Realty Times of October 23, 2009
National Average Long-Term Mortgage Rate Rises to 5 Percent
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.00 percent with an average 0.7 point for the week ending October 22, 2009, up from last week when it averaged 4.92 percent. Last year at this time, the 30-year FRM averaged 6.04 percent.
The 15-year FRM this week averaged 4.43 percent with an average 0.6 point, up from last week when it averaged 4.37 percent. A year ago at this time, the 15-year FRM averaged 5.72 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week, with an average 0.6 point, up from last week when it averaged 4.38 percent. A year ago, the 5-year ARM averaged 6.06 percent.
The one-year Treasury-indexed ARM averaged 4.54 percent this week with an average 0.6 point, down from last week when it averaged 4.60 percent. At this time last year, the 1-year ARM averaged 5.23 percent.
"Following bond yields, long-term mortgages rates edged up slightly this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although rates for 5/1 ARMs and traditional 1-year ARMs are around half a percentage point below 30-year fixed mortgages, consumers appear to be seeking the stability of fixed-rate mortgages. According to the Mortgage Bankers Association, ARMs averaged only about 6 percent of the number of mortgage applications in September and October thus far."
"The housing market is still trying to recover in the second half of the year. The Federal Reserve reported in its October 21st regional economic review that housing market conditions improved in recent weeks, primarily from a pickup in sales of low-to medium-priced houses. However, residential construction activity was reported to remain weak in most areas. New construction of single family homes rebounded in September, rising at a 3.9 percent annual rate, but did not erase all of the declines set in August, based on figures released by the Department of Commerce. Moreover, homebuilder confidence, as measured by the National Association of Homebuilder's Housing Market Index, fell slightly in October and marked the first decline since January of this year."
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Saturday, October 24, 2009
Thursday, October 22, 2009
Sell Short, Get $1,500
Realty Times of October 22, 2009
Sell Short, Get $1,500 in Closing Costs by Broderick Perkins
The U.S. Treasury is poised to announce a finalized plan to expand mortgage relief efforts to include short sales.
A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.
It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions.
That's because short sale bids often come in well below the last appraisal, real estate agents don't want the extra work involved and buyers fear a four-to-five month transaction period that could end in a no-deal scenario.
To help move more distressed properties through the clogged pipeline, the Treasury, under the Making Home Affordable's Home Affordable Modification Program (HAMP) is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals (the deed is transferred to the lender, avoiding the more costly foreclosure proceeding).
The Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal.
Earlier this year when the plan was first announced, there was also a provision to pay second lien holders up to $1,000 to relinquish their claim in such transactions.
Thus far, Refinancing Fannie Mae or Freddie Mac mortgages under the Home Affordable Refinance Program (HARP) and HAMP mortgage modifications have been the "go-to" foreclosure options among federal mortgage relief programs.
Some 260,000 homeowners have refinanced under the HARP program since January, according to the Federal Housing Finance Agency.
FHFA also said during the second quarter this year there were 11,700 short sales and 202,200 trial loan modifications under government programs.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Sell Short, Get $1,500 in Closing Costs by Broderick Perkins
The U.S. Treasury is poised to announce a finalized plan to expand mortgage relief efforts to include short sales.
A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.
It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions.
That's because short sale bids often come in well below the last appraisal, real estate agents don't want the extra work involved and buyers fear a four-to-five month transaction period that could end in a no-deal scenario.
To help move more distressed properties through the clogged pipeline, the Treasury, under the Making Home Affordable's Home Affordable Modification Program (HAMP) is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals (the deed is transferred to the lender, avoiding the more costly foreclosure proceeding).
The Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal.
Earlier this year when the plan was first announced, there was also a provision to pay second lien holders up to $1,000 to relinquish their claim in such transactions.
Thus far, Refinancing Fannie Mae or Freddie Mac mortgages under the Home Affordable Refinance Program (HARP) and HAMP mortgage modifications have been the "go-to" foreclosure options among federal mortgage relief programs.
Some 260,000 homeowners have refinanced under the HARP program since January, according to the Federal Housing Finance Agency.
FHFA also said during the second quarter this year there were 11,700 short sales and 202,200 trial loan modifications under government programs.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Tuesday, October 20, 2009
For Help Making Your Home Affordable
Learn About Making Home Affordable
Refinancing
Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home.
Modification
Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income.
Beware of Foreclosure Rescue Scams - Help Is Free!
Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
Assistance from a HUD-approved housing counselor is FREE.
Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make a mortgage payment to anyone other than your mortgage company without their approval.
