
- Incentives to lenders and servicers to modify at risk borrowers whohave not yet missed payments when the servicer determines that theborrower is at imminent risk of default.
- Modifications can start from now until December 31, 2012; loans can be modified only once under the program.
Loan Modification Terms and Procedures
- Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.
- Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent.A The NPV test will compare the net present value of cash flows with modification and without modification.A If the test is positive meaning that the net present value of expected cash flow is greater in the modification scenario the servicer must modify absent fraud or a contract prohibition.
- Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and re-default rate assumptions.
- Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).
- The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal.A Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
- The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowners association and/or condominium fees.A Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.
- Servicers must enter into the program agreements with Treasury’s financial agent on or before December 31, 2009.
Payments to Servicers, Lenders, and Responsible Borrowers
- The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.
- Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus pay for success fees on still-performing loans of $1,000 per year.
- Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.
- The program will provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.
- The program will include incentives for extinguishing second liens on loans modified under this program.
- No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasurys financial agent.
- Similar incentives will be paid for Hope for Homeowner refinances.
Transparency and Accountability
- Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.
- Servicers will be required to collect, maintain and transmit records for verification and
compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.
- Freddie Mac will audit compliance.
Posted in Home Affordable Modification Program, Loss Mitigation, Making Home Affordable, Mortgage Default, Stop Foreclosure, www.MakingHomeAffordable.gov | Comments
February 20th, 2009
President Obama announced a housing rescue plan in the state of Arizona in the town of Meza whereby more than half the homes on sale are facing foreclosure.
Lynn Murtagh a real estate broker who works for that Coldwell Banker Residential in Mesa said that 25% of the 3149 homes put up for sale are owned by banks. They are either repossessions or properties given back by borrowers who were not able to pay up their mortgage.
The number of homes up for short sale that is those sold at a lesser value is approximately 27%. This means that more than 50 % of houses on the market are distressed properties.
The Phoenix metro area has seen a rise in foreclosures and more than 6% have received a foreclosure filing during the year according to RealtyTrac. In the month of January alone according to current foreclosure statics, there were 1,079 foreclosures; this represents a 33% rise a year earlier and a staggering 318% rise from the same month in 2007.
Earlier in this decade, the whole area of Phoenix experienced rapid growth in real estate due to an increase in population and realtors from high priced places like California looked to spread out. Investors enriched themselves back then since prices for homes appreciated. According to a report by the National Association of Realtors, the average real estate prices in the fourth quarter of 2005 were close to 50% higher than in the year 2004.
Since that period however, the prices of homes in Mesa have dropped drastically. Price declines in several neighbourhoods are very severe. An example given by Murtagh is whereby people bought homes for about $225,000 in the year 2005 and they have now listed the same properties for $75,000.
Many recent home owners are now in a tight fix in their mortgages since they owe more than their homes are actually worth. This makes them increasingly vulnerable to foreclosure. During the housing boom, according to Murtagh, many Mesa home buyers opted for exotic mortgage products such as adjustable rate mortgage (ARMs), hybrid ARMs, no-doc loans and interest only loans which are now failing at an alarming rate. Many foreclosures are as a result of these unmanageable mortgages due to predatory lending and falling property prices than from the global economic crisis.
Job losses in the area have resulted in people falling back on their mortgages since many residents were employed in the housing industry either as construction workers or sales persons and other fields reliant on home sales. Murtagh is of the opinion that if the job losses could be stemmed, then many people would be able to stop foreclosure and keep their homes.
Posted in Economic Impact of Foreclosures, Human Impact of Foreclosures, Loss Mitigation, Short Sale | Comments
February 16th, 2009
The news that three of the most known national banks have temporarily stopped foreclosing on defaulted home loans has made more than a few families breathe a small sigh of relief. Everyone seems to be counting on the Obama administration to reverse the current economic decline, and these large banks are no exception. Although this respite will only buy the homeowner facing foreclosure about one more month, it may be enough time to stop foreclosure altogether.
