States Step Up Foreclosure Relief

From Realty Times of October 30, 2008

States Step Up Foreclosure Relief by Broderick Perkins


"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.

Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.

"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.

Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.

The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.


To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.

Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.

Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.

Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.

To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.

And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.

The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.

Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.

Renegotiate the terms of their loan with the lender.

Pay off their loan by refinancing the loan with another lender.

Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.

Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.

The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:

Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.

National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.

Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is a loan fund that provides eligible state residents with foreclosure assistance.

Minnesota's Foreclosure Prevention Assistance Program provides eligible state home owners with counseling and financial assistance.

Ohio's Opportunity Loan Refinance Program helps borrowers refinance high-cost loans with a 30-year fixed-rate and a 20-year, fixed rate second.
Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.
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Copyright © 2008 Realty Times. All Rights Reserved.


Visit Mr. Broderick's blog at

DEADLINENEWSROOM

To review the detailed article referenced by Mr. Broderick, visit:

Defaulting on the Dream

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HUD GOOD NEIGHBOR NEXT DOOR PROGRAM

A super HUD program available to Police and Teachers - tough to beat a 50% discount:

GOOD NEIGHBOR NEXT DOOR PROGRAM

· HUD offers a substantial incentive in the form of a discount of 50% from the list price of a home to law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical techs.

· In return the borrower must commit to live in the property for 36 months.

· Eligible SFR homes are HUD REOs located in HUD determined “revitalization areas”. To search for HUD listings click the following link. http://www.mcbreo.com/st_azmain.htm. Click on “City” next to “View All Available Properties”.

· HUD requires that the borrower sign a second mortgage note for the discount amount. No interest or payments are required on this “silent second” provided that the borrower fulfills the 3 year occupancy requirement.

· You may use FHA, VA or conventional financing.

· The purchase contract must indicate that the property is eligible for the GNND Program.


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FHA Still Going Strong

From Realty Times of October 20, 2008

Washington Report: FHA Still Going Strong by Kenneth R. Harney

The country's top housing official has an urgent message for potential home buyers: You may have heard that the credit markets were "frozen," but FHA has been open for business throughout the credit squeeze, and so are Fannie Mae and Freddie Mac. In fact, FHA's volume has tripled and the agency is now insuring well over a hundred thousand new loans a month.

In an exclusive one-on-one interview with Realty Times, Housing and Urban Development Secretary Steve Preston said that FHA, Fannie and Freddie -- who account for a combined 90 percent plus share of the entire U.S. mortgage market -- "have kept liquidity alive" for home buyers -- and have virtually unlimited funds for new mortgages.

"There is no credit crisis" for individual home buyers who have at least three percent to put down, documentable employment, and at least a moderately good credit record, said Preston.

Business loans and various other types of credit may have been more difficult to obtain in recent weeks, Preston told Realty Times, but thanks to the government's backing of the three biggest sources of mortgages, buyers and refinancers of houses have had no unusual problems.

Preston and HUD are playing key roles in the $700 billion financial system bailout plan now getting underway. Preston is one of just five members of the Financial Stability Oversight Board that oversees the entire effort. HUD's main task in the weeks ahead, he said, will be to either refinance or help work out thousands of delinquent subprime and underwater homes financed by private lenders during the boom years.

The agency's new "Hope for Homeowners" program, which started October 1, allows it to cut the principal debt, monthly payments and interest rates of delinquent loans through refinancings into fixed-rate FHA mortgages.

In the interview, Preston emphasized the importance of a new, $3.9 billion program that has received virtually no attention in the press, but which could have huge positive impacts on neighborhoods and communities struggling with large numbers of foreclosures.

Congress authorized HUD to provide funds and other assistance to local governments to buy, fix up, resell or rent out foreclosed houses that are dragging down local property values.

Known as the Neighborhood Stabilization program, it offers not only roles for local governments to fight housing blight, but also provides opportunities for alert realty agents, rehab contractors, builders and investors to be involved -- profitably -- in the turnaround efforts.

If you're interested, talk to your city or county housing and community development officials for details. Though HUD will be providing the funds, local officials will be calling the shots.



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Buyers Go West for Good Deals

From Realty Times of October 17, 2008

Hot Market: Buyers Go West for Good Deals by M. Anthony Carr

You've heard the news that pending sales are up across the country over 7 percent from July to August. While that's the broad brush news, when looking at the details, one sees just how many states in the West are experiencing a huge surge in the number of sales being registered on real estate boards across the region.

Following the trends over the last two quarters, it should be no surprise that the real estate market across the country is slowly beginning to show signs of life. The National Association of Realtors, keeper of national realty sales data, has been releasing the numbers all year of state after state experiencing very healthy sales increases from the 1st quarter to the 2nd quarter.

Leading the way is Idaho, with a 51 percent jump between the two quarters. California was up 25.8 percent followed closely by Nevada at 25 percent. The fourth strongest statewide market was Arizona, up by 20.5 percent.

