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HOMEBUYER TAX CREDIT:Extended & Expanded

Last Friday President Obama signed into law legislation that in effect not only extended,but expanded the tax credit first time home buyers have been accessing.The legislation,to extend unemployment benefits to workers makes it possible,as well, for a vast increase in the number of people who can now qualify for home buyer credits as income limits has been appreciatively increased.
The extension which now lasts through April 2010 has been expanded to now include current homeowners as well. Under the expanded program Americans who presently own a home may qualify for as much as $6500 tax credit when they buy a new home during the life of the program (military personnel serving overseas have more time).Homeowners who choose to participate in the expanded program need not sell their current homes,they are however,required to live in the new home as their primary residence for not less than three years after purchase.
This new but expected development is seen as an added boost for the US housing and mortgage markets,coming at a critical juncture in time,to further energize the national housing and mortgage industries.

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MORTGAGE LOANS: What AboutThose Seconds?

I was talking with Rhonda, remember her? She is the lady in my office who makes things happen...she is like that...she makes things happen - things gets done! Anyhow,as usual we were talking about the economy (who isn't?),and its impact on our industry,the mortgage/housing industry. I was in the process of delivering my analysis of how I saw events developing over the next 12-24 months in the industry....you know....the usual....home value....interest rates....credit availability, etc., etc.

Last Thursday I attended a seminar conducted by Wells Fargo Bank, here in Los Angeles. Wells Fargo needed to inform its Broker Correspondents,who originate Home Loans with them of how they intend to participate in the Freddie Mac Relief Refinance Mortgage program and the Fannie Mae DU Refi Plus program. These programs are the brainchild of the Obama Administration, in its continued efforts to stem the tide of foreclosures across the nation.

These programs, all conforming loans,however,does not consider second trust deeds. Wells Fargo and other financial/lending institutions participating in the program are not allowed to consider second mortgages under this refinance program - for both Fannie and Freddie Total Loan To Value (TLTV) is unlimited. The first trust deed, however may be refinanced up to 105% of value (LTV),with certain restrictions attendant.

Borrowers, I was about to explain to Rhonda are allowed to bring in their own funds, even gift funds,if their Loan To Value (LTV) on their first is greater than 105%....as if she did not hear my words.... and I know she did....the lady went straight to her point.....but Erle, she said...what about those seconds... all those seconds that are coming to the end of their term...those seconds on the jumbo loans...what happens when those rates go up? I don't know Rhonda! Are you thinking that we will see another series on foreclosures, in the jumbo market? That's what you now have me thinking....yes,indeed! What about THOSE Seconds...oh!boy...help me Rhonda, help.... help me.... Rhonda.

LOWER MORTGAGE RATES: The Bernanke Factor

"Americans are taking advantage of interest rates near record lows to trim monthly mortgage payments as mounting job losses and plunging wealth pinch household budgets. Policy steps to cut foreclosures and unclog credit markets may ease the housing slump and help revive economic growth later this year."Shobhana Chandra,April 22 (Bloomberg).

Two other Bloomberg writers, Brian Louis and Kathleen M. Howley in their piece published two days ago, quoted Robert Edelstein, a professor at the Haas School of Business at the University of California, Berkeley as saying "Home loans may go as low as 4 percent if the economy worsens." "Record foreclosures,falling home prices and an economy that has lost 5.1 million jobs since December 2007 will pressure Bernanke to further reduce borrowing costs."

The two writers noted that "Bernanke, a Harvard-educated student of the Great Depression who spent his 20-year academic career writing and teaching about the
1930s,is using his knowledge of that era to avoid the missteps policy makers made then. He's bringing down mortgage rates,supporting the banking system, and buying back government debt and mortgage-backed securities to relieve the scarcity of credit."

The incredulity of these two - how easily do we forget! One of the first things Bernanke did following his appointment as Fed Chairman was to initiate a series of rate hikes (duh!). What was he thinking about when he was doing that? Where and how did the nation benefit from his "20-year academic career of writing and teaching about the 1930s? How will lower rates - as good as that may be, help the hundreds of thousands of homeowners who are now homeless,indigent,completely ruined. When others were talking about recession all the way back in 2007 where was the professor? who was Chairman of the Board?

The economy is a wreck and those who are charged to ensure good health and well-being failed, and failed miserably.A possible 4 percent mortgage rate is seen to be a good thing, and home owners as well as home buyers should benefit if it ever happens - when this is all over Bernanke should wash his hands and go home.

