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.

Loan Programs Help Tri-City Homeowners Avoid House Repos is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

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.

Freddie Mac Got $6.1 Billion to Curb Government Repo Homes is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

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.

More Buyers Using FHA Loans to Buy Government Repo Homes is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

The first quarter 2009 Foreclosure Prevention Report released by Federal Housing Finance Agency director James B. Lockhart showed that nearly 37,000 loans were modified to help contain the spread of repo houses for sale in the country.

The first quarter figures was 57 percent higher than the last quarter of 2008 and twice as big as the number of loan modifications made in the first three months the previous year.

According to the report, modifications accounted for 43 percent of efforts to contain the spread of repo houses for sale in the first three months of this year, an increase of 33 percent from the previous quarter.

Meanwhile, modifications with over 20 percent decline in monthly mortgage payments increased by 52 percent during the first quarter of 2009 from 2 percent the same period the previous year.

Completed actions to contain the spread of repo houses for sale, such as modifications, repayment plans or forbearance, showed a substantial increase during the first three months of this year, with nearly 87,000 deals finalized in the quarter. The figures represented nearly 20 percent increase from the previous quarter and twice as many compared with the first quarter 2008 total.

On the other hand, home retention activities which resulted to distressed borrowers remaining in their homes, accounted for nearly 90 percent of foreclosure prevention actions finalized during the first three months of 2009. The figures are consistent with the number of foreclosure prevention actions finalized the previous year.

Freddie Mac and Fannie Mae both owned or guaranteed 56 percent of the total outstanding loans. However, only 22 percent of loans that were seriously delinquent were owned or guaranteed by Freddie Mac and Fannie Mae.

Despite the increase in the number of delinquencies on loans owned or backed by Freddie Mac and Fannie Mae in the first quarter of this year, the delinquency rate was lower than the average rate reported by the whole industry.

By the end of the 2009 first quarter, the percentage of Fannie Mae and Freddie Mac’s loans that were behind 60 days and were in danger of becoming repo houses for sale was 3.6 percentage point, compared with Veterans Affairs loans of 6.1 percent, 10.2 percent for loans owned by the Federal Housing Administration and 9.2 industry average.

Rise in Modifications to Contain Repo Houses for Sale is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

First off is the Help for Working Families Fair where distressed homeowners received advice on repo home prevention, finances, unemployment benefits, housing, home weatherization, utility assistance and health care.

The advice is given out for free to distressed homeowners by representatives of about 25 nonprofit organizations.

Another development that gave hope to homeowners who want to avoid repo home and are trying to survive the recession is Governor Bill Ritter’s signing of several bills into law.

One bill, the House Bill 1276 offers distressed homeowners who are facing foreclosure with a 90-day moratorium to work out solutions to make their account current. The bill, sponsored by Senator Morgan Carroll and Representative Mark Ferrandino, allows homeowners to communicate with foreclosure counselors under the Colorado Foreclosure Hotline program.

Under the bill, homeowners who are eligible for the repo home prevention program will have the opportunity to negotiate with their lenders to work out ways that would help them remain in their homes and avoid foreclosure.

The Colorado Foreclosure Hotline was one of the participants in the Help Fair. The agency helps troubled homeowners who have missed a payment or two or are on the brink of foreclosure. It warns homeowners against missing monthly mortgage payments and fraudulent lending practices.

Colorado Housing Assistance Corp. (CHAC), another fair participant, offers mortgage loan programs, free classes to educate novice homebuyers and borrowers and supportive financial counseling.

CHAC program coordinator Charlotte O’Donnell said that the Help Fair’s intention was well intended. However, she noticed that the event was a little challenging because it was organized at the last moment and therefore, it lacked the marketing needed for the event to reach to all concerned homeowners.

Additionally, ODonnell thinks that it was a mistake to hold the event at the Capitol because the place was not accessible to all those who want to join.

Meanwhile, Ritter also signed into law the House Bill 1310 which classified workers as either contractors or employees to make sure that working families would not be deprived of benefits such as unemployment insurance protection.

All the bills signed by Ritter are aimed at helping homeowners avoid repo home and survive the economic crisis.