People behind on mortgage payments can take certain steps to stop foreclosure. If you fall into this category, and your house is on the market, here are some things to consider:
1) Make sure that your house is priced competitively. If you have equity in your home, and are facing foreclosure, you have the opportunity to adjust your selling price. The current market is a buyer’s market, and buyers know it. They are looking for the best value for their money. Too often homeowners are blinded by the price they paid for their home, which was purchased in a seller’s market at too high of a price. Be realistic about what you can expect to receive for your home.
2) Insist on holding numerous open houses. Now, understand that this is not for the purpose of finding a buyer. Most open houses do not result in the sale of the home. Your open houses are one of your most valuable tools because they provide feedback. You need to know why your home is not selling. Price, location, layout, or decor can all be factors.
3) Once you know how people feel about your home, change it. Resist the temptation to become angry or hurt, accept the advice as it is, and make changes. After you have painted, cleaned, fixed landscaping, or corrected the issues people have mentioned, hold another open house. Repeat, repeat, and repeat this process. Sometimes all it takes is a coat of fresh paint and moving some furniture around to change how your home is perceived.
4) Make sure your home is listed online, advertised heavily, and has color fliers complete with a lot of pictures. Everyone has to know your home is a great value for the money and why. Let everyone know you are willing to make changes for the buyer. A "seller comments" page is an excellent tool, and you can describe things you have updated or changed based on prospective buyer feedback. This lets your new buyers know that they can work with you.
5) Get together your mortgage payments as best you can. Look around your home and start selling. Ebay can be a great tool to make some fast cash. Accept the fact that you will have to take a loss on the things you sell, and decide which things you don’t really use or need. If you can put together a few mortgage payments, you may be able to negotiate your momentary respite into a longer one, and sell your home in the meantime.
6) Consider alternatives to a straight sale. Some investors will purchase your home for the price of the remainder of your loan, and rent it back to you. This lowers your payments so you may stay in the home. Try renting rooms out yourself, or the basement. This might give you the income you were lacking.
Pre-foreclosure sales tend to attract investors and first time homebuyers, both of whom like to see an interested homeowner who is actively seeking to sell or rent their home. Take the time the banks are offering to try to make the necessary changes that will make your home sell.
Posted in Loss Mitigation | Comments
February 14th, 2009
It appears that some people are getting the promised benefits out of the various stimulus, recovery, and bailout plans that the government has passed in the last year. Though the government of California has been having an immeasurable amount of economic trouble lately, the state’s citizens are getting a small amount of recovery.
There were only 14,351 foreclosures in the state of January in California, as opposed to 20,952 foreclosures the month before. This number of foreclosures was the highest of any state in the entire country, but not the most per capital.
Nationwide, foreclosures are down by more than a quarter between the last two months. Despite these numbers, however, this may not be due only to a moderate recovery in the economy, as Fannie Mae and Freddie Mac both have a moratorium on foreclosures (and they own fifty percent of the United State’s mortgages), which has a big effect, completely separate from the strength of the market.
Furthermore, some commercial banks have agreed to do this as well.
Many banks are allowing consumers to change the terms of their mortgages, which can seriously hurt the banks’ balance sheets, and pumps up these numbers in an artificial way. This process is called Loss Mitigation.
Finally, the California senate has implemented a law recently, which may have had a large effect, that requires any lender to contact a homeowner before they are permitted to begin any type of foreclosure proceedings.
Posted in Economic Impact of Foreclosures, Loss Mitigation, Mortgage Default, Stop Foreclosure, US Foreclosure Statistics | Comments
February 14th, 2009
In today's society, switching services can mean costing you more money. Everywhere companies have taken this business model and turned it into a reputable way to do business.
Companies are protecting themselves by selling you a cheaper upfront service, for your long-term business. In practicality this sort of commitment is a fair practice. But at what point to you does it overstep the lines of fair business? After all, free market capitalism is what we have long built our economy on.