Report Lending Discrimination to HUD
If you believe you have experienced discrimination based on race, gender, national origin, or another reason, contact HUD’s Office of Fair Housing and Equal Opportunity at 1-800-669-9777.
To read the full text of the government webpage, go to http://makinghomeaffordable.gov/
Refinancing
Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home.
Modification
Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income.
Beware of Foreclosure Rescue Scams - Help Is Free!
Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
Assistance from a HUD-approved housing counselor is FREE.
Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make a mortgage payment to anyone other than your mortgage company without their approval.
Report Lending Discrimination to HUD
If you believe you have experienced discrimination based on race, gender, national origin, or another reason, contact HUD’s Office of Fair Housing and Equal Opportunity at 1-800-669-9777.
To read the full text of the government webpage, go to http://makinghomeaffordable.gov/
Monday, October 19, 2009
Washington Report: Tax Credit
Realty Times of October 19, 2009
Washington Report: Tax Credit by Kenneth R. Harney
Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn't hold their breath.
That's because it's looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.
But that's not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.
When it comes to tax issues, you've got to follow what New York Congressman Charlie Rangel is saying. He's the chairman of the Ways and Means committee, and no tax legislation has even a chance of getting anywhere without his say-so.
On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.
Here's what Rangel told reporters last week about the housing tax credit: "There's no question I think it should be extended," he said. How long, I haven't discussed." Rangel also said he doesn't thing that "eligibility should be expanded beyond the first-time home buyers," according to Dow Jones Newswires.
That's probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.
The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.
Informed of Rangel's comments, home builders president Jerry Howard said he's no longer as "optimistic about expansion" as he once was.
But, on the other hand, chairman Rangel's endorsement of an extension of the credit -- for a yet-to-be specified period of months -- has got be a lifesaver for thousands of buyers who've been worried they'd miss out on this year's credit because they can't close their transactions by November 30.
The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.
One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.
Copyright © 2009 Realty Times. All Rights Reserved.
Keep in mind, unless extended the cut off date is November 30,2009.
Washington Report: Tax Credit by Kenneth R. Harney
Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn't hold their breath.
That's because it's looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.
But that's not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.
When it comes to tax issues, you've got to follow what New York Congressman Charlie Rangel is saying. He's the chairman of the Ways and Means committee, and no tax legislation has even a chance of getting anywhere without his say-so.
On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.
Here's what Rangel told reporters last week about the housing tax credit: "There's no question I think it should be extended," he said. How long, I haven't discussed." Rangel also said he doesn't thing that "eligibility should be expanded beyond the first-time home buyers," according to Dow Jones Newswires.
That's probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.
The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.
Informed of Rangel's comments, home builders president Jerry Howard said he's no longer as "optimistic about expansion" as he once was.
But, on the other hand, chairman Rangel's endorsement of an extension of the credit -- for a yet-to-be specified period of months -- has got be a lifesaver for thousands of buyers who've been worried they'd miss out on this year's credit because they can't close their transactions by November 30.
The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.
One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.
Copyright © 2009 Realty Times. All Rights Reserved.
Keep in mind, unless extended the cut off date is November 30,2009.
Friday, October 16, 2009
Realty Times of October 16, 2009
Vital Information for First-Time Buyers by Phoebe Chongchua
The first-time homebuyer Federal tax credit for $8000, record-low interest rates, and nationwide median home prices dropping to the lowest point in five years, makes this an enticing time to consider buying a home. By the way, that tax incentive isn't truly just for first-time buyers -- it's defined as those not having owned a home in the last three years. Research and knowing your options are critical. Check with your tax accountant for more details. Note that the deadline is rapidly approaching to cash-in on this tax incentive, which runs out November 30th.
According to an article in August in the Raleigh News & Observer, 10.8 percent of buyers are motivated to buy due to Federal and state tax incentives. So far only 1.14 million buyers have filed for the credit but many more are expected to file for it on their 2010 returns. However, the National Association of Realtors reports that the first-time homebuyer figure in July was still about 10 percent below the average for the past six years.
There are many aspects to consider when buying your first home. Your price point, location, lifestyle, expert help, mortgage programs, inspections, how quickly you want/need to move, the list goes on. It can seem like an overwhelming process for first-time buyers. In fact, some shy away and continue to rent simply because they don't know who to turn to or where to begin. Today there are more resources than ever available with just the click of a mouse; however, that can create information overload! But if you take a breath and relax, I'll sort through some important factors for home buying. And even if you're a seller, it's good to review this material because it helps to remind you where first-time buyers' mindsets are when they make an offer on your home.
