Archive for the 'Stop Foreclosures' Category

The economies of Pasco, Richland and Kennewick in Washington were able to survive the worst of the national recession. But because the impact of unemployment is so widespread, many homeowners found themselves struggling to pay their mortgage payments and in danger of house repos.

The federal loan modification under the Making Home Affordable program of the Obama Administration has helped many homeowners in the Tri-City remain in their distressed properties.

Loan modifications involve changing the length or terms of the troubled mortgage to make monthly payments affordable and easy on the pocket of financially-strapped homeowners. The program introduced by the Obama Administration is designed to help as many as 9 million distressed homeowners modify or refinance their loans to affordable terms.

Nationwide, the program has already modified about 230,000 troubled loans. The federal government said that the modification initiative is on the track to help about 3 to 4 million borrowers in three years time.

Consumer Credit Counseling Service housing program director Liza Beam said that the modification program has helped many distressed homeowners remain in their properties. But she pointed out that despite the willingness of lenders to help homeowners, they are behind on their loan modification efforts. She added that the process for loan modification typically takes as long as six months.

Since October, the CCCS was able to help 70 homeowners who have trouble with their loan payments. The CCCS is certified by the U.S. Housing and Urban Development (HUD) to provide loan counseling services.

According to industry experts, many mortgage companies are now lenient when it comes to modifying troubled loans. Previously, homeowners should be 3 months or more delayed on their mortgage payments before mortgage companies would start making changes.

Some mortgage companies offer various forms of modifications. Homeowners can opt for forbearance which would allow lenders to divide the total missed payments to be paid incrementally on top of regular payments. Some lenders also modify troubled loans by reducing interest rates or extending the length of the mortgage loan.

Another way to reduce monthly payments is to file for partial claim. This method involves mortgage companies allowing homeowners to pay a portion of the principal and interest, deferring the remaining due amount until such time that the distressed property is sold.

Virginia-based government-sponsored enterprise Freddie Mac got $6.1 billion from the U.S. Treasury Department to prop up its finances as it operates its programs to help curb lender and government repo homes and stabilize the housing market.

The funds were requested by the Federal Housing Finance Agency, the overseer of Freddie Mac, after Freddie’s liabilities surpassed its assets by over $6 billion.

Since Freddie was put under the care of FHFA in September 2008, Freddie has already received a total of $51.7 billion in funding from the U.S. Treasury. Freddie can still access another $149.3 billion if it needs it to buy more home loans from lenders and help contain lender and government repo homes.

Since September 2008, the recent withdrawal is the third withdrawal Freddie has made.

In the first quarter this year, Freddie Mac reported a $9.9 billion loss or a $3.14 loss per share, with an $8.8 billion loss due to soaring default rates and declining home values and a $7.1 billion loss due to write-downs on mortgage-backed securities.

In 2008, Freddie Mac and Fannie Mae were among the most battered financial institutions due to the flood of foreclosures. Before these institutions could completely collapse and take the whole housing market down with them, the federal government took over and put Freddie Mac under FHFA supervision.

Freddie Mac and Fannie Mae made the housing and mortgage markets well-functioning by buying home loans from lenders and then selling them to securities investors. The two GSEs have purchased or have guaranteed nearly 31 million mortgage loans valued at $5.5 trillion, which is approximately 50 percent of all home mortgages in the country.

Freddie Mac supports the Obama administration’s program to curb lender or government repo properties by administering the loan refinancing scheme and the Home Affordable Modification scheme of the Obama program.

The two schemes were crafted to help distressed American homeowners whose home loans are guaranteed or owned by Freddie Mac.

Freddie Mac said that it has helped about 88,000 families keep their homes or remedy short sales in 2008. Currently, it holds about 7 percent of 2.5 million home loans in default and is helping lenders work out affordable repayment schemes to save houses from becoming lender and government repo homes.

Lastly, Freddie Mac has also been helping in rejuvenating the housing market by sustaining the liquidity of the mortgage markets, keeping mortgage rates affordable and stable and helping curb lender and government repo properties.

The number of homebuyers using Federal Housing Administration loans to buy private and government repo homes is increasing again after its decline in the 1990s.

In 2006, only two percent of homebuyers were using FHA loans. Most borrowers ignored FHA loans during the housing boom because of FHA loan limits and strict appraisal requirements. Home prices then were reaching their peak levels, surpassing FHA loan levels.

Now, FHA loans comprise almost 25 percent of loans taken out to buy private and government repo homes and other types of homes. Because lenders are now wary of making loans that would increase further losses, they are now more inclined to provide FHA-insured loans.

The FHA home loan insurance program encourages lenders to provide home loans to borrowers with lower down payments and lower credit scores because their losses will be covered by FHA.

Another factor for the rise in FHA loans to buy private and government repo homes is the increase in loan limits and choices of loan programs that borrowers can obtain.

Under the American Recovery and Reinvestment Act of 2009, FHA loan limits for purchases of single family homes have increased. The increased ARRA loan limits are based on limits set in the previously approved Housing and Economic Recovery Act of 2008 and the Economic Stimulus Act of 2008.

Under HERA, the FHA conforming loan limit for the year 2009 is $417,000, after which the Federal Housing Finance Agency will peg the loan limit to its chosen home price index.

Based on property size, the FHA loan limits are $271,050 for one-unit properties, $347,000 for two-unit properties, $419,400 for three-unit properties, and $521,350 for four-unit properties.

Also, the FHA loan limit for home equity conversion mortgages nationwide will increase from $417,000 to $625,500.

In high-cost cities, such as Washington, D.C. and New York City, FHA loan limits are set at $729,750.

Some critics said that giving higher FHA loans to borrowers who can only afford very minimal down payments and lower credit scores would cause another wave of private and government repo homes. But advocates of FHA loans argued that FHA has strict screening and appraisal guidelines. They explained that many prospective home buyers can afford to pay monthly home loan payments; they just cannot afford large amounts of down payments.

Now, FHA loans are not only being used to buy private and government repo homes; they are also being used to buy condominium units from housing developments previously approved by the FHA.

Government-sponsored enterprises, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association increased by 57 percent the number of loan modifications they initiated in the first quarter of 2009.

Struggling families in Colorado who are facing foreclosures and trying to deal with the impact of recession have found some help that could alleviate their miserable condition.

The widespread credit crunch in the financial industry has affected most sectors in the country, especially the housing market which is suffering from the unabated increase in the number of repo homes.

If you are a homeowner distressed by thoughts of repo homes, read on. Your mortgage loan might qualify for modification under President Barack Obama’s program to mitigate repo homes. If your loan is modified by your mortgage lender, your monthly payment will be reduced to an affordable level so that you would not struggle too much and you would save your house from following the fate of repo homes.

A day after US President Barack Obama unveiled his foreclosure prevention initiative, Department of Housing and Urban Development (HUD) Secretary Shaun Donavan urged banks and other financial services institutions to take aggressive steps to ensure the success of the $75 billion program.

According to Associated Press, 9.5 million homes spend more than 38 percent of their untaxed income on paying up their mortgage to dodge repossession. This value imposed the new threshold to qualify for a loan assistance program by Fannie Mae and Freddie Mac.

Evelyn Colon, a resident of Hartford, Connecticut, is seeking the help of the Greater Hartford Legal Aid (GHLA) from being evicted from her rental home which is being shutdown due to foreclosures. GHLA is a non-profit organization providing legal help to low-income families and individuals.