I can only hope none of you need this information, but if you do:
From Realty Times of June 25, 2009
New Loan Modification, Short Sale Options by Broderick Perkins
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov
Copyright © 2009 Realty Times. All Rights Reserved.
Showing posts with label bailout. Show all posts
Showing posts with label bailout. Show all posts
Thursday, June 25, 2009
Monday, March 16, 2009
Mark to Market
Here is an excellent piece that explains the Mortgage Crisis:
Courtesy of Mike Neill
American Alliance Mortgage Company
"The current economic crisis is the top news story for nearly every media outlet. But until recently, one of the most important factors that led to this challenging market has also been one of the least discussed. "
MARK TO MARKET
Yes, it is a little complicated, but every little bit of information helps us better understand.
Courtesy of Mike Neill
American Alliance Mortgage Company
"The current economic crisis is the top news story for nearly every media outlet. But until recently, one of the most important factors that led to this challenging market has also been one of the least discussed. "
Yes, it is a little complicated, but every little bit of information helps us better understand.
Friday, March 13, 2009
Rental & Second Home Refi's
From Realty Times of March 13, 2009
Investor Report: Refinancings by Kenneth R. Harney
Small-scale real estate investors got a pleasant surprise last week when Fannie Mae and Freddie Mac said they'd refinance potentially thousands of mortgages on rental and second homes as part of the Obama administration's massive housing relief effort.
The White House had announced last month that its refinancing effort would be for owner-occupied principal residences whose loans are either owned or have been guaranteed by Fannie or Freddie in mortgage-backed securities.
But when the two companies sent details of their upcoming programs to lenders last week, investor loans and mortgages on second homes WERE included among those eligible for refinancings.
A Freddie Mac spokesman, Brad German, explained that investors loans were included because refinancings can “help reduce renter evictions by putting landlords in a (more affordable) refi that improves their chance of success.”
That's excellent news for some investors, but it won't help out everybody.
Here's a quick overview of who's eligible and how to apply:
First, your investment property or second home loan must be owned or guaranteed by either Fannie or Freddie. Ask your loan servicer. Or you can go to websites set up by the companies to speed the process - Fannie Mae or FreddieMac.
If your mortgage is in some other institution's portfolio ... or in a private mortgage security, this program isn't for you.
Next, make a rough estimate of your current loan to value ratio on the property. If your mortgage balance does not exceed your property value by more than five percent, you're eligible.
Say you bought a rental duplex a few years back for $500,000 with a first mortgage of $400,000 at seven and a half percent that was acquired by Fannie Mae. You'd love to refinance that to today's much lower rates in the fives or sixes to increase your cash flow.
Because of local property value declines, say your duplex is now worth about the amount of your loan balance. That precludes you from refinancing from most sources, but under Fannie's special program, you'll be eligible … PROVIDED your loan balance does not exceed the property value by five percent.
There's another hoop to jump through: Your payment history on the mortgage needs to be just about flawless -- no thirty day late payments during the past 12 months -- or you won't get a refi.
Two additional, positive details to be aware of: Your credit score WON'T be a problem because Fannie and Freddie have agreed to waive their usual minimums, and you WON'T have to pay for new mortgage insurance.
Copyright © 2009 Realty Times. All Rights Reserved.
Investor Report: Refinancings by Kenneth R. Harney
Small-scale real estate investors got a pleasant surprise last week when Fannie Mae and Freddie Mac said they'd refinance potentially thousands of mortgages on rental and second homes as part of the Obama administration's massive housing relief effort.
The White House had announced last month that its refinancing effort would be for owner-occupied principal residences whose loans are either owned or have been guaranteed by Fannie or Freddie in mortgage-backed securities.
But when the two companies sent details of their upcoming programs to lenders last week, investor loans and mortgages on second homes WERE included among those eligible for refinancings.
A Freddie Mac spokesman, Brad German, explained that investors loans were included because refinancings can “help reduce renter evictions by putting landlords in a (more affordable) refi that improves their chance of success.”
That's excellent news for some investors, but it won't help out everybody.
Here's a quick overview of who's eligible and how to apply:
First, your investment property or second home loan must be owned or guaranteed by either Fannie or Freddie. Ask your loan servicer. Or you can go to websites set up by the companies to speed the process - Fannie Mae or FreddieMac.
If your mortgage is in some other institution's portfolio ... or in a private mortgage security, this program isn't for you.
Next, make a rough estimate of your current loan to value ratio on the property. If your mortgage balance does not exceed your property value by more than five percent, you're eligible.
Say you bought a rental duplex a few years back for $500,000 with a first mortgage of $400,000 at seven and a half percent that was acquired by Fannie Mae. You'd love to refinance that to today's much lower rates in the fives or sixes to increase your cash flow.