Give yourself more time than you think you need. Due to the housing crisis and credit crunch, the mortgage process can take even longer than it did previously. Searching for a home is averaging about 12 weeks while getting the mortgage process wrapped up can take up to 60 days, according to information released by National Association of REALTORS 2008 Profile of Buyers and Sellers.
Give yourself plenty of time to understand how much home you can afford, what kind of loan is most suitable for your needs, and, of course, plenty of time to select the home that fits your lifestyle. First-time homebuyers often don't have a lot of comparison shopping experience. Frequently they're just getting started. What is acceptable for a rental is likely different from what first-time buyers expect and accept when purchasing their first home. However, first-time buyers must understand that shopping for a home is akin to shopping for a mate … there are always some compromises that are necessary. If you don't allow enough time, you'll find that it will lead to headaches, rushed decisions, and, in the end, you may feel pressured to buy something that you have not had enough time to completely consider—maybe because you have to relocate and start your job.
Never skip an inspection. You simply can't spot everything that could be wrong with the home. While not all sellers do it, some hire an inspector to inspect the home when they list it on the market. However, the burden of the inspection typically falls on the buyer to pay for it. And the information you receive is invaluable. Hiring a certified inspector to give the home a once-over will help you discover problem areas that your agent can then negotiate for repair work or price adjustment. Also, note that the home inspections (yours and the sellers) may differ; examine both, this way you'll learn more about your potential home.
Frank Schulte-Ladbeck, a licensed home inspector says that when you get your home inspection be certain to have everything turned on. In one case, "The water valve to the house was turned to almost off. When you turned it on to regular pressure… the seller had water spurting out of almost all of the faucets because all of the O-rings, the seals, had all dried so much that they were just allowing water to spill right out of them," said Schulte-Ladbeck.
Use experts to help prepare. Having a team of experts who can expedite your search by finding the most suitable properties for you will save you endless hours of looking. Also, the right mortgage expert simplifies the loan process. You'll be guided through the home-buying process instead of becoming overwhelmed by the options, paperwork, and tasks. Using the best specialists can truly make buying your first home a wonderful experience.
Copyright © 2009 Realty Times. All Rights Reserved.
There are several bills in Congress relating to an extension of the Federal Tax Credit for 1st Time Homebuyers and reportedly one that covers ALL buyers. We shall see!
Vital Information for First-Time Buyers by Phoebe Chongchua
The first-time homebuyer Federal tax credit for $8000, record-low interest rates, and nationwide median home prices dropping to the lowest point in five years, makes this an enticing time to consider buying a home. By the way, that tax incentive isn't truly just for first-time buyers -- it's defined as those not having owned a home in the last three years. Research and knowing your options are critical. Check with your tax accountant for more details. Note that the deadline is rapidly approaching to cash-in on this tax incentive, which runs out November 30th.
According to an article in August in the Raleigh News & Observer, 10.8 percent of buyers are motivated to buy due to Federal and state tax incentives. So far only 1.14 million buyers have filed for the credit but many more are expected to file for it on their 2010 returns. However, the National Association of Realtors reports that the first-time homebuyer figure in July was still about 10 percent below the average for the past six years.
There are many aspects to consider when buying your first home. Your price point, location, lifestyle, expert help, mortgage programs, inspections, how quickly you want/need to move, the list goes on. It can seem like an overwhelming process for first-time buyers. In fact, some shy away and continue to rent simply because they don't know who to turn to or where to begin. Today there are more resources than ever available with just the click of a mouse; however, that can create information overload! But if you take a breath and relax, I'll sort through some important factors for home buying. And even if you're a seller, it's good to review this material because it helps to remind you where first-time buyers' mindsets are when they make an offer on your home.
Give yourself more time than you think you need. Due to the housing crisis and credit crunch, the mortgage process can take even longer than it did previously. Searching for a home is averaging about 12 weeks while getting the mortgage process wrapped up can take up to 60 days, according to information released by National Association of REALTORS 2008 Profile of Buyers and Sellers.
Give yourself plenty of time to understand how much home you can afford, what kind of loan is most suitable for your needs, and, of course, plenty of time to select the home that fits your lifestyle. First-time homebuyers often don't have a lot of comparison shopping experience. Frequently they're just getting started. What is acceptable for a rental is likely different from what first-time buyers expect and accept when purchasing their first home. However, first-time buyers must understand that shopping for a home is akin to shopping for a mate … there are always some compromises that are necessary. If you don't allow enough time, you'll find that it will lead to headaches, rushed decisions, and, in the end, you may feel pressured to buy something that you have not had enough time to completely consider—maybe because you have to relocate and start your job.