HOME MORTGAGES: Are Lower Rates In Our Future???

In our last Post, just over a week ago - Tax Day to be exact, we focused on past statements made by Federal Reserve Chairman, Ben Bernanke, and recent utterances of his. We questioned whether his statements about the economy generally, and the housing(mortgage) market specifically, were posturing because of political considerations, as we had seen during and leading up to the general elections toward the end of 2008.

An academic first and foremost, many believed that Bernanke's move from the Ivory Towers of Academia to become Federal Reserve Chairman, enabled him to "experiment" with the theories he lectured about in the classroom. One school of thought is of the opinion that this, in effect, was a contributing factor to much of the economic downturn the country is experiencing today.

It appears that even with the economic stimulus plan - monies to the banks - monies to the auto industry, and to others - the expectations for a quick economic turn a round is not at this time clearly evident. Some liken the situation to a helmsman attempting to turn an aircraft carrier or supertanker - it will happen... but...it takes time.

As the economy is taking some time to turn around, more Americans than ever before, are loosing their jobs, which leads eventually to loosing their homes in foreclosure actions, which brings more homes into an already saturated housing market,further lowering home values contributing to greater losses of equity in homes nationwide impeding the progress of the economy's turn.

Faced with a soaring Budget Deficit,an overburdened Treasury,millions of lost jobs and counting since the start of the recession, what answers has Professor Bernanke for the nation.Some say the answer is, even lower rates - we shall see.

MORTGAGES: The Posture of Politics or the Politics of Posturing?

"Today's economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence." Fed Bank Chairman, Ben Bernanke, yesterday, in a talk delivered in Atlanta.

That whole statement there make you go..."where did I hear that before?" Follow my lead here - replace the word "foundation" with "fundamentals" - does that jog your memory....yeah!! it did, didn't it? So I will not go into that... okay?

According to Bloomberg, today, April 15, 2009 ( Tax Day) "The number of mortgage applications in the U.S. fell last week for the first time in more than a month, indicating any stabilization in housing will be slow to materialize even as borrowing costs drop.

The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 11 percent to 1,113.2 in the week ended April 10, the lowest level in a month, from 1,250.6 the prior week. The group's refinancing gauge and purchase measure each dropped 11 percent. "

The Bloomberg report recalls that "Increases in home sales and residential construction have been among the signs Federal Reserve Chairman Ben S. Bernanke says show the economic slump is starting to slow."

The Fed Chairman acknowledged the development in his Atlanta address yesterday when he said "Recently we have seen tentative signs hat the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending including the sales on new motor vehicles."

So my question to you is: Did Mr Bernanke read the Mortgage Bankers Association report? If so, Did he read it while standing on his head? Did he read it from right to left? As if any of those activities would have aided his comprehension. Maybe he saw other reports which he choose not to divulge - Could his statement be seen as political posturing - sending a positive message - or is it just politics posturing - How long were we seeing and experiencing recessionary trends - can anyone recall the political posturing at the time - the country was told that everything was alright - there were no recession - when confronted with the facts of the economic situation in the U.S. Bush II responded by saying that he would not call it a recession unless the economists called it a recession - was that politics posturing, or what?

Where was Bernanke - Why did he not state the obvious? Was the lack of a timely and factual statement on the economy a deliberate act of political posturing, or was it politics posturing in the heated and hotly contested political years leading up to the recent Presidential Elections.

So now all the pain and suffering which could have been so much less severe had those who were expected to do their jobs without fear of favor had done so, rather than choosing to wade in waters they are not familiar with.

Mortgage Loans - The Front End and the Back End

In any economy at any time $8,000 is a lot of money. To be guaranteed by the U. S. Government that you could have a credit of up to $8,000 if you were to buy a home in the next 8 months is more than enough incentive to send first time-home home buyers ( that is a qualification) into the market place looking for homes.

Mortgage Interest Rates are very, very low - home prices are extremely low. Securing a mortgage loan and purchasing a home at this opportune time is a must-do for tens if not hundreds of thousands across America.

Adding their lot to the mix are certain members of the Real Estate Industry, who have obviously taken a page from the playbook of the auto industry. More incentives for the potential home buyer - how about not having to worry about mortgage payments for 6 months if you or your spouse were to lose your jobs.