Because of local property value declines, say your duplex is now worth about the amount of your loan balance. That precludes you from refinancing from most sources, but under Fannie's special program, you'll be eligible … PROVIDED your loan balance does not exceed the property value by five percent.
There's another hoop to jump through: Your payment history on the mortgage needs to be just about flawless -- no thirty day late payments during the past 12 months -- or you won't get a refi.
Two additional, positive details to be aware of: Your credit score WON'T be a problem because Fannie and Freddie have agreed to waive their usual minimums, and you WON'T have to pay for new mortgage insurance.
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, February 23, 2009
'Stimulus' and 'Stability' Equal Help for Homeowners
Sent with permission of:
Mike Neill
480-505-2202 ext. 208
mike@aamcbank.com
6139 S Rural Road, Bldg 200-104
Tempe, AZ 85283
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phase-out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured homes and houseboats used for principle residence also qualify.
Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
Mike Neill
.
Mike Neill
480-505-2202 ext. 208
mike@aamcbank.com
6139 S Rural Road, Bldg 200-104
Tempe, AZ 85283
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phase-out Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.
To break down what this phase-out means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:
Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.
Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.
Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured homes and houseboats used for principle residence also qualify.
Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
Mike Neill
.
Sunday, February 22, 2009
Top 10 People to Blame for the Financial Crisis
Get your dartboards out - here are the names of those to put on the target!
From National Realty News of Thursday, February 19, 2009 - By Stefan Swanepoel:
TOP 10 PEOPLE
.
From National Realty News of Thursday, February 19, 2009 - By Stefan Swanepoel:
.
Wednesday, February 18, 2009
Inside the Meltdown
Last night I watched a 1 hour show on the Public Broadcast System's "Frontline" called "Inside the Meltdown".
It was, without question, the most comprehensive explanation I have seen of why we are in the economic mess facing us today. I urge you to spend the nearly 1 hour viewing the show to better understand the mistakes that were made and where we are headed now. It clearly explains why lending for homes came to a screching halt, what toxic loans are, and why we must not let this ever happen again.
We regrettably have now begun to nationalize the nation's financial structure as we now own, as citizens, or as our government if you prefer, the 2 largest financial firms in the world, Fannie Mae and Freddie Mac and a percent of the dozen major banking firms.
You can view the show on your own computer and develop your own opinions on how to deal with what the future holds by going to
FRONTLINE
and clicking on "Inside the Meltdown". It takes a few minutes to load - then click on the Green Arrow and turn up your sound.
You are given the opportunity to download the video by mowing your cursor around the page and playing the program in Real Player at your own pace if you prefer. I also suggest you close any open pages on your browser to ensure a clean viewing of the program.
Folks, IT IS WORTH THE TIME! The better we understand how and why this happened, the better we can individually deal with it - and perhaps even help to prevent our grandchildren from facing this terrible ordeal again!
.
It was, without question, the most comprehensive explanation I have seen of why we are in the economic mess facing us today. I urge you to spend the nearly 1 hour viewing the show to better understand the mistakes that were made and where we are headed now. It clearly explains why lending for homes came to a screching halt, what toxic loans are, and why we must not let this ever happen again.
We regrettably have now begun to nationalize the nation's financial structure as we now own, as citizens, or as our government if you prefer, the 2 largest financial firms in the world, Fannie Mae and Freddie Mac and a percent of the dozen major banking firms.
You can view the show on your own computer and develop your own opinions on how to deal with what the future holds by going to
and clicking on "Inside the Meltdown". It takes a few minutes to load - then click on the Green Arrow and turn up your sound.
You are given the opportunity to download the video by mowing your cursor around the page and playing the program in Real Player at your own pace if you prefer. I also suggest you close any open pages on your browser to ensure a clean viewing of the program.
Folks, IT IS WORTH THE TIME! The better we understand how and why this happened, the better we can individually deal with it - and perhaps even help to prevent our grandchildren from facing this terrible ordeal again!
.
Tuesday, February 17, 2009
Economic Stimulus Plan
Economic Stimulus Plan Benefits the Housing and Mortgage Industries
From: Michael Neill [mailto:mike@aamcbank.com] American Alliance Mortgage Company, Revised February 17, 2009
Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.
Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...
________________________________________
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
________________________________________
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
________________________________________
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
This message was sent from Michael Neill to denis@denismarque.com. It was sent from: American Alliance Mortgage Company, 6139 S Rural Rd Bldg 200-104, Tempe, AZ 85283.
.
From: Michael Neill [mailto:mike@aamcbank.com] American Alliance Mortgage Company, Revised February 17, 2009
Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.
Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...
________________________________________
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
________________________________________
Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
________________________________________
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.