Hope for Colorado Distressed Homeowners to Avoid Repo Home is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

To address the devastating and widespread impact of the credit crunch, U.S. Treasury Secretary Timothy F. Geithner has announced the Public-Private Investment Program. Experts hope that Geithner’s program would bring relief to the financial industry and distressed homeowners who are on the brink of losing their properties to foreclosures.

The credit relief plan called on taxpayers to help insurance companies, bankers and other players in the financial industry to sell their mortgage-related assets.

Experts hope that the program will influence lawmakers to shift their attention from corporate bonuses to other substantive issues, particularly the growing number of repo homes that are weakening assets that the U.S. government will acquire.

Under the program, the government and investors will form a partnership to purchase repo homes loans or securities.

However, the program works against homeowners who will shoulder 94 percent of the risk for the loan pools.

Furthermore, guarantees or loans will be provided by the government to investors who in turn, will negotiate payments for assets and absorb the initial losses in an effort to mitigate the expected cost to the federal government.

According to experts, the success of the program designed to stabilize the financial industry and control the spread of repo homes in the country, depends on the willingness of homeowners to accept the proposed prices.

Meanwhile, Geithner explained that the government does not have any intention to impose pay or bonuses limitations on its partners. However, experts believed that investors are skeptical over Geithner’s program and whether it would success on reducing the number of repo homes.

They said that investors have every right to doubt following efforts of the Congress to enforce unreasonable taxes on bonuses and compensation paid by financial companies, such as American International Group.

Experts pointed out that it would be for the benefit of taxpayers if the Congress intensifies its efforts to help mortgage lenders prevent the spread of repo homes.

They believed that lawmakers can help a lot in foreclosure prevention by encouraging loan modifications that allow distressed borrowers to remain in their homes.

Geithner’s Credit Relief Plan Part of Repo Homes Prevention is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

Here are the qualifications issued by the Treasury Department for homeowners applying for loan modification under Obama’s foreclosure prevention program.

The first qualifications are about the characteristics of the home. The home must be occupied by the borrower and must be the primary residence. Residence requirements are examined through credit reports, utility bills and tax returns. It must also be a single-family housing structure with up to four units, which could be a condo, a cooperative or a manufactured house based in a site and taxed as a real state property. The home also must not have been condemned or left vacant.

The second qualifications concern the borrowers. Homeowners whose mortgages are in active litigation can apply for modification under Obama’s program to mitigate repo homes without prejudice to their legal rights. Likewise, homeowners who have filed for bankruptcy are not excluded from the program. They can still apply for loan modification.

The third qualifications are about the mortgage loans. Mortgages must have been initiated and taken on or before the first of January 2009. The loans must be first lien loans and their current unpaid balance just before modification must not be more than $729,750 for one-unit homes, $934,200 for two-unit homes, $1,129,250 for three-unit homes and $1,403,400 for four-unit homes. Each mortgage is entitled to only one modification under Obama’s program to avert the rise in repo homes.

Other rules are about liens, deadlines, monitoring and actions related to repo homes. Secondary liens, such as home equity loans, lines of credit or second mortgages, are excluded from the front-end debt-to-income computation, but are considered when back-end debt-to-income are calculated. For eligibility screenings, minimum or maximum loan-to-value ratios are not considered.

The application period for mortgage modification under Obama’s program ends on December 31, 2012. Cash incentive programs for borrowers however will continue for up to 5 years starting from the date the borrower’s modification application was approved.

Lastly, remember that these instructions are only guidelines. Contact your lender or a mortgage modification specialist to check whether you are qualified or not under the program.

Qualifications for Obama’s Program to Reduce Repo Homes is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

The foreclosure abatement initiative includes refinancing arrangements that will provide a chance to almost 9 million borrowers to reduce their mortgage payments.

The initiative will greatly help homeowners who are on the threshold of foreclosures, those making payments but are struggling to do so regularly and those who are at risk of defaulting.

In addition, the Treasury Department has pledged another $200 billion to help home mortgage providers Federal National Mortgage Association and Federal Home Loan Mortgage Corp. maintain low mortgage rates.

Furthermore, the foreclosure prevention initiative also includes incentives of $1,500 for distressed homeowners and $500 for lenders provided that loans have been modified before they defaulted.
The incentives are designed to encourage lenders to offer home refinancing to homeowners whose mortgages surpassed the fair market value of their properties.