Bankers everywhere are using contracts to keep you held down from searching for the most competitive price. They use penalties or a break funding penalty to keep people from breaking off their current agreement or mortgage. This can mean a very large sum of money by you the borrower.
Some banks are different but the typical bank wants three to six months of interest on a one to two year fixed rate loan. This means that a thirty year loan will be costing you additional interest payments just to break your agreement.
That is a lot of cash!
At what point does this simple practice teeter the unfair business practices?
Posted in Economic Impact of Foreclosures, Loss Mitigation, Mortgage Default | Comments
February 12th, 2009
The mortgage problem and foreclosures are very bad in the United States right now.Jobs are getting lost, home prices are falling, and the credit crunch is showing the horror of poorly taken and given investments and loans. According to the Foreclosures Canada Information Systems, there have been more foreclosures since November as in the six months before that, and and this is definitely getting worse.
The problem is confirmed by many other sources, including many of the banks falling victim.
Calgarians and Albertans are having an especially bad time of it. Calgary alone, a very small area, has more than 125 homes that are in the foreclosure process right now. It appears that much of the market is under water, and that everybody is falling victim.
In the past, few people who lost their job or had a drug or alcohol problem were foreclosed upon, many banks are finding that they must foreclose upon everybody. Many Realtors are finding that as much as fifteen percent of their business is now in helping banks to sell all of those homes that they find on their hands.
Posted in Economic Impact of Foreclosures, Loss Mitigation, Mortgage Default | Comments
February 11th, 2009
Given the state of the current financial crisis, the House Financial Services Committee Chairman Barney Frank has asked many of the major banking companies to voluntarily put a moratorium on foreclosing on occupied homes.
In addition, the government has already placed such a moratorium on Fannie Mae and Freddie Mac, which has had a large positive impact through the month of January. This moratorium is also widely supported in the Office of Thrift Supervision.
The government expects that 90% of the banks will decide to put this moratorium in place, but has no plan for this and has no actual control. In addition, at least $50 billion of the final bailout money will be used to prop up foreclosures. Because of the small moratorium that is in place so far, foreclosures have already been cut by at least 26% in January, however, this is only because Fannie Mae and Freddie Mac are government controlled and, therefore, can be forced to do no foreclosures, which the government cannot do to any of the public banks, even under the current bailout rules.
This is likely to change when the next part of the bailout funds are released.
Posted in Loss Mitigation | Comments
February 11th, 2009
The unprecedented recession in the world economy today seems to have hit every nation badly, though the percentage or the extent of damage may vary in each case. First it was believed that only the stocks were falling and the repercussions thereof would be redressed soon. But, as a wider panorama unfolded itself, it was discovered that not just finance companies but others too would face the cascading effect of the meltdown. Then followed housing loans and mortgages fiasco, credit card disillusionment’s, mortgage foreclosures in order to meet rising insecurities in the employment arena, so on and so forth.
Now, the bigger picture of the global meltdown is emerging. Mammoth commercial complexes that once housed hundreds of commercial establishments and looked unshakable, are slowly losing their clients who are moving to more affordable areas as cost cutting measures. Holding on to the prestigious address and location sheen seems to wearing off in the face of stark realities like layoffs and absence of contingency plans.
Landlords who once ruled the estate market are now pondering and are offering newer and attractive rebates to retain existing tenants. Vornado Realty Trust who apparently offered 10 months’ free stay to a tenant threatening to move out of One Penn Plaza at Manhattan is a case in point.
Another heart rending tale is that of 60-storeyed John Hancock Tower at Boston, the tallest building in New England, which has suffered heavy loss on account of severe fall in real estate price. The fact that it is being auctioned soon poses a very grim picture of the sad reality. The steep fall in its price from $1.3 billion to $700-900 million according to Associated Press, is shocking, to say the least.
According to Mark Goldman of San Diego State University, "a storm is brewing" in the commercial real estate industry and it is not just a storm in the tea cup as the adage goes.
