The discussion in our last post centered around the impact mortgage modification and loan restructuring applications are having on both the Service Provider/Banks, and on the Homeowner applicant as well.
As the time for foreclosure sale draws nearer homeowners are becoming increasingly concerned that their applications for mortgage modification will not be processed by their Banks before that time expires. At the same time the Banks, short staffed as they are because of recent layoffs, are also concerned that if they are unable to approve these applications in time, they will end up landlording vacant,vandalized and deteriorating buildings.
Some banks are simply overwhelmed and are failing at this. Some homeowners just do not qualify for mortgage modification or loan restructuring, even if they were lucky to get their applications processed prior to the foreclosure deadline. The result - more foreclosed properties entering a market already saturated with homes declining in value.
According to a report today by NPR.org "U.S. home prices fell an average of 19 percent in January from an year earlier....." Foreclosures, said the report "...and a hefty backlog of unsold houses continued to glut the market..." This situation may well be exacerbated by the actions of some Loan Servicers/Banks, who according to a report yesterday by the New York Times, are walking away "themselves", my quote, "on foreclosures".
The Times report, authored by Susan Saulny, quoted Larry Rothenberg, a lawyer for Weltman,Weinberg & Reis as saying "The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders decisions to walk away."
Not only have homeowners been walking away and abandoning their homes - now the banks are also participating in the act, according to the New York Times report - Is this a good thing for the homeowner? No! They still owe the Banks on the mortgage note - they are still obligated to make payments on the note - they are still hurting... and the Banks? Are they helping...I don't think so... What do you think?
Tuesday, March 31, 2009
Monday, March 30, 2009
Home Loan Mortgages: Who is Helping - Who is Hurting
Statements coming from mortgage industry watchdogs, around the nation, indicate that all is not well for homeowners, faced with foreclosure needing to restructure and modify their mortgages. Banks and Loan Servicers are experiencing a backlog of mortgage modification applications as an ever increasing number of homeowners queue up to participate in the government supported program. Banks and Loan Servicers had only recently downsized their staffs in their efforts to stay afloat.
As Loan Servicers struggle to keep up with the increasing volume of applications, and their desire not to end up playing landlord for vacant, vandalized and deteriorating properties, the focus seem to be to assist the most troubled of homeowners - those with the sub prime loans. This development places prime borrowers on a slower track to mortgage modification and loan restructuring.
According to report by Paul Jackson, writing in housingwire.com,"During February, 39.7 percent of loan workouts for prime borrowers were loan modifications; in contrast 66.5 percent of subprime workouts were loan modifications ."
This situation does not augur well for the homeowner who is running out of time or the Loan Servicer who may end up doing exactly what they are not qualified or want to do - landlording vacant, vandalized and deteriorating properties.
Our next post will look at the impact this development is having on both the homeowner and the Loan Servicer Banks.
As Loan Servicers struggle to keep up with the increasing volume of applications, and their desire not to end up playing landlord for vacant, vandalized and deteriorating properties, the focus seem to be to assist the most troubled of homeowners - those with the sub prime loans. This development places prime borrowers on a slower track to mortgage modification and loan restructuring.
According to report by Paul Jackson, writing in housingwire.com,"During February, 39.7 percent of loan workouts for prime borrowers were loan modifications; in contrast 66.5 percent of subprime workouts were loan modifications ."
This situation does not augur well for the homeowner who is running out of time or the Loan Servicer who may end up doing exactly what they are not qualified or want to do - landlording vacant, vandalized and deteriorating properties.
Our next post will look at the impact this development is having on both the homeowner and the Loan Servicer Banks.
Wednesday, March 25, 2009
HOME LOAN MORTGAGES: The Jumbo Question
We have been discussing, in the past couple of postings, the increased opportunities available today, for home owners and those in the market to buy a home, to get the needed financing they seek.
These opportunities emanate from Washington's continued efforts to free up credit and make it possible for home owners in jeopardy of loosing their homes to refinance, restructure or modify, in some manner, the mortgages they now have. On a parallel track rides the opportunity for first time home buyers to get into their first home, taking advantage of Washington's initiatives and credits.
For the most part, however, only conventional loans are available, as the funding of these mortgages will be backed up by Fannie Mae and Freddie Mac. Those whose loans are larger than $625,500 cannot participate, leaving tens of thousands of Americans out in the cold, as mortgages of $625,501 plus are beyond the legal ceiling of both Fannie Mae and Freddie Mac. That limit was upped in 2008 ,only temporarily to $729,750.
This development has relieved the stress in many households across the country. It appears, according to a report in the Los Angeles Times by Kenneth R. Hamey, of 03/22/2009 "new money is about to flow into an area of the real estate market that has been hard-squeezed by the credit crisis..." The report informs that the country's largest mortgage lender, Bank of America, "...is rolling out large program to finance loans between $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range."