As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.
This message was sent from Michael Neill to denis@denismarque.com. It was sent from: American Alliance Mortgage Company, 6139 S Rural Rd Bldg 200-104, Tempe, AZ 85283.
.
Monday, February 16, 2009
Non-Repayable Tax Credit
From Realty Times of February 16, 2009
Washington Report: Non-Repayable Tax Credit by Kenneth R. Harney
Further to the 1st Time Home Buyer article of yesterday:
First time buyers will get an improved, higher, nonrepayable version of last year's repayable $7,500 tax credit under Congress's massive $789 billion economic stimulus package.
That in turn should lead to 500,000 additional home sales this year, according to new estimates prepared by the National Association of Realtors economics staff and provided to Realty Times.
With the credit eligibility period now extended to September 1, instead of the previous cut-off date of June 30, the 500,000 additional transactions will include purchases not only by direct users of the credit, but also replacement home purchases by sellers who are moving out …or moving up.
This year's better tax credit should also generate huge amounts of "ripple effect" bang for the buck -- $62,000 of additional economic activity for every house sold - or roughly $31 billion in incremental economic benefits, according to the Realtors' projections.
Why? Because virtually every home purchase triggers other purchases and payments down the line -- furnishings, appliances, remodeling, real estate commissions, moving expenses and the like.
Not everybody in Washington is happy with the new credit, however. The National Association of Home Builders pushed hard for a $15,000 credit for all purchases during 2009 -- and got it inserted in the Senate version of the stimulus package.
But House and Senate conferees decided that was too costly in a bill that already had $280 billion in other tax benefits, and they cut it back to the smaller version passed earlier by the House.
Though the improved tax credit is drawing most of the attention, the stimulus package has a handful of other incentives and benefits for home owners. For example, it extends or expands all energy-related tax credits -- for everything from energy efficient heating and airconditioning units, doors, windows and insulation - through the year 2010.
And the bill should produce a lot of additional economic activity aimed at "weatherization" of up to one million houses owned by moderate-income families -- $5 billion worth of new subsidies, according to House Speaker Nancy Pelosi.
Still another big program in the package should create economic ripple effects in neighborhoods where there have been heavy numbers of foreclosures. The bill provides two billion dollars to buy up, renovate and either rent out or resell foreclosed and vacant houses.
The money will go to local governments, but the actual rehab, rental and resales work will flow to people in the private sector.
So if you live or work in an area that's seen a lot of foreclosures, check in with your local housing and planning departments to see how you might fit in.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Washington Report: Non-Repayable Tax Credit by Kenneth R. Harney
Further to the 1st Time Home Buyer article of yesterday:
First time buyers will get an improved, higher, nonrepayable version of last year's repayable $7,500 tax credit under Congress's massive $789 billion economic stimulus package.
That in turn should lead to 500,000 additional home sales this year, according to new estimates prepared by the National Association of Realtors economics staff and provided to Realty Times.
With the credit eligibility period now extended to September 1, instead of the previous cut-off date of June 30, the 500,000 additional transactions will include purchases not only by direct users of the credit, but also replacement home purchases by sellers who are moving out …or moving up.
This year's better tax credit should also generate huge amounts of "ripple effect" bang for the buck -- $62,000 of additional economic activity for every house sold - or roughly $31 billion in incremental economic benefits, according to the Realtors' projections.
Why? Because virtually every home purchase triggers other purchases and payments down the line -- furnishings, appliances, remodeling, real estate commissions, moving expenses and the like.
Not everybody in Washington is happy with the new credit, however. The National Association of Home Builders pushed hard for a $15,000 credit for all purchases during 2009 -- and got it inserted in the Senate version of the stimulus package.
But House and Senate conferees decided that was too costly in a bill that already had $280 billion in other tax benefits, and they cut it back to the smaller version passed earlier by the House.
Though the improved tax credit is drawing most of the attention, the stimulus package has a handful of other incentives and benefits for home owners. For example, it extends or expands all energy-related tax credits -- for everything from energy efficient heating and airconditioning units, doors, windows and insulation - through the year 2010.
And the bill should produce a lot of additional economic activity aimed at "weatherization" of up to one million houses owned by moderate-income families -- $5 billion worth of new subsidies, according to House Speaker Nancy Pelosi.
Still another big program in the package should create economic ripple effects in neighborhoods where there have been heavy numbers of foreclosures. The bill provides two billion dollars to buy up, renovate and either rent out or resell foreclosed and vacant houses.
The money will go to local governments, but the actual rehab, rental and resales work will flow to people in the private sector.
So if you live or work in an area that's seen a lot of foreclosures, check in with your local housing and planning departments to see how you might fit in.
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Copyright © 2009 Realty Times. All Rights Reserved.