According to a report by Diana Golobay carried two days ago on Housingwire.com "the California Association of Realtors (CAR) announced late last week it would offer a new "mortgage protection program" that promises first-time home buyers .....the guarantee of up to $1,500 per month for six months, in the event of job loss due to layoffs." The report goes on to inform that " ...co-buyers get up to $750 per month for up to six months, in case of layoffs. The program also includes benefits for accidental disability as well as a $10,000 death benefit, CAR said."

With these additional incentives now available at the back end of a mortgage loan, home buyers, on the front end, can take advantage of the $8,000 income tax credit, and easily slide into a new home loan knowing there is a cushion, at the other end, to ease their pain if they should fall. Yet, it is a good thing as it could remove from the marketplace the abundance of foreclosed homes that are out there - that's on the front end, while providing a mechanism for slowing the emergence of new foreclosed homes into the marketplace - this is on the back end - you with me?

New Mortgage Loan Program - 105% Loan To Value????

According to information received by this Post, two National Mortgage Lenders, Countrywide, owned and controlled by Bank of America, and Metlife Home Loans, a new mortgage loan refinance program called the Fannie Mae Refi Plus program commenced yesterday.

As its name indicates, this program is only for mortgage refinances of currently owned homes, and available to all homeowners under the recently passed American Recovery and Reinvestment Act of 2009. Availability, however, remains subject to certain conditions, which I will reveal shortly - the good news first, okay?

What is positive (if it could be viewed that way) is that Loan To Value ratios of up to 105% is allowed. Aside from owner-occupied homes, second homes and investment properties are also acceptable. Existing second liens are okay, if subjugated and Credit scores as low as 580 will be considered. For certain Counties around the nation, the conforming limit is set at $729,750 - more on this last in a bit.

Original First Mortgage Loans with a loan to value greater that 80% and those with Mortgage Insurance (MI), will not be considered, not at this time, anyway. Consolidation of a second lien into the new loan is also not allowed, neither are loans with new subordinate financing. Other ineligible loans are Balloon Mortgages, Interest Only Programs and Reverse Mortgages. It appears that the Mortgage Lender will also be developing their own criterion in addition to what the Treasury Departments' program calls for.

The program is not final at this time. The program will be expanded and undergo additional changes to facilitate more refinance options in keeping with the goals of the Home Affordability Refinance Initiative released earlier this year on March 4, 2009.

The Conforming limits is the new limit of $729,750 set by Congress earlier this year under the American Recovery and Reinvestment Act of 2009. However, loans acquired in 2009, but originated prior to July 1st 2007, will remain subject to the previously announced 2009 loan limits - Refer to our post of 03/25/2009. These limits were set under the provisions of the Housing and Economic Recovery Act of 2008.

Mortgages, Monies and Markets

The Mortgage Market is in an uncertain turmoil - on the one hand some homeowners are struggling to keep up with their mortgages while dreading the seemingly inevitable pink slip. Lucia Mutikani of Reuters reported today from Washington that "The number of U.S. workers filing new claims for jobless benefits surged to a 26 1/2 year high last week..." She goes on to say that Thursday's data showed "..that layoffs have yet to peak even as other signaled some improvement in the economy.

Other homeowners are trying desperately to reduce their monthly mortgage payments, in sometimes futile efforts, to keep possession of their homes. Loan Modification and Loan Restructuring does not work for all.

Buyers, on the other hand, are seeking to take advantage of the $8000 tax credit offered to first-time home buyers as part of the stimulus package. Many are not finding it easy though, as the guidelines Banks are now using to make home mortgage loans are so restrictive, few can qualify to buy a home at this time. Due to the foreclosure crisis home values have plummeted, making homes cheaper to purchase. Due to recent developments in the market and the actions of the government interest rates for 30-year fixed conforming loans are now below 5 percent.

According to Alan Zibel, a Real Estate Writer with the Associated Press "Mortgage finance Giant Freddie Mac said Thursday that the average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week..." Yet many who would want to buy, cannot. They are just not able to qualify. Insufficient income, weak or shaky credit and a lack of required reserves (liquid assets) in the bank often elicit a negative response from lenders.

Reports are, however that the ongoing recession appears to be levelling off. With the G20 meeting in London as a backdrop it appears that some minimal policy successes were achieved for attacking the flagging world economy. Yet with contrary economic philosophies between the U.S. and Britain on the one hand and Continental Europe; led by France and Germany on the other, enactment of agreed upon policies will be predicated upon local (national) politics - not the photo ops.

Meanwhile, in the U.S. and across the globe Mortgages are difficult to acquire, Money is scarce and the Market is uncertain.