No doubt, every company would want to carry a posh address on its card, but the sooner the harsh economic realities are confronted with , the better it would be for the survival to lend some semblance of balance to the current picture.
Posted in Economic Impact of Foreclosures, Human Impact of Foreclosures, Loss Mitigation, US Foreclosure Statistics | Comments
February 10th, 2009
Obama plan holds off on foreclosure rescue details. Obama said he would announce his housing strategy in the coming weeks. Meanwhile, home prices are not expected to hit bottom until year-end at the earliest.
Americans are hoping President Barack Obama will have more success, especially as foreclosures continue to grow. A Credit Suisse report published late last year forecast up to 10 million foreclosures by 2012, depending on the severity of the recession.
The Obama administration is expected to back a push in Congress a opposed by the mortgage industry a to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.
Posted in Loss Mitigation | Comments
In February of this year, the United States government announced a program that was set into motion in order to help homeowners keep their homes and avoid the threat of foreclosure. This program gives every homeowner in financial duress a glimmer of light in an area that seemed so dark and it is called the Home Affordable Modification Program.
President Obama put this plan into effect this year in order to pull people out of potential financial ruin and keep the economy moving. Most homeowners who have a mortgage may be eligible and monthly payments will be greatly reduced to a point where their mortgage payment fits into their budget.
This program has the potential to make great strides in helping both the lenders as well as the homeowners, and seventy five billion dollars has been allotted for it. It not only is it designed to reduce personal debt, but it also helps in alleviating the stress that homeowners facing potential ruin are feeling.
Are you eligible?
Due to the massive number of homeowner’s and the fact that most lenders are not adequately staffed, now is the time to jump in and get help in paying down your mortgage. It will help you avoid foreclosure and the credit issues that will haunt you for the next several years. There are guidelines put into place that will let you know if you qualify for the home affordable modification program.
One of the biggest factors will be when your mortgage started. Any home mortgage that originated before January 1, 2009 may be eligible.
Another major stipulation to being in this program is that your home has to both owner occupied and your primary residence. If the subject property in non-owner occupied, has someone else residing in the home and paying you rent then you cannot qualify for this modification. Your home also has to be the place that you currently live. The best way to prove this fact during the application process is by simply showing a piece of mail that has a recent date, your name, and address.
Your monthly income must meet specific guidelines as does your current unpaid mortgage balance. It is important to speak with a professional before applying for help.
There will likely be a short but thorough verification process where all of your income, assets and expenses will be scrutinized. Be sure that you claim every asset that you have and practice full honesty during the entire process. Lying about any of these issues will get you into trouble at some point during the application process and could cause you to be declined from the program later on.
Don’t worry about not qualifying in case you are in the midst of a bankruptcy filing. This will not necessarily be a deal breaker for you. The important thing is that you are truthful and that you disclose all of the details during the application process.
The program will be ending the end of December 2012, but all payments will continue for several months after the finish.
It is important to mention that the government is currently giving an incentive payment that encourages applicants during the initial process. A definite bonus for those who have found themselves strapped financially.
The home affordable modification program is a great way to get a boost on your home mortgage payments. It will not only help you with reduced mortgage payments, but also keep your home from being foreclosed.
Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.
The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac.A Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan to-value ratios above 80%.A Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
GSE lenders and servicers already have much of the borrowers information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary.A This flexibility will make the refinance quicker and less costly for both borrowers and lenders.A The Home Affordable Refinance program ends in June 2010.
The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.A Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications.A This program will work in tandem with an expanded and improved Hope for Homeowners program.
With the information now available, servicers can begin immediately to modify eligible mortgages under the Modification program so that at-risk borrowers can better afford their payments.A The detailed guidelines (separate document) provide information on the following:
Eligibility and Verification
- Loans originated on or before January 1, 2009.
- First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
- All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
- Property owner occupancy status will be verified through borrower credit report and other
documentation; no investor-owned, vacant, or condemned properties.
