Associated Press Story on White House Assistance for Homeowners

For those keeping track of Washington and the Housing Market, here is a recent story which I have cut and pasted from the Associated Press regarding assistance from Washington for home owners.

Title: Obama Administration Launches Housing Plan

Source: Yahoo News Financial Section, By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer 2 hrs 32 mins ago

WASHINGTON – The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments.

Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.

Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.

"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."
There was also skepticism that banks would be willing to participate.

"I've just seen so many of the programs not work," said Pava Leyrer, president of Heritage National Mortgage in Randville, Mich. "It gets borrowers hopes up. They call and call for these programs and we can't get anybody to do them."

The Obama administration's program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowner, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.

For the modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify for the loan modification program, which runs through 2012.

Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.

Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.

If the plan works as intended, it could be a big plus for borrowers like Nick Kavalary, a network cable installer who lives outside Milwaukee.

Kavalary, 42, has been struggling with JPMorgan Chase & Co. to get a loan modification. He was finally approved for one this year, but it only cuts his interest rate to about 9.8 percent from 10.75 percent. Even at the lower rate, he said, making the payment is nearly impossible.
"If I can't pick up a second job, I'm going to lose this house," he said. "With the job market being the way it is, nobody's hiring nobody."

For the refinance program, only homeowners whose loans are held by Fannie Mae or Freddie Mac are eligible and have until June 2010 to apply.

Consumers should contact their loan servicer — the company that sends out their monthly bill — to find out if their mortgages are held by Fannie or Freddie. The two mortgage finance companies own or guarantee almost 31 million home loans — more than half of all U.S home mortgages.

Many mortgage brokers, however, are critical. They argue the fees imposed by Fannie and Freddie over the past year make it difficult for borrowers to afford to refinance. The two companies, which are now government controlled, have yet to detail how they will implement the plan, or whether any fees will be rolled back.

Meanwhile, action to put in place another part of Obama's housing plan is expected soon on Capitol Hill.

House Democrats agreed Tuesday to narrow proposed legislation that gives bankruptcy judges the power to change the terms of mortgage loans for debt-strapped borrowers.
In the latest version of the bill, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.

A full vote in the House could come as early as Thursday.
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Confused About Your Mortgage? Trying to Buy a New Home or Refinancing?

One of the things I hope to do over time with this blog is to give you information on people who might be good resources. Dean Graber is someone I met at a recent real estate seminar in Queens, New York. If you need help with your mortgage, refinancing, loan modification - before stressing yourself out, call or email him. If you are buying a home - call him. If you are involved in a short sale negotiation - can't emphasize it enough - call him. What was it that struck me about Dean? He had a quick presentation that was easy to understand. That's important, you want someone who is going to help you, not confuse you. In addition, Dean is up to date with the expected changes coming down the pipeline as part of the economic stimulus package. Finally, and just as important, he is professional and personable. As tough as these issues are to work through, you want someone who doesn't create more stress with "attitude." His contact information is as follows: phone, 516-527-9549; email, deanwgraber@aol.com and fax number, 800-521-3756.

Check Out This Reuters Article Regarding Foreclosures

I thought this online Reuters article by Alister Bull and Mark Felsenthal would be of interest to anyone (really, all of us) interested in an update about the foreclosure situation. I could have summarized it but this is a very important issue and sometimes with such matters it is best to read what was reported in the way it was originally reported.

The article was entitled: Fed Takes Major Step Toward Stalling Foreclosures and it appeared on the Yahoo site on Tuesday, January 27th. By the way, if you go onto Yahoo News, go to the "more on real estate" area for archived articles on this issue from various news sources.