Home Loan Mortgages:Who is Helping Who is Hurting II

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?

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.

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.

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.

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.

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!!!!

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.

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

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!!!

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.

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.

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.

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.

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 .

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.

HOME LOAN MORTGAGES: Hope For The Best,Prepare For The.....

There seem to be no end in sight for the plight of homeowner, fearful of the loss of employment, weakened by the diminished value of their home, and now threatened by the possible loss of that home.

For the less optimistic among us, America will witness an unmanageble magnifiction in the amount of unemployed and homeless families as the seemingly out of control monstrocity, known as the economic crisis, continues its devastating shuffle across the nation. For the optimistic, the hope is that the monster will be caged, or at least harnessed, before more destruction ensues.

The realists tells us that there will be more pain before it is all over - they indicate that it should be at least another 12 months before there is any indication of a slowing of this monster's march of destruction.

According to Marcy Gordon, and Associated Press Business Writer in a report released this past week, "The nations banks lost $26.2 billion (with a"B") my emphasis. At the same time, according to Marcy Gordon," Regulators said there were 252 banks were in trouble at the end of 2008...", an increasee of 81 banks from the quarter immediately before. What is the cause of these troubles? They tell us its the housing and credit crises.

Christopher S. Rugaber, an Economics Writer for the Associated Press informed us this week that new home sales fell 10.2 percent in January, to a seasonally adjusted rate of 309,000; the worst, he reported, since 1963.

In the same report Mr Rugaber noted that "New jobless claims rose more than expected last week, and the number of Americans continuing to recieve unemployment benefits has topped 5.1 million...". "Fresh evidence" he said, "the recession is increasingly forcing employers to shed jobs."

How confident can homeowners be in the face of all this nauseous and unpalletable news reports? What should they do about the possible loss of employment, the actual loss of home value and even the (possible) loss of a home ? What are the homeowners options - We will look for answers in the next post.

MORTGAGE FORECLOSURES: A Discussion

Had a discussion in the office with Rhonda today about the Mortgage Foreclosure dilema as it appears to be affecting homeowners in America today. I have blogged a bit on this topic in an attempt to clear up the confusion and misinformation in the minds of some of my readers.

Who is Rhonda? She is only the greatest person, with the clearest head for details, you will ever enjoy having a conversation with. Rhonda has been working in the Real Estate Mortgage industry for more than a quarter of a century now, and what she might have forgotten about originating, processing and underwriting Real Estate Mortgage Loans most will never learn (I will not even go into her competence with the Escrow process). For years now Rhonda and I have been using each other as sounding boards; bouncing ideas off each other as we discussed topics as far ranging as the Katrina disaster to the most recent movement of the Fed rate.

This morning Rhonda referred me to a piece by Diane Sawyer of ABCs Good Morning America in which she interviewed Jim Avila, the Law and Justice Correspondent for ABC. In his report Mr. Avila talked of a new development that is giving homeowners facing foreclosure a chance to hold on to their homes. "Produce the Note" is actually a document that homeowners are using to stall the mortgage foreclosure process against their homes. According to the report Lenders (Banks) are having diffilcuty producing the note the homeowner signed at the time they obtained their home loans mortgages. If the Bank cannot produce the note with the homeowners signature, judges will stall the process until the bank can produce the document - this can go on for months as the banks are finding that they now need to track their loans from close of escrow through bundling for sale as mortgage backed securities. This gives the homeowner time to find a new job or an additional job or whatever they may need to accumulate the necessary financing to save their homes from the auction block

According to Jim Avila, "Produce the Note" was started by a Florida lawyer named Chris Hoyer who has the information on a website he has set up for the purpose providing help to homeowners facing foreclosure. Here is the website www.consumerwarningnetwork.com - go check it out.

Thanks Rhondi

LOAN MODIFICATION: A Wait & See Game - Part II

In my posting yesterday, I begun disscussing the prospects of homeowners in their attempts to get their Mortgage Loans modified and restructured. As I noted, some homeowners are of the opinion that things will work out for them once the President signs the bill in March.

At the end of that posting yesterday, I observed that there was a political aspect to the Stimulus
that needed to be factored into any determination as to what the final bill will be like that the President is to sign.

We are all aware that he has been making overtures to the Republican opposition in the Congress, in his effort to,one; bring a sense of biparatisanship to Washington, so that, two; he could move the country farther faster out of the devastating economic condition he found it in on January 22, 2009 following eight arduous years of Republican mismanagement.