The only two states to show a quarter over quarter increase from 2nd quarter 2007 to 2nd quarter 2008 was California, up 3.7% and Nevada surging forward at 18 percent.

When news hit about this latest sales increase of 7.4 percent, hidden, again, in the fine print was the fact that sales year over year in the west had jumped a whopping 37 percent. The challenge facing markets now, of course, is the current credit crisis, which will determine if the trends of upward bound sales will continue.
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Copyright © 2008 Realty Times. All Rights Reserved.

Biggest concern now, is it getting too crowded out here? We are projected to double in population in only a decade or two from now!


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Smaller Homeowner Bailout Already In Place

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From Realty Times of October 16, 2008

Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins


Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.

When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.

The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.

President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.

In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.

Loan modifications

On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:

A default on the mortgage either has already happened or is "reasonably foreseeable."

The home owner lives in the property as his or her primary residence.

The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.

It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.

The institute further advises:

1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.

2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.

3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.

FHA refinancing

Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.

U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.

The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.

The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.

Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.

As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.

The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.

The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.

The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.

Copyright © 2008 Realty Times. All Rights Reserved.

Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at

DEADLINENEWSROOM


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Real Estate Market Defying Odds

An encouraging article from Realty Times of October 14, 2008:

Real Estate Outlook: Real Estate Market Defying Odds by Kenneth R. Harney


The panic and fear that have been shaking Wall Street aren't translating into negative numbers for real estate -- in fact, it's been the reverse.

While the Dow Jones index peeled off a record fourteen hundred points in a matter of days, the latest pending home sales index was moving in the opposite direction -- up strongly to its highest level in more than a year.

Pending sales jumped by 7.4 percent in the latest month, according to the National Association of Realtors.

Financial industry analysts had forecast a one and a half point DECLINE in the index for the month, but pent-up demand for housing, plus rock bottom bargain prices in many markets, convinced buyers that this is a good time to get off the sidelines and get into the game.

The pending home sales index measures new contracts for home purchases that haven't yet gone to closing, but should do so in the near future. It's a widely accepted predictor of sales activity two to three months down the road.

Mortgage rates and new loan applications also defied the negative spiral in the stock market: Applications for home purchases to be financed with conventional mortgages jumped by three percent last week, and new FHA applications were up by nearly 10 percent, according to the Mortgage Bankers Association's national survey.

Interest rates on 30 year fixed rate loans dropped to 5.9 percent and 15 year rates hit 5.7 percent.

Why the sharp divergence in performance between home real estate and Wall Street?

One key reason is that real estate -- which helped trigger the financial crisis through lending abuses and fraud -- has been undergoing its own correction on pricing and underwriting practices for the past two and a half years.

It's already taken its lumps, and has now reached a point where prices in former boom markets are so affordable that smart buyers are swooping in.

Also - although we keep hearing about the global credit squeeze and banks' unwillingness to lend money, that's definitely NOT the case in the mortgage market. There's plenty of money available - as long as you have a solid credit history and some downpayment cash.

Fannie Mae, Freddie Mac and the FHA now account for well over 90 percent of home financing volume, and all three are backed by the federal government.

They've got a direct and virtually unlimited pipeline into the capital markets.

And with mortgage rates under 6 percent, no wonder consumers are shopping for -- and buying -- houses at great prices.

Copyright © 2008 Realty Times. All Rights Reserved.

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Phoenix area progess is on my website at www.denismarque.com on the Welcome page and on the Buyer Help page. Pay us a visit!


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Troubled Asset Relief Program

From Realty Times -

Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08

Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.

That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.

The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.

TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.

Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.

High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.

Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.

Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.

Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.

Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.

That, in turn, should gradually begin to have positive impacts on local real estate market conditions.

But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.

In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
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Copyright © 2008 Realty Times. All Rights Reserved.


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Market Conditions

Market Conditions by Realty Times Staff October 10, 2008

The latest report from the National Association of Realtors indicates that pending home sales surged in August -- jumping 7.4 percent. This level is even higher than the August 2007 stats.

Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. "What we're seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region," he said. "It's unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we're hopeful most of the increase will translate into closed existing-home sales."

Regionally, the West saw the biggest jump for the month of August -- surging 18.4 percent.

The only region that was still below August 2007 levels is the South.

Expert predict that home prices will finally begin to rise again -- by about 2 to 3 percent next year. This comes with prediction about 30 year fixed rate mortgages staying in the 6 percent range throughout 2009.

Copyright © 2008 Realty Times. All Rights Reserved.

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I would add that data on my website shows that September was strong as well.



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Market Conditions & Total Mortgages in U.S.

Market Conditions by Realty Times Staff October 7, 2008

It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.

Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.

The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.

Copyright © 2008 Realty Times. All Rights Reserved.

Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.


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