Lea's Corner

Walk Away?

2009-12-01T01:38:00.000-08:00

2009-09-30T11:01:00.001-07:00

If you or someone you know could benefit from learning about a Short Sale then please continue reading. Many people are looking for alternatives to foreclosure now that loan modifications are not an option. Or you may be in a negative equity situation and want to know your options even if it’s not a hardship with the mortgage. A comprehensive hour spent going over the specifics of how a Short Sale works. Topics such as Recourse and Non Recourse Loans, tax ramifications, income property, Second lien holders….etc will be addressed.

Please email or call to be placed on the interest list.

(310) 493-9678 or reagentlea@yahoo.com

Short Sales

2009-09-14T03:08:00.000-07:00

A short sale is the sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan.

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure.

A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from a Broker Price Opinion BPO (also known as a Broker Opinion of Value (BOV)) or through a valuation of an appraisal. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

One thing a buyer should know about a short sale is there is no necessary commitment by the bank to sell the house. When the bank completes a short sale they have to write off the difference between their loan amount and the lesser proceeds from the escrow, something they wish to avoid. You may go through all the paperwork to make an offer on the house, pay for inspections, and put down a deposit to start the sale process. After you have made your offer, the bank may try to convince the seller to refinance their loan and stay in the house, which avoids the bank having to take the write off. Any short sale contract includes a contingency where the bank must approve the sale. If the bank persuades the seller to refinance the house, the bank doesn't approve the short sale and the buyer gets their deposit back. In this situation the bank has tied up several months of the buyers time and now the buyer must start the buying process over again. So if you have a fixed time period to get in a specific city or neighborhood you may be better off with a foreclosure (the bank formally took possession of the property) or a situation where the seller has equity. In a short sale situation look for clues like has the seller moved out. This reveals the seller has no intention of staying in the property or working with the bank to make the mortgage more affordable. You are now seeing statements in Real Estate ads that say "Bank Approved Short Sale" or "Single Lender on Short Sale" (telling you that only one bank has to approve the short sale, not a 2nd and/or Home Equity lender). After doing due diligence with the selling realtor about how much the selling bank has approved, a Bank Approved Short Sale is much better than one where the bank holding the mortgage has only been lightly involved in the decision by the selling home owner to short sell the property.

(Wikipedia)

First Time Buyers

2009-08-27T20:56:00.000-07:00

From Yahoo Real Estate Advice and Guides.

Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you'll need to consider before investing in what may be your biggest asset.

Before You Start:

•Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
•Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
•Think about your lifestyle and how it might affect your choice of home and neighborhood.
•Do a little research on current home prices in the neighborhoods you plan to target.

Buying Your First Home
Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.

Even if housing prices don't continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child's education. There are also tax benefits.

Like many other investments, however, real estate prices can fluctuate considerably. If you aren't ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you'll need to determine how much you can spend and where you want to live.

How Much Mortgage Can You Afford?
Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae's standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.

The housing expense ratio compares basic monthly housing costs to the buyer's gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.

The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.

Many home buyers choose to arrange financing before shopping for a home and most lenders will "pre-qualify" you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.

In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.

How Much Home Can You Afford?
Bob and Janet's combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).

Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.

Costs of Buying a Home
Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front "points" (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month's homeowners insurance, recording fees and attorney's fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.

Ongoing Costs
In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.

Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.

Choosing a Neighborhood
Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don't have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property's future value. On the other hand, you may want to run a business out of your home.

Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.

Finding a Broker
If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer's broker. This individual does work for you, and therefore is paid by you. Seller's brokers are paid by the seller.

Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don't be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.

Home Buying Costs
Down Payment 0% - 20% of purchase price
Home Inspection $200 - $500
Points $1,000 and up for 1% - 3%
Adjustments 3% - 8% of purchase price

Once you've determined a price range and location, you're ready to look at individual homes. Remember that much of a home's value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.

Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.