It appears that the Republican opposition has decided that rather than being constructive, loosers that they are, would be obstructionist and make hard times harder for an already suffering public.

So, given whatever the pundits and "experts" postulate, until the bill is final as signed by the President, its not advisable to presume to "know" what the details are.

And remember, as I noted in my posting of 02/26/2009 there are certain tax consequences that even with a maximum $8000 refundable tax credit not everyone will be able to buy any home they want anywhere. A careful study of credible information now available will tell you that the program is directed primarily to housing that are located in local redevelopment and revitalization zone. Any casual look at where most foreclosure took place in any local jurisdiction will bear this out - it is in those areas that your $8000 tax credit will do you the most good - that is if you choose to move in those areas that may well be suffering from serious economic obsolescence (think you know where I'm going here?). Where have all the businesses gone...? To use a well known refrain.

Recalling again an earlier posting, 02/18/2009, it was noted that even the President said, that the " 'plan will not save every home' - in effect not everyone will qualify for loan modification..."
So lets continue to be hopeful as he, the President, that is, has asked us to be, while at the same understanding that you may quite likely not be one of those who can be helped.

LOAN MODIFICATION: A Wait & See Game

Spoke with a client today who was concerned that his lender is playing a waiting game with him. He wanted to know if he too, should wait until after the Obama Stimilus Plan comes into effect. He feels that because he is not behind on his mortgage, the lender is not treating his application for mortgage loan restructuring/modification with any sense of urgency.

It appears that homeowners all over are waiting for the same development - their faith seem to rest in the belief that the newly elected President will make things right for all and sundry. This may have some element of truth in it - but one needs to factor the politics of Washington into the mix, and that is something that most homeowners are failing to recognize. Tomorrow we will discuss the politics of the stimulus and its possible eventual effect on the homeowner trying to modify their mortgage.

HOMEBUYERS & THE $8000 TAX CREDIT

I received a phone call last week in which the caller needed to know how the $8000 Tax Credit would affect her. Will it allow her to refinance her Home Mortgage with her Lender, will she qualify for the tax credit - should she wait until the Bill is signed by the President in March - what are her options.
These are some of the questions that are uppermost in the minds of most homeowners - they have a need to know how all the financial disbursment will impact them - what benefits could they accrue from this Stimulus Packet.
There are, obviously, lots of confusion here, which is not helpful to those who are dilligently and earnestly attempting to determine exactly what is happening. Most of the confusion comes from the so-called "experts" - the radio and tv talking heads - who use the air to opine and postulate their opinions as if they were facts. So, I informed my caller of the information I had to date and suggested she await the signing ot the Bill, which will then be law, which means that whatever is contained therein is final and could be relied on in making decisions going forward.

First Time Homebuyers Only
It is understood that even some wanted the benefit to go to all home buyers - the final draft, as it is to be signed by the President is to benefit only first time homebuyers -so that immediately disqualifies my caller - she may need to consider a Mortgage Loan Modification if she is upsidedown or simply, a refinance - if there is enough equity. There are other stipulations in the Bill.
* the homeowner must live in the home for a minimum of three years, otherwise the tax credit will be forfeited, and the IRS will want its monies back in full.
*to qualify for first time homebuyer, you must not have owned a home in the most recent past three years.
*the purchase must take place between January 1, 2009 and November 30, 2009. The benefit here for the taxpayer/homeowner, and its a big benefit, is that the Tax Credit is REFUNDABLE!!!! which is to say you can get the whole $8000 in a refund check. Here is how it works, because again, there are stipulations applied to your tax liability. It's not hard to explain, but it could be hard to understand, (did you get that? - did I confuse you?) Well, follow me a bit more and it will come clearer.

The Effect of the Tax Credit
Unlike a Tax Deduction which in effect is a reduction against earned income for tax purposes, the Tax Credit will be used to reduce your tax liability for tax purposes.
*If you owe $10,000 in taxes and apply for the $8,000 tax credit your tax bill is reduced to $2,000 and if you already paid $11,000 in payroll deductions or estimated tax payments, you will get a refund of $9,000 - $8,000 tax credit (which is NOT a loan) plus the $1,000 regular refund over-payment. Conversly if you owe $10,000 in taxes and you only paid $9,000 in payroll deductions, the difference of $1,000 will be paid from the Credit and you get a refund for $7,000.

