Shared housing can mean shared expenses and, when the economy improves, shared equity -- a win-win economic situation. During past boom markets, appreciation has generated an equity windfall large enough to allow shared-housing partners -- family or otherwise -- to part ways, both with enough cash for a down payment on their own homes.
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Deadline Newsroom - The soft economy gives new meaning to family reunions.
More buyers are purchasing homes to accommodate more than one family generation, and households are otherwise doubling up for all kinds of reasons.
In the past 12 months, 37 percent of Coldwell Banker real estate professionals surveyed said they've noted an increase in home buyers looking to move more than one generation into a home.
In the back-to-the-future scenario, the move is most often an economic decision.
The vast majority -- 70 percent -- of Coldwell's sales agents say continued soft economic conditions may cause even greater demand for multigenerational housing in 2010 and beyond.
But there are other reasons.
The multigenerational family at 1600 Pennsylvania Ave. in Washington, D.C. includes America's "first grandmother," Marian Robinson, who lives with her daughter, Michelle Obama; her granddaughters, Malia and Sasha; and her son-in-law, President Barack Obama.
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Select state housing finance agencies are anxiously awaiting a small windfall to help as many as 125,000 struggling home owners in five states hardest hit by the housing crash.
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Deadline Newsroom - Select state housing finance agencies are anxiously awaiting a small windfall to help as many as 125,000 struggling home owners in five states hardest hit by the housing crash.
President Obama announced late last week a $1.5 billion infusion for housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.
Looking for their share, officials from state housing finance agencies (HFAs) were scrambling Monday to come up with the required program proposals that target unemployed home owners, so-called "underwater" home owners with homes worth less than their mortgage and home owners struggling with second mortgages.
"We don't have any details, just the announcement that was made Friday, but we are working on proposals even without the knowledge of how much we'll receive and that's hard to do without knowing," said Mary Lou Keenon, spokeswoman for the Michigan State Housing Development Authority (MSHDA).
State housing agencies engage in public and private partnerships to promote affordable housing and community economic development activities. Low cost loans, grants, education and other efforts typically target needy low- and moderate-income households.
The money is earmarked for state agency programs that reduce so-called "preventable" foreclosures. The U.S. Treasury must approve any programs before they begin.
Programs can vary, but mortgage modification has been the primary tool to help home owners stay in their homes.
A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. To get the payment down, lenders lower the interest rate, extend the loan term, reduce the principal (rarely) or use any combination of those approaches.
Treasury estimates are putting the cost of modifying troubled loans at approximately $12,000 each, which would provide help to around 125,000 homeowners. That's not much considering some 1.5 million homeowners are in need of help.
Other programs could include financial assistance for unemployed home owners and using funds to pay cash incentives to second mortgage holders, in an effort to encourage first mortgage holders to provide mortgage modifications.
"I've got to again repeat — government can’t stop every foreclosure. There's not enough money in the Treasury to stop every foreclosure. And we shouldn’t be using tax dollars to reward the same irresponsible lenders or borrowers who helped precipitate the crisis," Obama cautioned during a town meeting with 1,800 residents Feb. 19 at Green Valley High School in the Las Vegas suburb of Henderson, NV.
"During these difficult economic times, we will work to help responsible homeowners stay in their homes and stabilize the housing market so home values can rise," the president added.
Las Vegas had the nation's highest metro area foreclosure rate, with one in every 82 housing units receiving a foreclosure filing in January, according to RealtyTrac.
The high rate came despite a nearly 2 percent decrease in foreclosure activity from the previous month and a nearly 21 percent decrease in foreclosure activity from January 2009, RealtyTrac reported.
On the state level, four of the states awarded the $1.5 billion fund, also have the nation's highest foreclosure rates. One in every 95 Nevada housing units received a foreclosure filing during in January — more than four times the national average. The rate was one in every 129 for Arizona; and one in 187 for both California and Florida. Michigan's foreclosure rate was 1 in 258 and not among the top five, according to RealtyTrac.
"We are really excited and grateful for this help, and we intend to hit the ground running as soon as we know how much we will receive," said Evan Gerberding, assistant director of marketing for the California Housing Finance Agency (CalHFA).
"We have a loan modification program in place, but we will develop new programs to help borrowers who are unemployed or under employed or are underwater because that's the administration's goal," Gerberding added.