- Incentives to lenders and servicers to modify at risk borrowers whohave not yet missed payments when the servicer determines that theborrower is at imminent risk of default.
- Modifications can start from now until December 31, 2012; loans can be modified only once under the program.
Loan Modification Terms and Procedures
- Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.
- Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent.A The NPV test will compare the net present value of cash flows with modification and without modification.A If the test is positive meaning that the net present value of expected cash flow is greater in the modification scenario the servicer must modify absent fraud or a contract prohibition.
- Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and re-default rate assumptions.
- Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).
- The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal.A Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
- The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowners association and/or condominium fees.A Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.
- Servicers must enter into the program agreements with Treasury’s financial agent on or before December 31, 2009.
Payments to Servicers, Lenders, and Responsible Borrowers
- The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.
- Servicers that modify loans according to the guidelines will receive an up-front fee of $1,000 for each modification, plus pay for success fees on still-performing loans of $1,000 per year.
- Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.
- The program will provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.
- The program will include incentives for extinguishing second liens on loans modified under this program.
- No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasurys financial agent.
- Similar incentives will be paid for Hope for Homeowner refinances.
Transparency and Accountability
- Measures to prevent and detect fraud, such as documentation and audit requirements, will be central to the program.
- Servicers will be required to collect, maintain and transmit records for verification and
compliance review, including borrower eligibility, underwriting, incentive payments, property verification, and other documentation.
- Freddie Mac will audit compliance.
President Obama announced a housing rescue plan in the state of Arizona in the town of Meza whereby more than half the homes on sale are facing foreclosure.
Lynn Murtagh a real estate broker who works for that Coldwell Banker Residential in Mesa said that 25% of the 3149 homes put up for sale are owned by banks. They are either repossessions or properties given back by borrowers who were not able to pay up their mortgage.
The number of homes up for short sale that is those sold at a lesser value is approximately 27%. This means that more than 50 % of houses on the market are distressed properties.
The Phoenix metro area has seen a rise in foreclosures and more than 6% have received a foreclosure filing during the year according to RealtyTrac. In the month of January alone according to current foreclosure statics, there were 1,079 foreclosures; this represents a 33% rise a year earlier and a staggering 318% rise from the same month in 2007.
Earlier in this decade, the whole area of Phoenix experienced rapid growth in real estate due to an increase in population and realtors from high priced places like California looked to spread out. Investors enriched themselves back then since prices for homes appreciated. According to a report by the National Association of Realtors, the average real estate prices in the fourth quarter of 2005 were close to 50% higher than in the year 2004.
Since that period however, the prices of homes in Mesa have dropped drastically. Price declines in several neighbourhoods are very severe. An example given by Murtagh is whereby people bought homes for about $225,000 in the year 2005 and they have now listed the same properties for $75,000.
Many recent home owners are now in a tight fix in their mortgages since they owe more than their homes are actually worth. This makes them increasingly vulnerable to foreclosure. During the housing boom, according to Murtagh, many Mesa home buyers opted for exotic mortgage products such as adjustable rate mortgage (ARMs), hybrid ARMs, no-doc loans and interest only loans which are now failing at an alarming rate. Many foreclosures are as a result of these unmanageable mortgages due to predatory lending and falling property prices than from the global economic crisis.
Job losses in the area have resulted in people falling back on their mortgages since many residents were employed in the housing industry either as construction workers or sales persons and other fields reliant on home sales. Murtagh is of the opinion that if the job losses could be stemmed, then many people would be able to stop foreclosure and keep their homes.
The news that three of the most known national banks have temporarily stopped foreclosing on defaulted home loans has made more than a few families breathe a small sigh of relief. Everyone seems to be counting on the Obama administration to reverse the current economic decline, and these large banks are no exception. Although this respite will only buy the homeowner facing foreclosure about one more month, it may be enough time to stop foreclosure altogether.