Minimums and Maximums
Not everyone will benefit from this Tax Credit, even if they are first time buyers. Why?According to a report from Prudential California Realty, the bill reinstates last year's 2008 loan limits for FHA, Freddie Mac and Fannie Mae loans. These limits were equal to the greater of 125% of the 2008 local median home price or $271,050 for FHA and $417,000 for Freddie and Fannie, with an overall maximim cap of $729,750.
The Credit is phased out to individuals with AGI 0f $75,000 to 95,000 and couples filing jointly from $150,000 to $170,000 - this then in an indication of not just how MUCH house you can buy to qualify, but in reality WHERE you should buy to quality....this we will discuss further in another posting.

REAL ESTATE INVESTING: The Guru & The Teacher

The GURU
According to Merriam-Webster a Guru; (Hindi-Sanskrit) is"...one who is an acknowledged leader...intellectual guide in matters of fundamental concern.." Such a person is an "acknowledged leader" and such a person can guide you intellectually in matters of "fundamental concern."
Recently I have been discussing the gurus of the Real Estate Investment industry - the so called acknowledged leaders of the business. These are the people who will invite you by email or regular mail to attend local seminars they sponsor, explicitly to "reveal secrets" they have discovered - "secrets" they have been given exclusively by some mysterious individual, that they now have a burning desire to share with you. Once you are in possession of these "secrets", you will become wealthy - retire in style - travel the world - visit exotic places, etc., etc. The
"secret" always revolve around some aspect of real estate investing - and each guru has his or her own niche. They will invite you to webinars where another guru - guest - speaker will "discuss" portions of their "secret" with you, after which you are encouraged to purchase his package of "secrets." This is after you have more than likely paid for your guru's package of "secrets", paid for his 3 , 4-day or weeklong Bootcamp, and anything from 1 month to 12 months of followup mentoring to ensure you got all aspects the "secrets" right. After spending thousands upon thousands of hard-earned, and in these days scarce dollars, chasing the "secret"dream of becoming real estate millionaires many people come to the realization that the only ones getting wealthy in real estate are the gurus hawking their "secrets" to the unsuspecting. Very few benefit from the "secrets" of the gurus - many are disillusioned by the experience of chasing illusive "secrets" - yet, all is not lost!

The TEACHER
Returning to the wisdom of Merriam-Webster, we learn that the Teacher is "...one whose occupation is to instruct..." To instruct, again according to Merriam-Webster is "...to give knowledge." This then, is what Teachers do - they impart knowledge, they do not harangue,or do they cajole - hyperbole is not a part of their art. The Teacher will teach according to a structured plan that will bring the student along to achieve certain educational goals. Upon attainment of these goals, the student will be in a position to benefit financially from the knowledge they acquired from the Teacher's course of instructions.
For those seriously interested in Real Estate Investments forget the gurus and think about teachers - in future blogs I will discuss opportunities for the serious real estate investor to acquire the knowledge they will need to be successful in their endeavour.

REAL ESTATE INVESTING:The "Secret" of Making Millions

I promised in my last posting that I would discuss the gurus' "secret " to making millions in Real Estate Investing.

In that post I noted and accepted that most millionaires have made their wealth in Real Estate. This is still a fact, except, that there is now a new cadre of millionaires who are amassing great wealth selling to captive audiences, "secrets" to becoming wealthy in real estate investing.

Ordinary people wanting to climb out of the daily drudge of 9 to 5 jobs, and excited about the possibility that in a few short months they would be accumulating millions, are pumped up in day-long seminars by agitated speakers relating stories of rag to riches accomplishments, and the "secrets" they uncovered on their way to riches and wealth. Challenging their audience to buy this newly discovered "secret ", to follow the same path to wealth and financial independence, these gurus apply well worn and well know cliches of the day.

These audiences are challenged to be like the speaker or continue to be loosers. As this captive audience of hopefuls are being harangued and psyched by the speaker, their able assistants are in the back of the room setting up credit card equipment, and the packages supposedly containing the "secrets" to wealth. You are supposed to feel guilty or a lesser person if you were to walk through the door without stopping to slide your plastic.

Those who purchase the material find that the "secret", is not enough to realize their dreams of becoming wealthy. Not to worry - the seminar organizer has seen that far ahead, and the hopeful millionaires are now invited and encouraged to participate in a weekend or weeklong Bootcamp to learn strategies with the experts, one that is held somewhere out of State, and which now costs a few more thousand dollars - following the Bootcamp there is yet another level you must go, to secure more "secrets". Hopeful millionaires are encouraged to sign up for one-on-one tutoring with the Master him(her)self for as long as a year - this now should get you to where you need to be, as your quest for wealth and financial independence has now morphed into an odyssey for "secrets".
My next posting will discuss how to spot the difference between the teacher and the millionaire "guru".