This will be done through the Bank's retail network, it acquired last year, Countrywide Home Loans, which the report goes on to inform, is soon to become Bank of America Home Loans. It is reported that other lenders are seriously considering following in the footsteps of B of A, providing portfolio loans to buyers and homeowners in need of larger-than-Fannie-Freddie-FHA Loans.
What the guidelines for qualification in these Jumbo Loan programs will be, is yet to be ascertained. How much down payment will be required, what are the requirements for reserves, maximum loan amount,FICO, DTI etc., etc.
These variables notwithstanding, the supply of Jumbo financing entering the marketplace can only be viewed as a positive.
These opportunities emanate from Washington's continued efforts to free up credit and make it possible for home owners in jeopardy of loosing their homes to refinance, restructure or modify, in some manner, the mortgages they now have. On a parallel track rides the opportunity for first time home buyers to get into their first home, taking advantage of Washington's initiatives and credits.
For the most part, however, only conventional loans are available, as the funding of these mortgages will be backed up by Fannie Mae and Freddie Mac. Those whose loans are larger than $625,500 cannot participate, leaving tens of thousands of Americans out in the cold, as mortgages of $625,501 plus are beyond the legal ceiling of both Fannie Mae and Freddie Mac. That limit was upped in 2008 ,only temporarily to $729,750.
This development has relieved the stress in many households across the country. It appears, according to a report in the Los Angeles Times by Kenneth R. Hamey, of 03/22/2009 "new money is about to flow into an area of the real estate market that has been hard-squeezed by the credit crisis..." The report informs that the country's largest mortgage lender, Bank of America, "...is rolling out large program to finance loans between $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range."
This will be done through the Bank's retail network, it acquired last year, Countrywide Home Loans, which the report goes on to inform, is soon to become Bank of America Home Loans. It is reported that other lenders are seriously considering following in the footsteps of B of A, providing portfolio loans to buyers and homeowners in need of larger-than-Fannie-Freddie-FHA Loans.
What the guidelines for qualification in these Jumbo Loan programs will be, is yet to be ascertained. How much down payment will be required, what are the requirements for reserves, maximum loan amount,FICO, DTI etc., etc.
These variables notwithstanding, the supply of Jumbo financing entering the marketplace can only be viewed as a positive.
Monday, March 23, 2009
HOME SALES INCREASE:Home Shoppers Are Buying
In our most recent posting we discussed the opportunities presented to those shopping for a new home, as against those homeowners wanting to take advantage of lower mortgage rates and refinance their mortgages. We saw that due to the abundance of homes, the low value of the homes and low interest rates, that those in the market for a home was presented with a better opportunity to own a home, than those needing to refinance a home which was loosing value.
According to reports out today, sales of existing homes for last month,February, rose by 5.1%, the largest, according to these reports, in 6 years. Sales grew to an annual rate of 4.72 million last month, according to the National Association of Realtors, from 4.49 million for the month of January.
Even though the sales figures do not yet reflect the $8,000 tax credit, put in place to attract first-time home buyers, it is noted that first-time home buyers comprised more than half of all purchases. This is seen to be a good thing and a positive for the future of the economy which is still the primary concern of the new administration in Washington, and of all Americans - and the world, for that matter.
In the shadows, however, remains the homeowner who is having a difficult time taking advantage of the new lower mortgage interest rates, as their homes continue to decline in value; and as unsold homes in the market, themselves, rose some 5.2% for the same period. This means that inventories of unsold homes continue to be high.
Not before or until these unsold homes begin to decrease, will prices begin to stabilize. Not before a stabilization and an eventual upward movement in prices, will value begin to stabilize and move upward. Those home owners unable to modify or restructure their mortgages during this time will continue to hurt.
The hope for them is that the$1.2 trillion that the Federal Reserve has injected into the economy purchasing mortgage-backed securities and Treasury debt, along with the Central Bank's doubling its purchases of debt issued by Fannie and Freddie to $200 million , could expedite the process of slowing the increase of foreclosed homes coming onto the market, curbing the loss of home values, facilitating credit opportunities and developing once again a dynamic housing industry. This then, will create the environment homeowners will need to refinance their mortgages.
According to reports out today, sales of existing homes for last month,February, rose by 5.1%, the largest, according to these reports, in 6 years. Sales grew to an annual rate of 4.72 million last month, according to the National Association of Realtors, from 4.49 million for the month of January.
Even though the sales figures do not yet reflect the $8,000 tax credit, put in place to attract first-time home buyers, it is noted that first-time home buyers comprised more than half of all purchases. This is seen to be a good thing and a positive for the future of the economy which is still the primary concern of the new administration in Washington, and of all Americans - and the world, for that matter.
In the shadows, however, remains the homeowner who is having a difficult time taking advantage of the new lower mortgage interest rates, as their homes continue to decline in value; and as unsold homes in the market, themselves, rose some 5.2% for the same period. This means that inventories of unsold homes continue to be high.