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Saturday, February 14, 2009
Home Buyer Tax Credit
I send you to this page from New Quest City since it the clearest article I have seen thus far to the effect on Real Estate of the American Recovery and Reinvestment Act of 2009. Primarily directed at Buyers, I note that which is good for Buyers serves the Sellers as well. More Buyers, more sales!
Highlights:
1) If you have not owned a home for 3 years, you are a first time Home Buyer!
2) You can get up to $8,000 tax credit (not deductions, but money to pay taxes).
3) You do not have to repay the $8,000 if you keep the home for 3 years.
4) You must close the sale in 2009.
There is more, so read the articcle.
First Time Home Buyer Tax Credit
There are no doubt questions still not answered but a 1,000 page Congressional Bill does take a bit of time to digest and understand.
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Highlights:
1) If you have not owned a home for 3 years, you are a first time Home Buyer!
2) You can get up to $8,000 tax credit (not deductions, but money to pay taxes).
3) You do not have to repay the $8,000 if you keep the home for 3 years.
4) You must close the sale in 2009.
There is more, so read the articcle.
There are no doubt questions still not answered but a 1,000 page Congressional Bill does take a bit of time to digest and understand.
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Wednesday, February 11, 2009
Don't Walk Away from your Home
News reports indicate that lawyers are now active in the mortgage problems. They are working with banks and lenders to bring suits against those who abandon there homes and/or use "jingle mail" - the practice of mailing the house keys to the lender.
Talk to the bank or lender who holds your mortgage - make them aware of your problem in meeting payments. If you miss 3 monthly payments, the bank will give you 90 days (in most cases) to do a "short sale" on your home, a much, much better option than jingle mail.
If you need assistance finding experts in the field of "short sales", I don't claim to be one, call me and I will put you in touch with some one that can help you. Under no circumstances give money up front to anyone who claims to be able to help you - most, if not all, asking for up front money will do nothing for you.
You can reach me at denis@denismarque.com for assistance.
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Talk to the bank or lender who holds your mortgage - make them aware of your problem in meeting payments. If you miss 3 monthly payments, the bank will give you 90 days (in most cases) to do a "short sale" on your home, a much, much better option than jingle mail.
If you need assistance finding experts in the field of "short sales", I don't claim to be one, call me and I will put you in touch with some one that can help you. Under no circumstances give money up front to anyone who claims to be able to help you - most, if not all, asking for up front money will do nothing for you.
You can reach me at denis@denismarque.com for assistance.
.
Monday, January 26, 2009
Top Five Myths About Loan Modification
From Realty Times of January 26, 2009
Top Five Myths About Loan Modification by Ralph Roberts
DETROIT--(BUSINESS WIRE)-- Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, today released a list dispelling the top five myths about loan modification. Intended to better educate homeowners facing the prospect of losing their home in foreclosure, the following list demystifies the most common misconceptions surrounding the loan modification process.
MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today's market, there's a good chance they'll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
MYTH #2: My credit score is bad so I won't qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.
MYTH #3 I am not late on my mortgage payments so I won't qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It's difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.
MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.
MYTH #5: It's too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn't voluntarily abandon it, and the home hasn't been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
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Top Five Myths About Loan Modification by Ralph Roberts
DETROIT--(BUSINESS WIRE)-- Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, today released a list dispelling the top five myths about loan modification. Intended to better educate homeowners facing the prospect of losing their home in foreclosure, the following list demystifies the most common misconceptions surrounding the loan modification process.
MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today's market, there's a good chance they'll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
MYTH #2: My credit score is bad so I won't qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.
MYTH #3 I am not late on my mortgage payments so I won't qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It's difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.
MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.
MYTH #5: It's too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn't voluntarily abandon it, and the home hasn't been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.
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Copyright © 2009 Realty Times. All Rights Reserved.
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Friday, January 23, 2009
Few Borrowers Can Revise Mortgage Loans
We do not wish to only present the good news - you will get the other side of the story here as well!
Not everyone agrees that the bailout is working. One woman's story as it appears in RISMEDIA, January 23, 2009:
A different view of the bailout!
It appears our new president has a major challenge ahead of him in this area!
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Not everyone agrees that the bailout is working. One woman's story as it appears in RISMEDIA, January 23, 2009:
It appears our new president has a major challenge ahead of him in this area!
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Monday, October 20, 2008
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.
.
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.
.
Monday, October 13, 2008
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.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
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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.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Tuesday, October 7, 2008
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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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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Monday, September 29, 2008
THE BAILOUT - SURPRISE, SURPRISE!!
The bailout bill has failed in the U.S. House !!!!
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
Brief Overview of Bailout Plan
From Realty Times on September 29, 2008
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
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