There will be a formula for allocating the funds among the five states based on home price declines and unemployment.
HFAs must submit programs that target struggling home owners as well as affordable home programs. Funded programs and programs' efficacy ratings will be posted online to promote transparency and accountability.
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Effective June 1, 2010, new mortgage modification provisions are designed to speed up the process of getting struggling home owners into modifications they can afford. It doesn't really change the documents required, just the process.
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Deadline Newsroom - The latest spin on government-sponsored mortgage modifications, demands that home owners provide an initial package of documents before the first phase of a modification can begin.
The newest plan for the ever-evolving Obama Administration's Home Affordable Modification Program (HAMP) also requires lenders (or servicers) to review the documentation and respond with an approval or rejection within 30 days.
The new guidance also details how lenders must convert a trial modification to a permanent one.
Effective June 1, 2010, the new provisions are designed to speed up the process of getting struggling home owners into mortgage modifications they can afford. It doesn't really change the documents required, just the process.
As of December, only about 100,000 of a potential 4 million eligible home owners were enjoying permanent mortgage modifications with average mortgage payment reductions of $500 a month, according to the U.S. Treasury. Another 750,000 home owners have trial modifications with the same average mortgage payment reduction.
A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. To get the payment down, lenders lower the interest rate, extend the loan term, reduce the principal or use any combination of those approaches. Reducing the principal is rare, but there is a push afoot to encourage more principal reductions.
While a modification might stain your credit, it's considered a better deal than losing your home and your credit standing to a foreclosure or short sale.
Home owners who sign up for HAMP mortgage modifications begin with a trial modification period of at least three months. Previously, some home owners entered the trial modification with less documentation than is now required.
Now, before obtaining a trial modification, home owners who believe they are qualified must supply three types of documentation:
• Proof of income. A checklist is available to tell home owners what documents they need for proof if they are a wage earner, self-employed, or receive retirement or receiving other income.
Within 10 days of receiving a home owner's information, the lender must, in writing, acknowledge receipt of the paperwork and describe, with a timeline, the next phase -- the evaluation process.
Within 30 days of receipt of the application, the lender must evaluate the application and request additional information if the application is incomplete. Also within 30 days, if the home owner's information is complete and otherwise meets modification eligibility requirements, and the lender grants a modification, the lender must send the home owner a trial modification plan notice.
If the requirements aren't met, the lender must notify the home owner that he or she is not eligible for a HAMP modification.
For home owners who are not eligible for a HAMP deal, the lender is required to consider the home owner for other loss mitigation options, including refinance, forbearance, non-HAMP modifications, and ultimately short sales or deeds in lieu of foreclosure.
During the 30 days, in order to review the application, the lender has a right to get a copy of a home owner's credit report and to verify the property is the home owner's principal residence.
The lender can also determine the property's value using an onsite appraisal, automated valuation model (AVM) or a real estate broker's price opinion (BPO).
Home owners who achieve a trial modification must make all payments on time to move to a permanent modification. A "permanent" modification isn't necessarily so. Years down the road, the lender can determine to continue or end the modification and revert to the original terms of the mortgage or take other steps.
Throughout the ordeal, lenders must track and maintain records of the process including phoned, written and emailed contacts with the home owner.
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Those 20- to 40-foot corrugated steel containers, a much stronger and more permanent alternative to weaker manufactured homes, are built to withstand stacking and shipping through hell and, well, high water. They are impervious to hurricanes and robust enough to remain standing in all but the worst earthquakes. DeadlineNewsGroup is here!
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Deadline Newsroom - The surplus of steel cargo shipping containers is an immediate answer to Haiti's sudden housing shortage.
Turning the containers into housing will also put residents of the island nation to work.
The island country, like other Caribbean nations, imports more than it exports and that leaves a surplus of empty containers languishing on their docks.
So when retired Georgia Tech building construction and industrial design professor Richard Martin recently saw photos of the containers unscathed and toppled and floating in the sea after Haiti's Jan. 12 quake, he renewed thoughts about their potential use.
"We can do something quickly. We can go down there and help rebuild the country and get the involvement of the Haitians. I won't do anything without Haitian workers working with me," says Martin, who operates Atlanta, GA-based Global Container Partnerships.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
The vast majority of current home owners say they would use the expanded version of the home buyer tax credit for "smart spending" on things that could ultimately increase income available for more spending -- the fuel that really powers the economy.