Donovan, during an interview on the NBC program “Today Show”, said that the foreclosure problem started as a crisis in the mortgage market and spread to become an employment crisis.
He pointed out that the Obama Administration is certain that there are enough requirements to ensure and sustain heavy bank refinancing. This, he added, could mean a great deal to help owners of distressed properties.

He explained that those eligible for mortgage refinancing are homeowners who have good credit. He admitted that there are homeowners of distressed properties who would not benefit from the foreclosure prevention initiative, citing in particular investors owners who purchased homes they never occupied.

Meanwhile, Federal Deposit Insurance Co. Chairman Sheila Bair said that the foreclosure prevention initiative will have a significant impact on the Obama Administration’s effort to curb the number of repossessed homes.

In an interview on the ABC television show “Good Morning America”, Bair empathized with homeowners who are good mortgage payers who feel that they are being left out from the initiative and that the Obama Administration is instead rewarding distressed homeowners for their risky behavior.

She pointed out that what is important right now is to put a stop on foreclosures and halt falling home prices which could all lead the way to stabilizing the housing market.

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This financial burden is felt nationwide for 10 percent of mortgaged-homeowners are at least one month delayed in payment of are already in foreclosure.

But the financial difficulty is definitely felt by the minorities.

Minorities suffered from the sudden downward spiral of housing that homeownership is declining.

Among the minorities that spend more than 38 percent of their income to prevent foreclosure, the Hispanic lead at around 33 percent of homeowners in this status. Only 25 percent of Asians and African-Americans and 16 percent of Caucasians are at this status.

Though many Latinos have stable incomes, they end up in sub-prime mortgages because they either have no bank accounts or limited credit history or low credit scores. Since sub-prime lenders do not require proof of income, Latinos end up with costly interest rates, making it difficult to sustain.

Then, 3 of 10 senior homeowners suffer the same 38 percent of their income straight to battling foreclosure. This is common in Vermont, Rhode Island, New York, New Jersey, Nevada, Massachusetts, Florida, Washington D.C. and California.

Single parents are also among the financially strapped. More than 25 percent of Michigan single parents and around 27 percent nationwide allot 38 percent of their monthly in saving their homes from repossession. But the worst is in California where 40 percent of single parents are in this status.

Disappointed housing counselors blamed these homeowners who borrowed more than they can actually handle and those abusive lenders who abuse the elderly, immigrants and ingenuous.

Housing counselors also pointed out that if the Bush administration have taken the foreclosure crisis seriously as early as possible, we would not suffer this much.

Let us just hope that the Obama Administration’s $100 billion financial bailout find may actually help in the controlling foreclosure.

Who Spends More Than 38 Percent of Their Monthly Income to Prevent Foreclosure? is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.

They are banking on a new law that is part of the $700 billion bailout bill, or the Troubled Asset Recovery Program passed by Congress, protecting tenants in good standing from being evicted in homes being repossessed due to foreclosures.

Responding to this incident, U.S. Senator Christopher Dodd, the chairman of the Senate Banking Committee has requested in writing for the immediate action of the Federal Housing Finance Agency in supporting tenants who are current in the rental payments and be protected from eviction from foreclosed homes.

The new law is applicable to mortgages owned by federal agencies, particularly Fannie Mae and Freddie Mac, two GSEâ??s (Government Sponsored Enterprises) recently placed under conservatorship by the administration in response to the brewing crisis on crisis on foreclosures. These two mortgage giants own or guarantee half of the nationâ??s residential mortgages, including the house where Evelyn Colon is renting in.

Colon has been a tenant of good standing with up to date payments in rent and has a valid lease on her rented home. Under the provision of the new law, tenants of good standing should be protected from eviction from their rented homes that are in trouble with foreclosures.

In a response to the request by Senator Dodd, Fannie Mae stated that it is currently working on this case by Colon and will work out a solution for her to stay in the apartment. It is also working now to help other tenants in the same situation. They are currently reviewing their overall policies regarding renters in foreclosure homes, and aims to keep as many tenants and renters in their apartments as possible.

Tenant Protection Urged for Renters in Foreclosure Properties is a post from Foreclosure-Auction.net - Your online source for house auctions for sale.