Summary:

•Buying a home can mean building significant value through the years.
•Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
•Pre-qualifying with your lender is a good way to determine how much house you can afford.
•You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
•In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
•Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
•Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
•Remember to consider resale value when buying your home.

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2009-08-04T09:16:00.000-07:00

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Is The Housing Meltdown Ending?

2009-05-06T08:41:00.000-07:00

Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago.
The consensus forecast of industry experts polled by Briefing.com had predicted no increase in the index.

It may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed, according to Lawrence Yun, NAR’s chief economist. And, the upturn may have been boosted by the first-time homebuyers tax credit, a temporary measure that will lapse in December.

“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Yun. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment.”

The index is understood to be a forward indicator of home sales trends since it measures contracts signed, not completed sales. The up-tick may indicate that home prices have fallen low enough for buyers to get off the fence.

Feeling for the bottom? Yun is not calling a bottom yet, however, because the index is still at a relatively low level. Instead, he’s looking toward the summer selling season to determine what direction the market will take. Plus, he would like the number of homes on the market to drop to a more normal level of six to seven months of supply.

“If inventory goes down - it’s at just under 10 months now - to below eight months, that would mean we’re on the way to a sustainable recovery,” Yun said.
Anecdotal evidence indicates that trend may be happening. Realtors and other industry insiders are seeing rising open house attendance and multiple bids on some particularly desirable properties. Plus, pricing has become sharper, according to Sherry Chris, the CEO of Better Homes and Gardens Real Estate.

“Overpricing seems to be ending,” she said. “Properties are coming onto the market and selling quickly.” And buyers are feeling a little more urgency, she added. In many markets, buyers have not felt any pressure to make an offer. “They said to themselves, ‘I don’t have to act immediately. It will still be on the market two weeks from now,’” she said. Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house. They don’t, however, believe there will be price increases soon; three of four buyers think prices will stabilize or even decline in their areas over the next 12 months, according to Gallup.

Pat Newport, a real estate analyst for IHS Global Insight, is putting less emphasis on pending home sales than he once did for his housing market analyses. There has been a disconnect lately, he said, between the number of properties going into contract (pending home sales) and the number that actually close (existing home sales). He speculates that this is because buyers are making offers and signing contracts but, because of financing problems, many deals are falling through.

Regional differences
The South saw the largest gain of any region, with pending home sales jumping 8.5%. Pending sales are 7.7% higher there compared with a year ago.
The Midwest gained 3.9% from February and 1.7% year-over-year. Northeast sales fell 5.7% and are off 24.1% compared with March 2008. The West dropped 1% for the month but are up 8.2% year-over-year.
Low home prices continued to help to drive sales, although NAR’s affordability index actually fell 2.3% from February, when it hit a historic high. This index is based on family income, home prices and mortgage rates.

“Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment,” said NAR President Charles McMillan, in a prepared statement. “For buyers who’ve been on the sidelines and have good jobs, the market has never looked more favorable.

source: www.money.cnn.com

Located at 5633 Overhill Drive, B.A. Clark Realty has been serving the community for over 30 years. For all of your real estate needs please call:

Lea Anderson
Real Estate Agent
B.A. Clark Realty
Serving the Los Angeles area
(323) 294-0094 ext 227
reagentlea@yahoo.com

Signs Of Housing Recovery

2009-04-29T08:36:00.000-07:00

Sales of existing homes fell in March, according to an industry report released Thursday, but analysts say the housing market is showing signs of stabilization.

The National Association of Realtors said that existing home sales fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February.

March sales were down 7.1% year over year, and came in weaker than the 4.65 million rate forecast by analysts surveyed by Briefing.com.

Despite last month’s decline, existing home sales appear to be stabilizing, according to Ian Shepherdson, economist at High Frequency Economics.

“Sales are volatile month-to-month, but the trend appears to be flattening off,” Shepherdson said in a research note.

Single family home sales, which are considered the core of the market, fell at a 10% annualized rate in the first quarter of 2009, after a 17.4% drop in the last three months of 2008. At the current sales pace, existing-home sales will be down “only” 2% in the second quarter, according to Shepherdson.