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Deadline Newsroom - A new survey reveals that savvy consumers are cashing in on the new and improved home buyer tax credit and that behavior bodes well for the economy.
The vast majority of current homeowners say they would spend the expanded version of the homebuyer tax credit on repaying existing debts, home improvements, savings and investments and household expenses, according to a Coldwell Banker survey of 1,000 homeowners.
Improved Home Buyer Tax Credit
The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.
A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don't qualify.
Home buyers have to repay the credit if they live in their primary residence less than 36 months and are not members of the military.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price is $800,000.
Both first-time home buyers and others must close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
Buyers can claim the credit on their 2009 taxes, even if the purchase is made in 2010 by filing an amended return. Buyers who don't owe taxes can have the credit refunded to them.
Paying off debts affords consumers more spending power, home improvements likewise put more equity money in their pockets and savings and investments generate income.
Consumer spending, of course, is the real fuel for the economy's engine. And much consumer spending is fueled by the housing market -- provided the housing market is energized.
Helping to energize the housing market and the economy is the idea behind the homebuyer tax credit and it's recent extension and expansion.
By October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
As a tangible asset with a host of other tax breaks and the potential for equity gain, a home is often a consumer's most valuable asset.
As the economic theory goes, when more consumers buy homes, the economy gets a boost.
Coldwell Banker's survey appears to confirm the theory.
Among those surveyed, 83 percent said if they purchased a home and qualified for the tax credit they would engage in "smart spending" on things that could ultimately increase income available for spending.
Only 6 percent said they would squander the money on luxury items such as vacation or shopping spree.
According to the survey most consumers would spend their tax credit:
• To pay off debts (34 percent). Paying off debts leaves more money to spend or save and invest for returns that again generate spending money.
• To make home improvements and potentially increase the value of their home and home equity (29 percent). Home equity, can be a way to consolidate other, more expensive debt or spend further on capital improvements that generate more returns on the money.
• To put into savings and investments (28 percent). Saving and investing for returns is a much better personal financial approach than using credit for purchases.
Coldwell Banker also found, after learning about the tax credit expansion, 20 percent of those surveyed said they were more likely to consider purchasing a home than they were six months ago.
Of course, what will happen when the tax credit expires in 2010, without another extension, is anyone's guess.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Mortgage Modification Update: Home owners with modified mortgages save an average $550 a month, but there has been some difficulty converting trial modifications into permanent modifications.
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Deadline Newsroom - The Obama Administration is saving home owners an average $550 a month with loan modifications, but only 31,382 of a potential 4 million qualified homeowners are actually enjoying the savings.
However, there has been some difficulty converting trial modifications into permanent modifications.
A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. Lower payments can result from a lower interest rate, extended loan term, reduced principal or any combination of those approaches.
"Modifications are the ideal and most economically viable method by which homeowner's can retain their homes. Previously, homeowner's were left to fend for themselves in terms of innocently contacting somewhat shady sources who often collected an upfront fee of between $4,000 to $5,000 and promised to contact the lender directly on their behalf in order to modify their loans and reduce their monthly payment," said Michael D. Rodriguez, broker/owner of Platinum Capital Mortgage & Real Estate in Salinas, CA
Under the HAMP plan, borrowers who sign up for mortgage modifications begin with a trial modification of up to five months.
That gives them time to submit a stack of paperwork, including proof of income, assets, debts, hardship affidavit and other documents, to make the modification stick. The trial period also gives them time to determine if the modified monthly payment is sustainable, according to the Treasury.
The majority of approximately 375,000 borrowers who have begun trial modifications nationwide and are scheduled to convert to permanent modifications by the end of the year, have not completed the paperwork, according to the Feds.
Some delays have also been caused by servicers switching gears with each new federal update or adjustment to the program.
"I am very pleased that the government has taken a more aggressive hands on approach towards implementing programs such as HAMP to provide an alternative to homeowner's who would otherwise lose their homes to foreclosures," Rodriguez said.
GMAC Mortgage Inc. completed 7,111 permanent modifications, more than any other servicer, followed by JPMorgan Chase & Co., with 4,302 modifications; Ocwen Financial Corp., with 4,252; Aurora Loan Services, 3,622 and Wells Fargo, 3,537.