Not before or until these unsold homes begin to decrease, will prices begin to stabilize. Not before a stabilization and an eventual upward movement in prices, will value begin to stabilize and move upward. Those home owners unable to modify or restructure their mortgages during this time will continue to hurt.
The hope for them is that the$1.2 trillion that the Federal Reserve has injected into the economy purchasing mortgage-backed securities and Treasury debt, along with the Central Bank's doubling its purchases of debt issued by Fannie and Freddie to $200 million , could expedite the process of slowing the increase of foreclosed homes coming onto the market, curbing the loss of home values, facilitating credit opportunities and developing once again a dynamic housing industry. This then, will create the environment homeowners will need to refinance their mortgages.
Saturday, March 21, 2009
FED HOLDS RATES: More Buyer Opportunities
This past week the Federal Reserve met, and at the end of their sessions, maintained interest rates at their all-time low. This presents a great opportunity for homeowners who now have a chance to refinance their home mortgages to new lower rates that are now well below 5%.
With the continued decline in home prices, which in many instances, have caused home owners to be upside down on their mortgages, owing more now than the home is worth, it is not believed that there will be many home owners who can take the opportunity to refinance their mortgages.
The decline in property values, however, added to the federal stimulus program that, among other things, provide for certain tax credits for first-time home buyers, is a bonus for buyers. The abundance of readily available properties across the nation, that have been foreclosed, adds to this rare opportunity, where mortgage interest rates are as low as they are and home prices are as low as they are. Its shopping time.
With the continued decline in home prices, which in many instances, have caused home owners to be upside down on their mortgages, owing more now than the home is worth, it is not believed that there will be many home owners who can take the opportunity to refinance their mortgages.
The decline in property values, however, added to the federal stimulus program that, among other things, provide for certain tax credits for first-time home buyers, is a bonus for buyers. The abundance of readily available properties across the nation, that have been foreclosed, adds to this rare opportunity, where mortgage interest rates are as low as they are and home prices are as low as they are. Its shopping time.
Sunday, March 15, 2009
LOAN MODIFICATION:Who Is It Good For? Part III
The fact that a homeowner has not missed a mortgage payment, is not cause for disqualification from Loan Modification. This is so even if the homeowner has little or no equity in the property - they can refinance into a new mortgage with better terms and a lower rate.
Barack Obama's foreclosure prevention plan according to Housing Secretary, Shaun Donovan, "...will help make home ownership more affordable for 9 million American families, and in doing
so, help to stop the damaging impact that declining home prices have on all Americans."
Even though the focus of the program is on those who are behind on their mortgage payments, and those at risk of defaulting, homeowners who have no delinquencies can still qualify if they can show that:
(1) they owe more on the home than it is worth
(2) they have a high mortgage debt compared to their income
(3) they have an increase in expenses, and
(4) they have a decline in income
The Homeowners Stability and Affordability Plan seeks, among other things, to obtain minimal and sustainable mortgage payments for the homeowner. It has set a 31% ratio of gross income to expenses. This is seen as an ideal goal and falls within standard Fannie Mae and Freddie Mac guidelines. The ratio includes taxes, insurance and any applicable Homeowner Association dues.
The thinking is that this should contribute to easing the spiraling momentum of the nation's foreclosure crisis.
Among other requirements that are expected of the homeowner when applying for relief under the plan is:
(1) full disclosure of income
(2) execution of a statement of financial hardship
(3) the primary mortgage must be below $729,000
(4) the homeowner must have obtained the mortgage prior to
January 1, 2009 and
(5) the home must be their primary residence
According to all indications, Washington officialdom is promoting this loan modification plan whenever and wherever. Banks and Loan Servicers are being encourage to participate in the program through various incentives the Federal Government has incorporated in the plan. All homeowners across the nation need to do now, is to call or go into their Bank or Loan Servicer to start their process. Its good for you ... see if you qualify.... visit or make the call...............NOW!!!!
Barack Obama's foreclosure prevention plan according to Housing Secretary, Shaun Donovan, "...will help make home ownership more affordable for 9 million American families, and in doing
so, help to stop the damaging impact that declining home prices have on all Americans."
Even though the focus of the program is on those who are behind on their mortgage payments, and those at risk of defaulting, homeowners who have no delinquencies can still qualify if they can show that:
(1) they owe more on the home than it is worth
(2) they have a high mortgage debt compared to their income
(3) they have an increase in expenses, and
(4) they have a decline in income
The Homeowners Stability and Affordability Plan seeks, among other things, to obtain minimal and sustainable mortgage payments for the homeowner. It has set a 31% ratio of gross income to expenses. This is seen as an ideal goal and falls within standard Fannie Mae and Freddie Mac guidelines. The ratio includes taxes, insurance and any applicable Homeowner Association dues.
The thinking is that this should contribute to easing the spiraling momentum of the nation's foreclosure crisis.