First-time buyers made up 53% of existing home sales in March. Charles McMillan, NAR’s president, said first-time buyers are “crucial” to a recovery in the overall housing market.
“The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down,” McMillan said in a statement.

Meanwhile, sales of “distressed properties” accounted for over half of all transactions in March. Foreclosed homes typically sell for 20% less than traditional homes, according to NAR.
“Clearly foreclosure activity is driving the marketplace,” said Adam York, an economist at Wachovia Economics Group, in a research report. “Buyers are clearly looking for ‘bargains,’ if they are looking at all.”

Existing home sales in the West declined 4.2% in March. Sales in the South and the Northeast also fell, while sales in the Midwest were unchanged.

The national median existing-home price was $175,200 in March, up 4.2% from $168,200 in February. Still, the median existing-home price was down more than 12% since March 2008, when it was $200,100.

The total number of existing homes on the market at the end of March fell 1.6% to 3.74 million units. At the current sales pace, it would take an estimated 9.8 months to sell that inventory of properties. That’s up slightly from 9.7 months in February and January.

“The inventory overhang has stabilized too,” Shepherdson said. But the number of existing homes on the market remains historically high, and prices will continue to fall rapidly “for the foreseeable future,” he said.

Source: money.cnn.com
Reposted from: http://www.timandjulieharris.com/

Lea is a Real Estate Agent in Los Angeles, CA
For your real estate needs, please call
(323) 294-0094 ext 227

2009-04-22T08:04:00.000-07:00

This is exciting news during a time where most Real Estate Professionals and consumers are hearing nothing but doom and gloom regarding the real estate market.

Don't forget about the $8,000 tax credit that some may qualify for if a home is purchased before Decemeber 1, 2009.

*****************************************

An estimated 36,215 new and existing homes and condos sold in California last month, a 23.9% month-on-month increase from February and 47.4% year-on-year increase from March 08, according to a report published Thursday by San Diego-based MDA DataQuick Information Systems. March marked the ninth consecutive month of year-over-year sales inclines.
Sales prices continue to slip in the Golden State, however, with March posting a median sales price of $233,000 — 0.4% below February’s median and 37.7% below the year-ago median seen in March 08. DataQuick attributed the drop to the work of depreciation in concert with shifts in the types of homes sold toward foreclosure properties. Real estate-owned (REO) properties accounted for 57.4% of monthly sales in March, up from 35.5% in March ‘08.

California home buyers in March committed to an average mortgage payment of $958, 44% below the average payment entered in March ‘08, 63.1% below the latest bubble’s June 2006 peak and the lowest average monthly payment, adjusted for inflation, reported in DataQuick’s statistics, which track information back to 1988.

“Indicators of market distress continue to move in different directions,” say DataQuick researchers. “Foreclosure activity is nearing its 2008 peak, while financing with adjustable-rate mortgages is at an all-time low, as is financing with multiple mortgages.”

A continued increase in Bay Area home sales and continued decrease in median sales price indicates stabilization forces at work, while a “significant” slowing of the pace of median sale price declines suggests the nine-county market might be near its bottom, DataQuick found. A total of 6,325 new and resale houses and condos sold in the Bay Area in March, at a median sales price of $290,000.
“For now, the extent to which prices have fallen in the upscale markets is more difficult to gauge because many of those areas are essentially in hibernation, with scant sales,” said DataQuick president John Walsh in a press statement.

March sales in the area average 9,025 with a high of 12,645 in March ‘04, the information provider said. March ‘09 marked the third-slowest March on record with DataQuick.
“More than any other region, the Bay Area is waiting for so-called jumbo loans to come back on line,” adds Walsh. “Even with prices off their peaks, most home purchases in the upper half of the market still require a mortgage for more than $417,000, which are far more difficult to come by. We think there’s a good chance those larger loans will become more available during the second or third quarter.”

Source: HousingWire.com

Reposted from http://www.timandjulieharris.com/

Hope For Homeowners...

