Is There Hope?

http://media.npr.org/documents/2009/feb/obama_foreclosure_plan.pdf

NPR.org

Economy
Obama Sets $75 Billion Plan To Stem Foreclosures
by Deborah Tedford

President Obama on Wednesday unveiled an aggressive plan that aims to help up to 9 million homeowners avoid foreclosure, a major cause of the nation's financial crisis.
The president announced details of the plan in a speech in suburban Phoenix, where massive foreclosures drove down the median price of an existing home to $136,000 last month — a 49 percent drop from 2006, according to The Arizona Republic.
The plan is designed to help homeowners whose mortgages exceed the value of their home and those who are on the verge of foreclosure. It includes $75 billion to cut the home payments of some homeowners and $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae and Freddie Mac — double what was originally pledged.
"Through this plan, we will help between 7 and 9 million families restructure or refinance their mortgages so they can avoid foreclosure," Obama said in remarks to a crowd at a Mesa, Ariz., high school. "And we are not just helping homeowners at risk of falling over the edge; we are preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs."
The announcement came shortly after the Commerce Department released even more bad news about the housing market. The government report showed that housing starts fell nearly 17 percent in January to a seasonally adjusted annual rate of 466,000 units, a record low. Applications for building permits, an indicator of future activity, also dropped.
The president's initiative calls for allowing 4 million to 5 million ineligible homeowners with mortgages through Fannie Mae or Freddie Mac to refinance their home loans at lower rates. To accomplish this, Obama said he would remove restrictions that prevent Fannie and Freddie from refinancing mortgages valued at more than 80 percent of a home's worth.
Housing Secretary Shaun Donovan stressed that homeowners don't need to be delinquent in payments to get help.
The plan also offers financial incentives for lenders to reduce the mortgage payments of as many as 4 million homeowners who are at risk of losing their homes. Under the $75 billion Homeowner Stability Initiative, lenders would cut mortgage payments to no more than 31 percent of the borrower's income.
"My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines — which will be in place two weeks from today," Obama said.
The plan is designed to aid homeowners and entire communities where double-digit foreclosure rates have led to declining properties and a shrinking tax base. Last year, there were nearly 3.2 million foreclosure filings — including default notices, auction sale notices and bank repossessions — on more than 2.3 million properties during 2008, an 81 percent increase in total properties from 2007, according to RealtyTrac, which tracks foreclosures.
The president stressed that the plan would not rescue speculators who made risky investments on homes to resell, dishonest lenders who distorted facts to get loans approved, or people who bought homes they knew they could not afford.
In addition, the Treasury Department announced it would provide up to $200 billion to Fannie Mae and Freddie Mac to stabilize the markets and hold down mortgage rates. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac.
"The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners," said a Treasury Department statement.
The president announced his housing initiative just one day after he signed a $787 billion economic stimulus plan that aims to create or save 3.5 million jobs. On Wednesday, he said part of the economic stimulus included $2 billion in competitive grants to communities looking for innovative ways to avoid foreclosures.

Advantages To Purchasing in 2009

AMERICAN RECOVERY AND INVESTMENT ACT

Here are the high points that you must be aware of:
1) $15,000 tax credit…no loan cap, no income cap. For anyone who buys a primary home.
2) $15,000 credit only repayable if the home is resold within 3 years. (no flipping)
3) Credit only for primary homes.
4) Closing on or before December 31st 2009.
5) Claimable at closing and it CAN BE APPLIED TO THE DOWNPAYMENT.
6) Create a temporary 30 year, fixed rate mortgage with these amazing terms:
2.99% through 06/30/09.
3.99% through 12/31/09
7) The FNMA/ FHLMC to purchase these low rate, FHA insured loans from lenders at full price and then resell them at lower market prices…bascially…the governement will subsidize the difference.
8.) As proposed, lenders who do Loan Mods and Short Sales will have their losses subsidized by the government. In other words, the government is NOW GIVING LENDERS HUGE indentives to do Short Sales.

reference: www.timandjulieharris.com

Struggling Homeowners Can Receive Help!!