Among other requirements that are expected of the homeowner when applying for relief under the plan is:
(1) full disclosure of income
(2) execution of a statement of financial hardship
(3) the primary mortgage must be below $729,000
(4) the homeowner must have obtained the mortgage prior to
January 1, 2009 and
(5) the home must be their primary residence
According to all indications, Washington officialdom is promoting this loan modification plan whenever and wherever. Banks and Loan Servicers are being encourage to participate in the program through various incentives the Federal Government has incorporated in the plan. All homeowners across the nation need to do now, is to call or go into their Bank or Loan Servicer to start their process. Its good for you ... see if you qualify.... visit or make the call...............NOW!!!!
Thursday, March 12, 2009
LOAN MODIFICATION:Who Is It Good For? Part II
Reduction of principal mortgage balances and lower interest rates are the two primary benefits home owners are hoping for when applying for loan modification and restructuring.
The $75 billion foreclosure prevention program ,which got under way this past Wednesday, dictates that Lenders and Servicers who are participating in the program, lower interest rates to cause mortgage payments to not be greater than 31% of gross household income. A portion of the reduction is expected to be subsidized by the government. Other incentives are also being offered. The principal mortgage balance could also be reduced, sufficiently so, that the 31% threshold is realized.
Contrary to some opinions circulating in the streets, being behind on mortgage payments is not the only criterion the homeowner need have to apply - homeowners who are current on their mortgages, and who have had no late payments, can and should apply for loan modification if they can meet certain of the programs' guidelines.
What these are we will discuss in detail in tomorrows' post.
The $75 billion foreclosure prevention program ,which got under way this past Wednesday, dictates that Lenders and Servicers who are participating in the program, lower interest rates to cause mortgage payments to not be greater than 31% of gross household income. A portion of the reduction is expected to be subsidized by the government. Other incentives are also being offered. The principal mortgage balance could also be reduced, sufficiently so, that the 31% threshold is realized.
Contrary to some opinions circulating in the streets, being behind on mortgage payments is not the only criterion the homeowner need have to apply - homeowners who are current on their mortgages, and who have had no late payments, can and should apply for loan modification if they can meet certain of the programs' guidelines.
What these are we will discuss in detail in tomorrows' post.
Wednesday, March 11, 2009
LOAN MODIFICATION: Who Is It Good For?
$75 Billion is a lot of money at any time, particularly in these austere times. Scheduled for termination sometime toward the end 2012, it is easy then, to understand why everyone wants to get "theirs" before it is all gone.
Part of a larger package of incentives and credits, the $75 Billion is to assist homeowners who are in danger of loosing their homes to foreclosure. Lender banks are encouraged to work with homeowners who apply for loan modification and restructuring. Those banks that participate in the program will be the recipient of financial incentives built into the program. These are to encourage their full participation.
Overwhelmed by the amount of applications, faced with their own internal guidelines, and needing to abide by the guidelines of the program some banks are having a hard time resolving and approving the loan modification applications they receive in a effective and timely manner.
A lot of this has to do with what the program calls for, and what the applicant homeowner has to offer in order to qualify for successful restructuring and modification of their mortgages.
One immediate issue is the 31% threshold of gross household income that the federal program insists on as a qualifying criterion. Faced with diminishing and sometimes irregular income, the increased use of credit cards and other credit instruments, meeting that threshold will be a particular hardship for many.
Tomorrow we will discuss further, other criteria that must me met by the homeowner and the participating bank to confirm and comply with the dictates of the programs' guidelines - hopefully an indept discussion over the next couple of posts will assist all in developing a better understanding of what they need to bring to the table if they are to be successful
Part of a larger package of incentives and credits, the $75 Billion is to assist homeowners who are in danger of loosing their homes to foreclosure. Lender banks are encouraged to work with homeowners who apply for loan modification and restructuring. Those banks that participate in the program will be the recipient of financial incentives built into the program. These are to encourage their full participation.
Overwhelmed by the amount of applications, faced with their own internal guidelines, and needing to abide by the guidelines of the program some banks are having a hard time resolving and approving the loan modification applications they receive in a effective and timely manner.
A lot of this has to do with what the program calls for, and what the applicant homeowner has to offer in order to qualify for successful restructuring and modification of their mortgages.
One immediate issue is the 31% threshold of gross household income that the federal program insists on as a qualifying criterion. Faced with diminishing and sometimes irregular income, the increased use of credit cards and other credit instruments, meeting that threshold will be a particular hardship for many.
Tomorrow we will discuss further, other criteria that must me met by the homeowner and the participating bank to confirm and comply with the dictates of the programs' guidelines - hopefully an indept discussion over the next couple of posts will assist all in developing a better understanding of what they need to bring to the table if they are to be successful
Tuesday, March 10, 2009
FORECLOSURE SALES: Investor Opportunities- Part II
Mortgage Loans are harder to qualify for today than they were a few years ago. Mortgage Rates are lower than they were a few years ago. Credit is now harder to obtain than it was 2 or 3 years ago. Many of the Home Mortgage Loan Programs, available 2-3 years ago have gone away - vanished along with many of the Lenders who provided and promoted them.