Never skip an inspection. You simply can't spot everything that could be wrong with the home. While not all sellers do it, some hire an inspector to inspect the home when they list it on the market. However, the burden of the inspection typically falls on the buyer to pay for it. And the information you receive is invaluable. Hiring a certified inspector to give the home a once-over will help you discover problem areas that your agent can then negotiate for repair work or price adjustment. Also, note that the home inspections (yours and the sellers) may differ; examine both, this way you'll learn more about your potential home.
Frank Schulte-Ladbeck, a licensed home inspector says that when you get your home inspection be certain to have everything turned on. In one case, "The water valve to the house was turned to almost off. When you turned it on to regular pressure… the seller had water spurting out of almost all of the faucets because all of the O-rings, the seals, had all dried so much that they were just allowing water to spill right out of them," said Schulte-Ladbeck.
Use experts to help prepare. Having a team of experts who can expedite your search by finding the most suitable properties for you will save you endless hours of looking. Also, the right mortgage expert simplifies the loan process. You'll be guided through the home-buying process instead of becoming overwhelmed by the options, paperwork, and tasks. Using the best specialists can truly make buying your first home a wonderful experience.
Copyright © 2009 Realty Times. All Rights Reserved.
There are several bills in Congress relating to an extension of the Federal Tax Credit for 1st Time Homebuyers and reportedly one that covers ALL buyers. We shall see!
Rates Still Below 5 Percent
Realty Times of October 16, 2009
30-Year Fixed Rate Still Below 5 Percent for Third Consecutive Week
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.92 percent with an average 0.7 point for the week ending October 15, 2009, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 6.46 percent.
The 15-year FRM this week averaged 4.37 percent with an average 0.7 point, up from last week when it averaged 4.33 percent. A year ago at this time, the 15-year FRM averaged 6.14 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.38 percent this week, with an average 0.6 point, up from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 6.14 percent.
The one-year Treasury-indexed ARM averaged 4.60 percent this week with an average 0.5 point, up from last week when it averaged 4.53 percent. At this time last year, the 1-year ARM averaged 5.16 percent.
"Mortgage rates rose slightly over the week, but rates on 30-year fixed mortgages remained below 5 percent for the third consecutive week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Homeowners are taking advantage of these low rates to refinance their current balances. Over the past five weeks ending October 9, more than three out of five mortgage applications were for refinancing, according the Mortgage Bankers Association."
"The outlook on economic growth in the second half of this year has improved over the past few months. At it's September 22-23 monetary policy meetings, the Federal Reserve increased its forecast for real GDP growth from the last meeting in mid-August. They noted that data from the housing sector indicated that a gradual recovery in activity was under way. The modest strengthening came about, in part, to improvements in housing affordability stemming from low interest rates for conforming loans and a lower level of house prices."
Copyright © 2009 Realty Times. All Rights Reserved.
30-Year Fixed Rate Still Below 5 Percent for Third Consecutive Week
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.92 percent with an average 0.7 point for the week ending October 15, 2009, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 6.46 percent.
The 15-year FRM this week averaged 4.37 percent with an average 0.7 point, up from last week when it averaged 4.33 percent. A year ago at this time, the 15-year FRM averaged 6.14 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.38 percent this week, with an average 0.6 point, up from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 6.14 percent.
The one-year Treasury-indexed ARM averaged 4.60 percent this week with an average 0.5 point, up from last week when it averaged 4.53 percent. At this time last year, the 1-year ARM averaged 5.16 percent.
"Mortgage rates rose slightly over the week, but rates on 30-year fixed mortgages remained below 5 percent for the third consecutive week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Homeowners are taking advantage of these low rates to refinance their current balances. Over the past five weeks ending October 9, more than three out of five mortgage applications were for refinancing, according the Mortgage Bankers Association."
"The outlook on economic growth in the second half of this year has improved over the past few months. At it's September 22-23 monetary policy meetings, the Federal Reserve increased its forecast for real GDP growth from the last meeting in mid-August. They noted that data from the housing sector indicated that a gradual recovery in activity was under way. The modest strengthening came about, in part, to improvements in housing affordability stemming from low interest rates for conforming loans and a lower level of house prices."
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, October 5, 2009
Preserving Homes and Communities Act
Realty Times of October 5, 2009
Washington Report: Preserving Homes and Communities Act by Kenneth R. Harney
Capitol Hill housing and mortgage lobbyists were buzzing last week about an aggressive new legislative proposal that could put tens of thousands of financially-stressed home owners into loan modifications, even if their lenders and loan servicers had to be dragged kicking and yelling to the negotiating table.