REAL ESTATE INVESTING:What's In It - Who's In It

It is universally known and accepted that the greatest potential for wealth - anywhere in the world, lies in the ability to control real estate - land and the bounties it possess have been the cause of marriage as well as mayhem - throughout world history the need for more and more territority has been the cause of wars between princes and principalities seeking to increase the wealth in their treasuries.

Today, it is said that at least 7 out of every 10 millionaires have accumulated their wealth by way of real estate. And given the historic levels of foreclosures in the real estate market today - the opportunity for real estate investors is greater than it has ever been in a very,very long time.

From the bowels of this financial debacle has emerged the carpetbaggers and self-proclaimed gurus of the real estate investment business. These "experts" promote themselves as having all the answers to getting wealthy investing in real estate. From the unlearned, and uninitiated these "gurus" make mega bucks selling investment programs on CDs,Seminars,Boothcamps and One on One Tutoring; each a step up to another level enabling these carpetbaggers to solicit even more monies from a "pumped up" audience seeking to become the next Donald Trump.

In my next blog I will discuss how these "gurus" make their millions in real estate selling the "secret" to making "millions" in Real Estate Investing - secrets which only they have.

HOME LOAN MORTGAGES:The $75 Billion Plan-Not For Everyone

As he announced his $75 Billion bail out plan for homeowners, President Obama informed America that the "plan will not save every home" - in effect not everyone will qualify for loan modification - not every home will escape the foreclosure block. The Plan, as it appears to be set up, does not require the participation of anyone - not the Lender, not the Homeowner.

The $75 Billion Home Stability Initiative, instead, provides a vehicle of incentives, on the one part, for Lenders to cut monthly payments to an estimated 4 million homeowners on the verge of foreclosure. The other part is set to assist homeowners whose homes have lost value - their mortgages should be owned or guaranteed by Fannie Mae or Freddie Mac. In this latter scenario, it is seen that some 5 million homeowners could benefit as the Plan would allow for the absortion of some $200 million in losses by each of the two companies using funds set aside by Congress in 2008.

Economy.com tells us that 13.8 million or almost 27% of 52 million homeowners with mortgages owe more (on their mortgages) than their homes are worth..." It is expected that homeowners, whose loans exceed their properties' value by more than 5%, may experience difficulties getting the help they are seeking from their Lender.

Investors holding certain toxic mortgage-backed securities, who make monies from interest payments, may not be too willing to cooperate, and this could be key to preventing many foreclosures. Could this be something the President was thinking about?

HOME LOAN MORTGAGE:The Homeowners Dilema

Indications are that the pace of foreclosures across the nation should be slowing in the not too distant future - some say before this year, 2009, is ended.

The recent actions of JP Morgan-Chase and Citigroup, to impose moratoriums on home foreclosures, is a cause for hopeful anticipating by homeowners , facing mortgage issues, nationwide. The hope is that other banks will follow the lead of these two and likewise institute moratoriums, if even with some nudging from the federal government.

With some 10,000 families a day, according to some estimates, losing their homes; and with only $50 billion slated to buy up those troubled mortgage-backed securities, it is yet to be determined if the hopes of homeowners are justified, albeit the promises of the President.
What happens when the moratorium ends - what will the banks want, what will they be demanding - how severe will be their guidelines for restructuring and modifying the mortgage loan.

Job security, the uncertainty of continued employment, limited and dwindling financial resources are serious concerns of homeowners, and are not helpful when applying for mortgage loan modifications. This is crushing to the hopes of the homeowner. Staying in their homes is priority number one. Homeowners are encouraged to immediately seek mortgage loan modification at the earliest indication that there may be some future negataive impact on their income or financial assets. Banks are more inclined to work with homeowners who have good prospects, and who could demonstrate the ability to eventually pay off their mortgage. This, then, is the best way forward.