Here is an article from Washington Post:

LAS VEGAS, Feb. 9 — The Obama administration has developed the broad outlines of a plan to stem the soaring rate of foreclosures by adding incentives for borrowers and lenders to agree to modify home loans that have fallen behind, perhaps by as little as a single month.

The plan is a “more aggressive” version of an initiative launched by mortgage financiers Fannie Mae and Freddie Mac late last year, James Lockhart, director of the Federal Housing Finance Agency, said in an interview here. The administration has said it will spend between $50 billion and $100 billion from the financial bailout package to help struggling homeowners.

Senior officials are still hammering out the initiative and are not expected to provide the details tomorrow when they unveil their rescue plan for the financial system, two sources familiar with the matter said. The foreclosure strategy could be announced at the end of this week or next week, they said.

Lockhart said both lenders and borrowers have been frozen by the perception that the government may continue to unveil new and better modification programs.ad_icon
“The early returns show that we may need to be more aggressive” than plans already announced, he said. But the government also needs to send a message to lenders that its new approach would represent the “best and final” offer.

The Fannie and Freddie program allowed borrowers who were 90 days delinquent on a loan to have their payments lowered to 38 percent of their income. The loan could also be extended from 30 years to 40 years, and if that was not enough, the interest rate could be reduced to as low as 3 percent to make the payments more affordable.

Consumer advocates say the program was a good start in tackling the foreclosure problem but did not go far enough to help homeowners. For example, the effort did not include measures to cut the principal owed by borrowers who have seen the value of their home fall below their mortgage loan. Another requirement — that borrowers miss three payments before qualifying for help — has been a troublesome issue identified by some consumer groups.

The government’s new approach would make the terms more generous for both the borrowers and lenders. For instance, borrowers who missed only one payment might be able to qualify, Lockhart said. Lenders may be able to lower payments to a lower percentage of a homeowner’s income.

Officials are also planning to set national standards for when banks opt to participate in the government plan — an important concern for loan servicers who can now only perform modifications that improve the value of the mortgage under the terms of their contracts with investors.

Lockhart said he hoped the new program would be attractive to loan holders, but he added that they had an obligation to increase their modification efforts.

“It is taking too long,” he told an industry group during a speech in Las Vegas. “It is time to act.”

posting taken from http://www.timandjulieharris.com/

If you need help regarding your best plan of action,
CALL TODAY!!
(323) 294-0094 ext 227
Lea, The Loan Modifier

Loan Modification Questions and Answers

What is a Loan Modification?

A loan modification is the procedure whereby a loan’s payment plan is changed, due to the hardship of the borrower. This may include changes to the rate, the term and the monthly payment amounts. In rare cases, the principal amount may be reduced.

This process is handled through the lender’s Loss Mitigation Department.


Why Would a Lender Agree to Modify Someone’s Loan?

It’s simple. Foreclosures are at an all time high. Banks cannot afford to own many foreclosed home assets. Banks are in the business of lending money, not owning property. When they own property, their money is locked up and they can't lend it out, so banks lose money on foreclosed homes in almost every case. With this in mind, now is a great time to request a loan modification for your clients, if they have a verifiable hardship that could otherwise lead them into a foreclosure situation, and if they wish to stay in the home. The loan modification option saves the homeowner’s home from foreclosure, helping both the homeowner and the bank.

How Does the Homeowner Benefit?

For the homeowner who wishes to keep their home, the Loan Modification is the solution, regardless of their current equity or credit situation. Different than the short sale, the homeowner stays in the home. Ultimately, the result of a Loan Modification is the borrower more easily and consistently makes their mortgage payments. This allows them to stay in their home and preserve the American Dream for themselves and their families, avoiding what has been dubbed, the ‘American Nightmare’ of losing their home to foreclosure.
Furthermore, a Loan Modification will not contribute to the decline of the local housing market, takes less time and effort than a short sale and is better for the homeowner’s credit. In many cases, a Loan Modification can close in less than 30 days, assuming the system has been followed as we present in this guide, and the homeowner qualifies

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(323) 294-0094 ext 227