This then is the landscape that is Real Estate today.
Into this anguished desolation the Federal Government has come, saturating the environment, with multi billions in cash and programs to revive and resusitate the afflicted. Stimulus programs and tax credits are made available to those in trouble with their mortgages, and for those who would purchase a home at this time.
Taking advantage of the declining prices for houses, Real Estate Investors are crowding Public Auction events and County Courthouses in their effort to make a great deal. At the same time bargain hunting home buyers are experiencing difficulty competing with the seasoned and experienced investor, who by their very activity drive up the price of the property being auctioned. Homebuyers are limited by income, constrained by cash and confined to certain narrow guidelines, to qualify for a mortgage loan sufficient to purchase a home. These buyers complain that they are unable to compete with the investor who arrives at the auctions with a fist full of dollars.
How is this situation to be resolved? Can it be resolved? Should it even be resolved?
To address these questions one must first determine and understand the reasons for the actions of the government in interjecting itself into the situation. If it is accepted that the actions of the government in providing help to those about to loose their homes; and incentives to those who would buy a home at this time, is to harness the runaway train that is the economy today, then we must accept that any purchase of any home, anywhere in the nation, is a good thing.
On the other hand, if you do not believe this to be so, then you need to remove your blinders, talk to your friends and family and check your retirement account.
The experts tell us that the economic problem we are facing today was triggered by an overabundance of bad investments/loans in the housing market, from main Street to Wall Street.
The unprecedented loss of homes to foreclosure excerbated the problem, as the sheer number of foreclosed homes daily coming on the market, dealt a severe blow to value as not evidence is recent times. They tell us that we will only see the bottom of this economic spiral once the flow of foreclosed homes is slowed; and recovery will only begin once homes are being bought up off the market.
So there is a role for all in bringing about the economic recovery - sooner rather than later. In this role the potential buyer is encouoraged to seek out the best and most affordable home to purchase - the tax credit in the stimulus package is, among other things, the incentive to buy a home at this time.
The investor, whether they are buying real estate to hold for the long term, or fixing and flipping for profit, they too, are contributing, if only by cleaning up the blight in our neighborhoods and revitalizing our communities across America -'nuff with the finger pointing already!!!
This then is the landscape that is Real Estate today.
Into this anguished desolation the Federal Government has come, saturating the environment, with multi billions in cash and programs to revive and resusitate the afflicted. Stimulus programs and tax credits are made available to those in trouble with their mortgages, and for those who would purchase a home at this time.
Taking advantage of the declining prices for houses, Real Estate Investors are crowding Public Auction events and County Courthouses in their effort to make a great deal. At the same time bargain hunting home buyers are experiencing difficulty competing with the seasoned and experienced investor, who by their very activity drive up the price of the property being auctioned. Homebuyers are limited by income, constrained by cash and confined to certain narrow guidelines, to qualify for a mortgage loan sufficient to purchase a home. These buyers complain that they are unable to compete with the investor who arrives at the auctions with a fist full of dollars.
How is this situation to be resolved? Can it be resolved? Should it even be resolved?
To address these questions one must first determine and understand the reasons for the actions of the government in interjecting itself into the situation. If it is accepted that the actions of the government in providing help to those about to loose their homes; and incentives to those who would buy a home at this time, is to harness the runaway train that is the economy today, then we must accept that any purchase of any home, anywhere in the nation, is a good thing.
On the other hand, if you do not believe this to be so, then you need to remove your blinders, talk to your friends and family and check your retirement account.
The experts tell us that the economic problem we are facing today was triggered by an overabundance of bad investments/loans in the housing market, from main Street to Wall Street.
The unprecedented loss of homes to foreclosure excerbated the problem, as the sheer number of foreclosed homes daily coming on the market, dealt a severe blow to value as not evidence is recent times. They tell us that we will only see the bottom of this economic spiral once the flow of foreclosed homes is slowed; and recovery will only begin once homes are being bought up off the market.
So there is a role for all in bringing about the economic recovery - sooner rather than later. In this role the potential buyer is encouoraged to seek out the best and most affordable home to purchase - the tax credit in the stimulus package is, among other things, the incentive to buy a home at this time.
The investor, whether they are buying real estate to hold for the long term, or fixing and flipping for profit, they too, are contributing, if only by cleaning up the blight in our neighborhoods and revitalizing our communities across America -'nuff with the finger pointing already!!!
Monday, March 9, 2009
FORECLOSURE SALES: Investor Opportunities
The continuing spate of home foreclosures across the nation is providing an ocean of opportunities for Real Estate Investors who are flocking the Auction Sales as they are being conducted across the nation.
These investors are able to find great bargains at the auctions as the diminished value of homes continue to plummet. Their purpose for purchasing these properties are varied. Some are interested in buying to hold, others are purchasing to whole sale while others are at the auctions seeking to acquire and turn for a quick profit.