HOME LOAN MORTGAGES:How Helpful Are The Banks

President Obama is signing the signing the 787 billion-dollar (stimulus) package of investment and tax cuts tomorrow to the delight and satisfaction of millions across the nation;among them are homeowners,businessowners and banks.
Wall Street,which last year got a jumbo portion of financing from taxpayer's monies is expecting an additional infusion of cash from this current package, so too, are the auto makers and the Banks,which themselves already got some cash.
The prevailing feeling on Main Street is that help is on the way - with the additional cash the Banks are receiving, homeowners are less likely to loose their homes to foreclosure. In fact,only recently, Citigroup and JP Morgan-Chase along with Mortgage Finance giants Freddie Mac and Fannie Mae announced the imposition of moritoriums on home foreclosures.
This sentiment was reinforced over the weeekend when, in a nationally televised interview, Senior Obama adviser, David Axelrod informed us that the President would on Wednesday of this week, announce a plan that is aimed at stemming foreclosures and provide immediate help to homeowners who are "right on the edge" of foreclosure, and ultimately help in "raising home values that are plummeting."
That same day House Financial Services Chairman, Barney Frank (D.-Mass) told us on a competing national network, that $50 billion (for the program)would not be enough. The Congressman went on to say, however, that he "...in fairness...won't know that for a while.." He continued "...we will begin (the process),..if in fact,by the time we've used $50 billion, it turns out we can use more,then I believe the Congress would be responsive..."
Meanwhile Mr. Axelrod was indicating, in his interview, that the $50 billion mortgage bailout could double to $100 billion.
Is this music to the ears of Banks, or is it? Think for a moment what these bankers are discussing in their boardrooms as they sip their frappucino. Think of the glee they must feel as they tee off at their local country club - all that money coming their way.
Why? Tell me now - would these very unpopular people, overburdened with nonperforming assets make it a priority to assist homeowners with the restructuring and modification of their mortgage loans, when they know the Federal Government is initiating plans to bail them out.
Obviously the most troubled of these banks are the ones with the most troubled assets - it follows they not only expect to recieve the first of the bail out monies, but the most of it - can you understand then why it is in their best interest to hold on to as much of the bad paper for as long as they can? Can you now understand why some of them refuse to assist the homeowner who is seeking relief -telling them that unless they have missed payments , help is not possible.
As he fulfills his promise to use government to assist struggling homeowners avoid foreclosure, it will be interesting to see how the President deal with the concerns of the Main Street and the collusions of Wall Street.

MORTGAGE HOME LOANS:The Modification Mystery

Late last week the US Congress passed President Obama's Stimulus Package which he is supposed to sign on Tuesday, following the President's Day holiday. According to those who claim to know,this will now make it easier for the Obama Adminidtration to begin to turn the US and by extension,the world's economy around.
However,it seems,no one will go on record to say when the economy will turn around, or indeed,even if it will - thus, there is no time line or even a time horizon,to use the nomenclature of the recent past administration. nevertheless, the general concensus on main street is; the hope that it should happen in a twelve to eighteen months.
While we all continue to wait and hope across America, and as we discuss the pros and cons of the historic passage of this Bill and what it will mean for us,homes continue to be lost to foreclosure action,jobs continue to be lost to austerity and even businesses continue to close their doors because of the impact of the recesssion,even as States struggle to provide necessary services and balance their Budgets.
As home values correspondingly continue their downward spiral,homeowners must decide, now, what they should do about their mortgages. Should they seek to modify and restructure,should they consider a short sale accomodation with their Lender/Bank and a potential Buyer,or should they simply,as others have done,just walk away from their homes.
Added in the mix is the confusion homeowners are finding in the modification messages that bombard them daily on TV, the Radio and the Mail,by sundry services proclaiming they have the right solution for the homeowners' mortgage dilemma.
Why should the homeowner pay for this service - should they even pay at all?Is this something the already struggling can do for themselves? How honest is this provider? Are they in it only to make a buck,or do they genuinely feel the homeowner's pain? What about the Lender/Bank - how concerned are they about the homeowner's plight? What effort are they making to facilitate the homeowner who is applying directly to them for assistance to restructure and modify their mortgage loan.
It has been reliably reported that some Lender/Banks have been refusing to consider the applications of homeowners if they are not behind on their mortgage payments, and even then there is procrastination and foot-dragging on their part.Should we now believe that homeowners,victims already, of the system and the economic downturn that was created,should deliberately wreck their good credit profile in order to get the attention of the Lender/Banks that actually placed them in this awful loan?
The alternative the homeowner has is to pay some high-priced lawyer to represent them in their effort to get the attention of the Lender/Bank to acceed to the applications of the homeowner seeking home mortgage relief.
As this is going on,more jobs are being lost,more homes are lost and more "for sale" signs appear on your neighbor's' lawn down the street....and the beat goes on...