WASHINGTON (Reuters) – The Federal Reserve on Tuesday took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.
Fed Chairman Ben Bernanke said the initiative would specifically include $74 billion of assets held in connection with the bailout last year of Bear Stearns and American International Group.
"The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank," he said in a letter to Rep. Barney Frank, chairman of the House of Representatives financial services committee.
The Fed was instructed by the law last year that authorized a $700 billion bank bailout with public money that it must do what it can to minimize foreclosures.
The Bear Stearns and AIG rescues were done outside of this emergency measure, and President Barack Obama has said that part of the second $350 billion tranche of the money, that was released to him by Congress earlier this month, will be used to stem the tide of foreclosures.
Private economists estimate that millions of Americans are at risk of losing their homes after the collapse of the U.S. housing market savaged house prices and forced up unemployment as the economy slid into recession at the end of 2007.
Frank, a Massachusetts Democrat, has been among U.S. lawmakers pressing the Fed and the government to do more to prevent mortgage foreclosures and he said the decision by the Fed was a "major breakthrough."
"We just had very good news from Mr. Bernanke from the Federal Reserve, who has just announced a very significant increase in Federal Reserve policies to reduce foreclosures," Frank told MSNBC television in an interview.
MODIFYING RISKY LOANS
Research firm RealtyTrac says 850,000 foreclosed homes are already on the market and expects this number to rise by another 1 million homes in 2009, with 2 million more homes entering the foreclosure process during the same period.
Senate Banking Committee Chairman Christopher Dodd separately said that the Fed's decision was an important step.
"I am delighted to hear the news. I don't know details of it yet. I am very encouraged by that," he told reporters.
"We have been trying to get, as you know, for some time in the previous administration (of President George W. Bush) for them to take steps on foreclosure mitigation.
"They refused to do so for whatever reason. I am very pleased that the Fed is stepping up," Dodd said.
In a bold effort to unscramble complex mortgage-backed securities at the heart of a financial crisis sparked by the housing market decline, the Fed said it would encourage mortgage servicers to modify loans at risk of default.
It will also "assist" the loan servicer in making modifications, according to a document made public by the Fed on Tuesday, entitled "Homeownership Preservation Policy for Residential Mortgage Assets."
The Fed has said it will purchase up to $500 billion of mortgage-backed securities by the end of June to make home loans more affordable to boost demand for houses.
Mortgage-backed securities pool many different mortgages, which makes them extremely tricky to separate in a loan modification designed to prevent foreclosure.
The Fed said it would consider reducing the interest rate paid on mortgages at risk of default, extending the term of the loan, and accepting "a deferral or reduction of the outstanding principal balance of the loan," according to the Fed document.
(Additional reporting by Rachelle Younglai in Washington and Helen Chernikoff in New York; Editing by Jan Paschal)

Update and Have a Wonderful Holiday

Checking out open houses and in the midst of Holiday preparations since the end of November but decided to take the time to add a brief update. You may have noticed nothing new in my blog. Since many economic changes are occuring rapidly, I decided to take a little time to research issues that I have been asked about. Keep track of this blog and be sure to check back within the next few weeks for more write-ups, general real estate information, and tips to get things moving. In the meantime, have a wonderful Holiday and I wish you the best for 2009! Let's make your Dream Home a reality in 2009!!!

What is prequalification and do I need it?

So, a potential home buyer asks, what is prequalification, do I need it?

Two words used with frequency confuse both buyers and sellers. One often hears of pre-qualification and pre-approval. What's the difference and why does it matter? Pre-qualification refers to an opinion a potential buyer has been given by a lender regarding his purchasing budget. In other words, pre-qualification is basically a quick credit check, it does not mean you can get the loan. Pre-approval refers to the process whereby a buyer has had credit and other financial information actually checked out and knows with more certainty the maximum amount a lender will give. Pre-approval does not guaranty that you will actually get the loan.

Then, why would someone want or need pre-qualification and pre-approval. Both should be thought of as important steps on the path to purchasing a home. Pre-qualification makes sense because it helps one start to focus on what is affordable and available within one's budgetary range. There are many beautiful properties out there and it is very easy to spend time dreaming and then encounter disappointment when looking at homes out of ones reach. So, pre-qualification is useful.

Pre-approval however enables a buyer to get on a faster track to purchasing a home. A pre-approved buyer is a serious buyer who knows his/her budget and limitations. This is a big time saver for all parties involved. After pre-approval, a buyer should work quickly with a realtor to identify those available properties that can indeed be purchased.