The impact, positive or negative, that these investors may be having on the already soft Real Estate market is becoming a topic of discussion for some who feel that genuine home buyers are at a disadvantage because of their seeing inability to compete with the Real Estate Investor who are viewed by many as mere speculators in the marketplace - tomorrow we will look into this school of thought attempting to seek some clarity as to what is or isn't.
These investors are able to find great bargains at the auctions as the diminished value of homes continue to plummet. Their purpose for purchasing these properties are varied. Some are interested in buying to hold, others are purchasing to whole sale while others are at the auctions seeking to acquire and turn for a quick profit.
The impact, positive or negative, that these investors may be having on the already soft Real Estate market is becoming a topic of discussion for some who feel that genuine home buyers are at a disadvantage because of their seeing inability to compete with the Real Estate Investor who are viewed by many as mere speculators in the marketplace - tomorrow we will look into this school of thought attempting to seek some clarity as to what is or isn't.
Sunday, March 8, 2009
NEW HOME BUYING OPPORTUNITIES
The recent Tax Credit of the Federal Government provides great homebuying opportunities for many who before could not otherwise purchase a home.
With home values as low as they are, due to the flood of properties coming on the market as a direct result of foreclosoures, those shopping for homes now have a wonderful opportunity to purchase a home at a great price.
Not only are home prices at an unprecedented low, but so are interest rates - this last, is an added incentive to buy at this time.
The Credit itself is the major incentive for many, as there is no repayment, so long as the buyer meet certain criterion to qualify for the credit, and retains the property as their primary residence for at least 3 years. The Credit of as much as $8,000, depending on the individuals income tax situation will be in the form of a tax refund check from the IRS.
The home buyer will need to qualify as well to meet income and other requirements depending on weather they file as single or a couple, husband and wife - this will determine the amount of the loan they may qualify for. They will also need to meet lenders' guidelines for downpayment, reserves, credit and loan to value and debt to income ratios.
If they could put these together, the chances are that they could qualify to buy a great home at a great price - the opportunity is there as it hasn't been in a very long time.
With home values as low as they are, due to the flood of properties coming on the market as a direct result of foreclosoures, those shopping for homes now have a wonderful opportunity to purchase a home at a great price.
Not only are home prices at an unprecedented low, but so are interest rates - this last, is an added incentive to buy at this time.
The Credit itself is the major incentive for many, as there is no repayment, so long as the buyer meet certain criterion to qualify for the credit, and retains the property as their primary residence for at least 3 years. The Credit of as much as $8,000, depending on the individuals income tax situation will be in the form of a tax refund check from the IRS.
The home buyer will need to qualify as well to meet income and other requirements depending on weather they file as single or a couple, husband and wife - this will determine the amount of the loan they may qualify for. They will also need to meet lenders' guidelines for downpayment, reserves, credit and loan to value and debt to income ratios.
If they could put these together, the chances are that they could qualify to buy a great home at a great price - the opportunity is there as it hasn't been in a very long time.
Saturday, March 7, 2009
FOR THE 1ST TIME HOMEBUYER: A Tale of Two Credits
Raising home foreclosures, falling home values, restrictive and ever tightening mortgage guidelines and a scarcity of Credit compounded the real estate marketplace. Buyers weren't buying and Sellers couldn't sell.
And prices kept falling as the spreading foreclosure epidemic continued its monthly regurgitation of even more homes onto the already saturated marketplace. Yet the bargain hunters were out and about - even too, home buyers seeking to take advantage where an opportunity might exist.
Credit #1
In the waning days (months maybe?) of the Bush Administration, under public pressure to do something the Congress and the White House agreed to a package which included a Credit that would encourage new first time home buyers to go out and buy homes. This was an attempt to reduce the amount of homes that remained on the market depressing home values in the marketplace.
The Housing and Economic Recovery Act of 2008 provided certain incentives for home buyers to get out and start buying homes, among which was a interest free tax credit of $7,500 repayable over 15 years on their tax returns. The home buyer, however, must among other things, be a first time home buyer, and must live the the home for a minimum of 3 years as their primary residence. They also needed to complete their purchase after April 8, 2008 and before January 1, 2009.
Credit #2
In the rising days, literally, of the Obama Administration, The American Recovery and Reinvestment Act of 2009 was passed with a stimulus package providing first time home buyers a credit of $8,000 - this needs not be repaid as long as the home buyer remains in the home for at least 3 years - here, there are also stipulations that needs to be met, similar to the Bush plan.
Caught in the middle of of these two Credits, homeowners who bought before January 1, 2009 are somewhat frustrated that they need to repay their "loan" while those who qualify under the Obama plan, get not only a credit of $500 more, but they wont have to repay it as long as they abide by the stimulus guidelines. Many are hoping that there may be a relaxing of the rules, or new legislation that will give them the same benefits as the more recent stimulus package, but that does not seem likely.