People behind on mortgage payments can take certain steps to stop foreclosure. If you fall into this category, and your house is on the market, here are some things to consider:
1) Make sure that your house is priced competitively. If you have equity in your home, and are facing foreclosure, you have the opportunity to adjust your selling price. The current market is a buyer’s market, and buyers know it. They are looking for the best value for their money. Too often homeowners are blinded by the price they paid for their home, which was purchased in a seller’s market at too high of a price. Be realistic about what you can expect to receive for your home.
2) Insist on holding numerous open houses. Now, understand that this is not for the purpose of finding a buyer. Most open houses do not result in the sale of the home. Your open houses are one of your most valuable tools because they provide feedback. You need to know why your home is not selling. Price, location, layout, or decor can all be factors.
3) Once you know how people feel about your home, change it. Resist the temptation to become angry or hurt, accept the advice as it is, and make changes. After you have painted, cleaned, fixed landscaping, or corrected the issues people have mentioned, hold another open house. Repeat, repeat, and repeat this process. Sometimes all it takes is a coat of fresh paint and moving some furniture around to change how your home is perceived.
4) Make sure your home is listed online, advertised heavily, and has color fliers complete with a lot of pictures. Everyone has to know your home is a great value for the money and why. Let everyone know you are willing to make changes for the buyer. A "seller comments" page is an excellent tool, and you can describe things you have updated or changed based on prospective buyer feedback. This lets your new buyers know that they can work with you.
5) Get together your mortgage payments as best you can. Look around your home and start selling. Ebay can be a great tool to make some fast cash. Accept the fact that you will have to take a loss on the things you sell, and decide which things you don’t really use or need. If you can put together a few mortgage payments, you may be able to negotiate your momentary respite into a longer one, and sell your home in the meantime.
6) Consider alternatives to a straight sale. Some investors will purchase your home for the price of the remainder of your loan, and rent it back to you. This lowers your payments so you may stay in the home. Try renting rooms out yourself, or the basement. This might give you the income you were lacking.
Pre-foreclosure sales tend to attract investors and first time homebuyers, both of whom like to see an interested homeowner who is actively seeking to sell or rent their home. Take the time the banks are offering to try to make the necessary changes that will make your home sell.
It appears that some people are getting the promised benefits out of the various stimulus, recovery, and bailout plans that the government has passed in the last year. Though the government of California has been having an immeasurable amount of economic trouble lately, the state’s citizens are getting a small amount of recovery.
There were only 14,351 foreclosures in the state of January in California, as opposed to 20,952 foreclosures the month before. This number of foreclosures was the highest of any state in the entire country, but not the most per capital.
Nationwide, foreclosures are down by more than a quarter between the last two months. Despite these numbers, however, this may not be due only to a moderate recovery in the economy, as Fannie Mae and Freddie Mac both have a moratorium on foreclosures (and they own fifty percent of the United State’s mortgages), which has a big effect, completely separate from the strength of the market.
Furthermore, some commercial banks have agreed to do this as well.
Many banks are allowing consumers to change the terms of their mortgages, which can seriously hurt the banks’ balance sheets, and pumps up these numbers in an artificial way. This process is called Loss Mitigation.
Finally, the California senate has implemented a law recently, which may have had a large effect, that requires any lender to contact a homeowner before they are permitted to begin any type of foreclosure proceedings.
In today's society, switching services can mean costing you more money. Everywhere companies have taken this business model and turned it into a reputable way to do business.
Companies are protecting themselves by selling you a cheaper upfront service, for your long-term business. In practicality this sort of commitment is a fair practice. But at what point to you does it overstep the lines of fair business? After all, free market capitalism is what we have long built our economy on.
Bankers everywhere are using contracts to keep you held down from searching for the most competitive price. They use penalties or a break funding penalty to keep people from breaking off their current agreement or mortgage. This can mean a very large sum of money by you the borrower.
Some banks are different but the typical bank wants three to six months of interest on a one to two year fixed rate loan. This means that a thirty year loan will be costing you additional interest payments just to break your agreement.