2009-03-31T06:00:00.001-07:00

Breaking News: A new report was just released that disclosed the results of the much applauded Hope For Homeowners program. Harris Real Estate University students have been hearing from their coaches for months that the only true hope for homeowners is…..fellow Realtors.
No government program is ever going to replace the relationship between the homeowner and the Realtor. Realtors must do everything in their power to learn now what this market demands……so they can be the real….Hope For Homeowners.

Here is the article from CNN Money.
If HOPE for Homeowners, the foreclosure-prevention plan passed last summer, was a soft drink, it would be New Coke. If it was an automobile, it would be an Edsel. A movie? Howard the Duck.
In the five months since it has been in effect, HOPE has helped exactly one homeowner to avoid foreclosure. This despite Congress having made $300 billion available to back these loans and estimating that the program would benefit as many as 400,000 families.
“As it stands now, we’ve only gotten 752 applications,” said Federal Housing Authority spokesman Brian Sullivan. “And only insured one loan. Needless to say, the program isn’t working terribly well.”
Rep. Michael Castle (R - Del.), who sits on the House Financial Services Committee, agreed, calling HOPE “one of the most failed programs we’ve had in a long time.”
Nonetheless, the House of Representatives recently approved an updated version of HOPE as part of the bankruptcy-reform bill that is a keystone to President Obama’s Homeowner Affordability and Stabilization Plan. But it was no overhaul to the program; the changes are very subtle.
Will more government programs make a difference? Have they so far, NO. Realtors are the only true hope for homeowners.

Castle is concerned that the new program will also be a waste of time and money. But Sen. Chris Dodd (D - Conn.), one of the chief architects of the earlier version of HOPE, supports keeping it in the bankruptcy bill, according to a source close to the negotiations. He hopes the changes will help convince more servicers to use the program.
The Senate is expected to vote on the bill in the next few weeks.
The original program called for lenders to voluntarily refinance delinquent mortgages by reducing the principal balance on loans to 90% of a home’s current market value. The new 30-year, fixed-rate loans would then be backed by the FHA. Under the new plan, lenders would only have to write it down to 93%.
Borrowers who owed $220,000 on a house valued at $200,000, for example, would need their mortgage balances reduced to $180,000 to qualify for an original HOPE for Homeowners refi. That’s a $40,000 write-off. Under the new plan, lenders would have to forgive $34,000.
Lenders simply won’t do that very often. They prefer to use term extensions or interest rate reductions to help make mortgage payments affordable for at-risk homeowners. As a result, most of the big lenders refused to participate in the program, which was strictly voluntary though heavily encouraged by the Bush and Obama administrations.
“Writing down principal is the last thing you want to do because you have to realize the loss immediately,” said Paul Leonard, a spokesman for the Housing Policy Council, a coalition of mortgage lenders.

The program has also failed, Leonard added, because of the conditions and limits the program imposed. Borrowers, for example, had to agree to pay the government 50% of any future profits they made from selling the property. Under the new version of HOPE, borrowers would no longer have to split any earnings with Uncle Sam.
Other changes include incentive payments to servicers of $1,000 to induce them to participate.
The Congressional Budget Office now projects that HOPE for Homeowners could help just 25,000 mortgage borrowers over the next 10 years at a cost of $675 million.
Despite those modest numbers, Leonard said that the members of Housing Policy Council want to keep HOPE for Homeowners on the table even though the administration’s Homeowner Affordability and Stabilization Plan does much more than HOPE.
Besides reducing mortgage payments through interest rate reductions or term extensions, HASP provides for lowering mortgage principals - the only thing that HOPE offers.

as seen on www.timandjulieharris.com

Is There Hope?

2009-02-19T04:24:00.000-08:00

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

2009-02-10T14:06:00.000-08:00

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!!

2009-02-10T09:19:00.000-08:00

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/

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Loan Modification Questions and Answers

2009-02-08T18:33:00.000-08:00

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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