And prices kept falling as the spreading foreclosure epidemic continued its monthly regurgitation of even more homes onto the already saturated marketplace. Yet the bargain hunters were out and about - even too, home buyers seeking to take advantage where an opportunity might exist.
Credit #1
In the waning days (months maybe?) of the Bush Administration, under public pressure to do something the Congress and the White House agreed to a package which included a Credit that would encourage new first time home buyers to go out and buy homes. This was an attempt to reduce the amount of homes that remained on the market depressing home values in the marketplace.
The Housing and Economic Recovery Act of 2008 provided certain incentives for home buyers to get out and start buying homes, among which was a interest free tax credit of $7,500 repayable over 15 years on their tax returns. The home buyer, however, must among other things, be a first time home buyer, and must live the the home for a minimum of 3 years as their primary residence. They also needed to complete their purchase after April 8, 2008 and before January 1, 2009.
Credit #2
In the rising days, literally, of the Obama Administration, The American Recovery and Reinvestment Act of 2009 was passed with a stimulus package providing first time home buyers a credit of $8,000 - this needs not be repaid as long as the home buyer remains in the home for at least 3 years - here, there are also stipulations that needs to be met, similar to the Bush plan.
Caught in the middle of of these two Credits, homeowners who bought before January 1, 2009 are somewhat frustrated that they need to repay their "loan" while those who qualify under the Obama plan, get not only a credit of $500 more, but they wont have to repay it as long as they abide by the stimulus guidelines. Many are hoping that there may be a relaxing of the rules, or new legislation that will give them the same benefits as the more recent stimulus package, but that does not seem likely.
Wednesday, March 4, 2009
LOAN MODIFICATION: Game On
As was stated the $75 billion Mortgage Refinance and Modification Plan, promised by President Obama, was launched today by the Treasury Department. It is estimated that some 9 million homeowners will be benefitted by the program.
With today's launch homeowners will now be able to immediately take advantage, as according to the Treasury Secretary, the program is designed in such a way as to allow for immediate modifications.
Only homeowners who live in their own homes will be eligible to participate in the program. Also homeowners whose loans are owned or secured by Fannie Mae or Freddie Mac should be able to qualify for the program. Homeowners must also show that they will be able to pay for the new loan once modified. The loan amount amount must also meet Frannie and Freddie Guidelines which means that $417,000 is the maximum.
The program will not consider investment properties, non-owner occupied properties or those homeowners who is seen to have knowingly purchased risky loans. That means sub-prime snd private investor loans will not qualify.
With today's launch homeowners will now be able to immediately take advantage, as according to the Treasury Secretary, the program is designed in such a way as to allow for immediate modifications.
Only homeowners who live in their own homes will be eligible to participate in the program. Also homeowners whose loans are owned or secured by Fannie Mae or Freddie Mac should be able to qualify for the program. Homeowners must also show that they will be able to pay for the new loan once modified. The loan amount amount must also meet Frannie and Freddie Guidelines which means that $417,000 is the maximum.
The program will not consider investment properties, non-owner occupied properties or those homeowners who is seen to have knowingly purchased risky loans. That means sub-prime snd private investor loans will not qualify.
Tuesday, March 3, 2009
HOME LOAN MORTGAGES:Homeowner Affordability & Stability Plan Starts Tomorrow
Barack Obama's initiative to help homeowners stave off foreclosure begins tomorrow, March 4, 2009. Referred to formally as The Homeowner Affordability & Stability Plan, it provides hope for many across the nation who view it as possibly their last if not only chance to protect their homes.
This $75 billion foreclosure prevention program is also being criticized by some who feel it is not the right way to go. They point to reports that suggest nearly half of borrowers who had their loans adjusted in 2008, fell behind again, on their payments, 6 months later. These critics feel that if the banks are not adjusting the loans sufficiently lower, then the borrower has not received any help - it is just "a short term fix", they argue.
According to CNNMoney.com CitiMortgage announced today that unemployed homeowners whose houses are financed by CitiMortgage may be eligible to have their mortgages "temporarily" (quotation is mine), reduced to $500 a month.
The report go on to say that Sanjiv Das, CitiMortgage's President and CEO told CNN Radio that "We're planning to help recently unemployed homeowners by giving them the ability to pay as little as $500 a month on their mortgage, which in effect is less than the price of a one-bedroom rental nationally". Borrowers, the report say are covered by the program for 90 days when they submit documents proving they are recent recipients of State unemployment benefits. Extensions are possible, Das told the radio station, after the expiration of the 90 days, depending on the homeowners' situation.
Nonetheless, there are optimisms for the program, which calls for loan servicers to lower borrowers' interest rates to 31% of their gross income. The government, it is understood, will subsidize part of the reduction, as well as kick in incentives to encourage servicers, borrowers and mortgage investors to participate .