Under the new bill, which was sponsored by four Democratic senators active in housing issues, all lenders and servicers operating in the U.S. would be prohibited from foreclosing on home owners unless they had discussed reasonable modification options with the borrowers.
Lenders who didn't comply would be hit by stiff fines and other legal penalties.
Even more significant -- all lenders would be required to perform what the bill calls a “net present value” test for every seriously delinquent borrower -- that is, a financial analysis weighing the financial benefits of a modification of loan terms, compared with those of a foreclosure.
If the net present value of a modification exceeded that of a foreclosure, lenders would be required by federal law do so.
For borrowers unable to handle the payments offered under a modification plan, the bill would create a multi-billion national fund for states to make loans or grants to prevent foreclosures.
The bill, called the Preserving Homes and Communities Act, was authored by Rhode Island Senator Jack Reed, a senior banking committee member. It's co-sponsors include Illinois Senator Dick Durbin, Jeff Merkey of Oregon and Sheldon Whitehouse of Rhode Island.
The senators said they plan to push the legislation hard because they're frustrated by the slow pace of loan modifications in the face of record numbers of foreclosures this year.
“Voluntary efforts to keep families in their homes have failed,” said Durbin. “This bill will force lenders to modify qualified mortgages” rather than letting them move quickly to foreclosure, which destroys households and neighborhoods.
The mortgage payment assistance program created by the bill would provide money to state housing agencies to set up revolving funds to assist people who've lost income in the recession and now face the imminent loss of their house.
Federal and state funds could provide gap financing to get people past their problems -- or outright grants -- to help them avoid foreclosure.
The bill would also fund state and local programs that create “mandatory mediation” requirements. Lenders would have to allow mediation efforts between themselves and their borrowers before filing foreclosures against home owners.
Though certain to be opposed by banking and mortgage lending groups, the new proposal could get serious traction in the Senate, and is virtually certain to get strongly support in the heavily Democratic House.
Copyright © 2009 Realty Times. All Rights Reserved.
Washington Report: Preserving Homes and Communities Act by Kenneth R. Harney
Capitol Hill housing and mortgage lobbyists were buzzing last week about an aggressive new legislative proposal that could put tens of thousands of financially-stressed home owners into loan modifications, even if their lenders and loan servicers had to be dragged kicking and yelling to the negotiating table.
Under the new bill, which was sponsored by four Democratic senators active in housing issues, all lenders and servicers operating in the U.S. would be prohibited from foreclosing on home owners unless they had discussed reasonable modification options with the borrowers.
Lenders who didn't comply would be hit by stiff fines and other legal penalties.
Even more significant -- all lenders would be required to perform what the bill calls a “net present value” test for every seriously delinquent borrower -- that is, a financial analysis weighing the financial benefits of a modification of loan terms, compared with those of a foreclosure.
If the net present value of a modification exceeded that of a foreclosure, lenders would be required by federal law do so.
For borrowers unable to handle the payments offered under a modification plan, the bill would create a multi-billion national fund for states to make loans or grants to prevent foreclosures.
The bill, called the Preserving Homes and Communities Act, was authored by Rhode Island Senator Jack Reed, a senior banking committee member. It's co-sponsors include Illinois Senator Dick Durbin, Jeff Merkey of Oregon and Sheldon Whitehouse of Rhode Island.
The senators said they plan to push the legislation hard because they're frustrated by the slow pace of loan modifications in the face of record numbers of foreclosures this year.
“Voluntary efforts to keep families in their homes have failed,” said Durbin. “This bill will force lenders to modify qualified mortgages” rather than letting them move quickly to foreclosure, which destroys households and neighborhoods.
The mortgage payment assistance program created by the bill would provide money to state housing agencies to set up revolving funds to assist people who've lost income in the recession and now face the imminent loss of their house.
Federal and state funds could provide gap financing to get people past their problems -- or outright grants -- to help them avoid foreclosure.
The bill would also fund state and local programs that create “mandatory mediation” requirements. Lenders would have to allow mediation efforts between themselves and their borrowers before filing foreclosures against home owners.
Though certain to be opposed by banking and mortgage lending groups, the new proposal could get serious traction in the Senate, and is virtually certain to get strongly support in the heavily Democratic House.
Copyright © 2009 Realty Times. All Rights Reserved.
Subscribe to:
Posts (Atom)