That is a lot of cash!
At what point does this simple practice teeter the unfair business practices?
The mortgage problem and foreclosures are very bad in the United States right now.Jobs are getting lost, home prices are falling, and the credit crunch is showing the horror of poorly taken and given investments and loans. According to the Foreclosures Canada Information Systems, there have been more foreclosures since November as in the six months before that, and and this is definitely getting worse.
The problem is confirmed by many other sources, including many of the banks falling victim.
Calgarians and Albertans are having an especially bad time of it. Calgary alone, a very small area, has more than 125 homes that are in the foreclosure process right now. It appears that much of the market is under water, and that everybody is falling victim.
In the past, few people who lost their job or had a drug or alcohol problem were foreclosed upon, many banks are finding that they must foreclose upon everybody. Many Realtors are finding that as much as fifteen percent of their business is now in helping banks to sell all of those homes that they find on their hands.
Given the state of the current financial crisis, the House Financial Services Committee Chairman Barney Frank has asked many of the major banking companies to voluntarily put a moratorium on foreclosing on occupied homes.
In addition, the government has already placed such a moratorium on Fannie Mae and Freddie Mac, which has had a large positive impact through the month of January. This moratorium is also widely supported in the Office of Thrift Supervision.
The government expects that 90% of the banks will decide to put this moratorium in place, but has no plan for this and has no actual control. In addition, at least $50 billion of the final bailout money will be used to prop up foreclosures. Because of the small moratorium that is in place so far, foreclosures have already been cut by at least 26% in January, however, this is only because Fannie Mae and Freddie Mac are government controlled and, therefore, can be forced to do no foreclosures, which the government cannot do to any of the public banks, even under the current bailout rules.
This is likely to change when the next part of the bailout funds are released.
The unprecedented recession in the world economy today seems to have hit every nation badly, though the percentage or the extent of damage may vary in each case. First it was believed that only the stocks were falling and the repercussions thereof would be redressed soon. But, as a wider panorama unfolded itself, it was discovered that not just finance companies but others too would face the cascading effect of the meltdown. Then followed housing loans and mortgages fiasco, credit card disillusionment’s, mortgage foreclosures in order to meet rising insecurities in the employment arena, so on and so forth.
Now, the bigger picture of the global meltdown is emerging. Mammoth commercial complexes that once housed hundreds of commercial establishments and looked unshakable, are slowly losing their clients who are moving to more affordable areas as cost cutting measures. Holding on to the prestigious address and location sheen seems to wearing off in the face of stark realities like layoffs and absence of contingency plans.
Landlords who once ruled the estate market are now pondering and are offering newer and attractive rebates to retain existing tenants. Vornado Realty Trust who apparently offered 10 months’ free stay to a tenant threatening to move out of One Penn Plaza at Manhattan is a case in point.
Another heart rending tale is that of 60-storeyed John Hancock Tower at Boston, the tallest building in New England, which has suffered heavy loss on account of severe fall in real estate price. The fact that it is being auctioned soon poses a very grim picture of the sad reality. The steep fall in its price from $1.3 billion to $700-900 million according to Associated Press, is shocking, to say the least.
According to Mark Goldman of San Diego State University, "a storm is brewing" in the commercial real estate industry and it is not just a storm in the tea cup as the adage goes.
No doubt, every company would want to carry a posh address on its card, but the sooner the harsh economic realities are confronted with , the better it would be for the survival to lend some semblance of balance to the current picture.
Obama plan holds off on foreclosure rescue details. Obama said he would announce his housing strategy in the coming weeks. Meanwhile, home prices are not expected to hit bottom until year-end at the earliest.
Americans are hoping President Barack Obama will have more success, especially as foreclosures continue to grow. A Credit Suisse report published late last year forecast up to 10 million foreclosures by 2012, depending on the severity of the recession.
The Obama administration is expected to back a push in Congress a opposed by the mortgage industry a to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.
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