This $75 billion foreclosure prevention program is also being criticized by some who feel it is not the right way to go. They point to reports that suggest nearly half of borrowers who had their loans adjusted in 2008, fell behind again, on their payments, 6 months later. These critics feel that if the banks are not adjusting the loans sufficiently lower, then the borrower has not received any help - it is just "a short term fix", they argue.
According to CNNMoney.com CitiMortgage announced today that unemployed homeowners whose houses are financed by CitiMortgage may be eligible to have their mortgages "temporarily" (quotation is mine), reduced to $500 a month.
The report go on to say that Sanjiv Das, CitiMortgage's President and CEO told CNN Radio that "We're planning to help recently unemployed homeowners by giving them the ability to pay as little as $500 a month on their mortgage, which in effect is less than the price of a one-bedroom rental nationally". Borrowers, the report say are covered by the program for 90 days when they submit documents proving they are recent recipients of State unemployment benefits. Extensions are possible, Das told the radio station, after the expiration of the 90 days, depending on the homeowners' situation.
Nonetheless, there are optimisms for the program, which calls for loan servicers to lower borrowers' interest rates to 31% of their gross income. The government, it is understood, will subsidize part of the reduction, as well as kick in incentives to encourage servicers, borrowers and mortgage investors to participate .
Monday, March 2, 2009
HOME LOAN MORTGAGES: A Time To Hold Or A Time To Fold
As some homeowners loose their homes, involuntarily, to their Mortgage Lender, others are doing everything and most anything they can to hold on to their American Dream; wishing and hoping that things will get better in time to save their homes from foreclosure.
According to a piece in USA Today recently,"foreclosure filings surpassed 3 million in 2008..." At a rate of approximately 61,000 a day, according to other reports, many homeowners have little hope that events, planned and unplanned, will develop in time to protect their homes from foreclosure action sale.
The President, himself made it clear that," not everyone will be helped... not all homes will be saved " So it's for the homeowner to determine, from information available, if their mortgages can be restructured or modified, and if not, what then are their options.
This Blog has learned that the Mortgage Lenders (Banks), who are accepting Loan Modification and Loan Restructuring Applications, appear to be giving priority's to the more terminal mortgages - homeowners who have missed payments, received Notices of Default, and those who have received Foreclosure Sale Notices,have become the priority.
Homeowners who are still current with their mortgage payments,but for whom finances may have tightened, due to reduced income from fewer hours at work or the loss of a spouses' employment, will have to wait in line. The concern of these homeowners is 'time' - will they get their application approved for modification in time before they are forced to miss their mortgage payments? Will the spouse get another job in time to prevent a missed mortgage payment. Will the other spouse be able to hold unto their employment to give the Loan Modification Application time to be processed and approved?
And what about homeowners whose Loan Modification Applications are getting the first consideration due to their more dire situation? It is understood that priority treatment is not at all an indication of success for their application. They need to prove their ability to successfully make their mortgage payments going forward. If they are unable to satisfy the Banks that they have that capacity, they may not be approved for loan modification and restructuring.
No one knows better than the homeowners themselves, their income and financial circumstances. With the right advice from accredited and honest professionals they could save themselves undue stress and worry by making the right decision going forward -To use a couple cliches - there are times we all need to take a step back in order to take two forward... we sometimes need to know just when to hold them... or when to fold them.
According to a piece in USA Today recently,"foreclosure filings surpassed 3 million in 2008..." At a rate of approximately 61,000 a day, according to other reports, many homeowners have little hope that events, planned and unplanned, will develop in time to protect their homes from foreclosure action sale.
The President, himself made it clear that," not everyone will be helped... not all homes will be saved " So it's for the homeowner to determine, from information available, if their mortgages can be restructured or modified, and if not, what then are their options.
This Blog has learned that the Mortgage Lenders (Banks), who are accepting Loan Modification and Loan Restructuring Applications, appear to be giving priority's to the more terminal mortgages - homeowners who have missed payments, received Notices of Default, and those who have received Foreclosure Sale Notices,have become the priority.
Homeowners who are still current with their mortgage payments,but for whom finances may have tightened, due to reduced income from fewer hours at work or the loss of a spouses' employment, will have to wait in line. The concern of these homeowners is 'time' - will they get their application approved for modification in time before they are forced to miss their mortgage payments? Will the spouse get another job in time to prevent a missed mortgage payment. Will the other spouse be able to hold unto their employment to give the Loan Modification Application time to be processed and approved?
And what about homeowners whose Loan Modification Applications are getting the first consideration due to their more dire situation? It is understood that priority treatment is not at all an indication of success for their application. They need to prove their ability to successfully make their mortgage payments going forward. If they are unable to satisfy the Banks that they have that capacity, they may not be approved for loan modification and restructuring.
No one knows better than the homeowners themselves, their income and financial circumstances. With the right advice from accredited and honest professionals they could save themselves undue stress and worry by making the right decision going forward -To use a couple cliches - there are times we all need to take a step back in order to take two forward... we sometimes need to know just when to hold them... or when to fold them.
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