The trial modification leader was Bank of America with 156,864, followed by JPMorgan, 136,686; CitiMortgage, Inc., 100,126; Wells Fargo, 96,137 and Saxon Mortgage Services, Inc., with 35,565.
"As this report illustrates, struggling homeowners across the country continue to receive immediate relief in the form of reduced monthly payments and a second chance to stay in their homes," said Phyllis Caldwell, Chief of Treasury's Homeownership Preservation Office (HPO).
"Our focus now is on working with servicers, borrowers and organizations to get as many of those eligible homeowners as possible into permanent modifications," she added.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Mortgage Modification Update: The Obama Administration is trying to clear some of the slow-moving sludge out of the Home Affordable Modification Program (HAMP) program, which is designed to stave off foreclosures for millions of American homeowners.
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Deadline Newsroom - It's not easy turning a potential foreclosure into a successful affordable mortgage modification -- from either side of the table.
Homeowners, facing confusing documentation requirements and conflicting advice from both honest and dishonest corners, become intimidated and drag their heels or bury their heads.
Lenders grapple with voluntary provisions, ever-evolving regulations, skilled worker shortages and disoriented homeowners. It's not surprising they develop some ambivalence.
To help clear some of the sludge out of the Obama Administration's Home Affordable Modification Program (HAMP) the U.S. Treasury Department and Department of Housing and Urban Development (HUD) recently announced plans to speed up trial mortgage modification conversions to help homeowners obtain a permanent mortgage modification.
A mortgage modification occurs when the lender reworks the terms of your existing home loan, typically to lower payments and make the home more affordable for you. Lower payments can result from a lower interest rate, extended loan term, reduced principal or any combination of those approaches.
Under the HAMP plan, borrowers who sign up for mortgage modifications begin with a trial modification of up to five months. That gives them time to submit a stack of paperwork, including proof of income, assets, debts, hardship affidavit and other documents, to make the modification stick. The trial period also gives them time to determine if the modified monthly payment is sustainable, according to the Treasury.
"Property owners we represent who are attempting to get mortgage modifications are frustrated by the amount of time it is taking to get the modification. Two owners have been at it since early June, with little progress," says Jan Leasure, managing broker of Monterey Bay Property Management in Monterey, CA.
Approximately 60 percent of the 375,000 borrowers who have begun trial modifications nationwide are scheduled to convert to permanent modifications by the end of the year, but have not completed the paperwork, according to the Feds.
On the other hand some delays are caused by servicers switch gears with each new federal update or adjustment to the program.
"The owners have also been frustrated by the fact that, as the programs offered by the federal government change, the lender changes the criteria for modification and the way their files are handled. Hopefully, the more options that are offered, the more property owners will be eligible for modification," Leasure said.
The mortgage modification conversion effort includes provisions that have already:
• Extended the period for trial modifications started on or before September 1, 2009 to give homeowners more time to submit the required information.
• Streamlined the application process to minimize paperwork and simplify the submission process.
• Ordered federal officials to meet regularly with servicers (banks and lenders) to identify necessary improvements to borrower outreach. Servicers failing to meet certain obligations could be subject to monetary penalties and sanctions.
• Developed operational metrics to hold servicers accountable for their performance, which will soon be reported publicly.
• Enhanced borrower resources on the MakingHomeAffordable.gov website and the Homeowner's HOPE Hotline (888-995-HOPE) to provide direct access to mortgage modification tools and housing counselors.
New resources on MakingHomeAffordable.gov include:
• Links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps.
• Information about how the trial phase works, what borrower responsibilities are to convert to a permanent modification, and new instructional videos which provide step-by-step instructions.
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The extension and expansion of the popular home buyers tax credit gives both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.
Unauthorized use of this story is a copyright violation -- a federal crime Deadline Newsroom - President Barack Obama, this morning, signed legislation that extends a first time home buyer tax credit and extends a smaller tax credit to move-up and other buyers.
The extension and expansion of the popular home buyers tax credit gives both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.
The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.
A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don't qualify.
Home buyers have to repay the credit if they live in their primary residence less than 36 months and are not members of the military.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price is $800,000.
Both first-time home buyers and others must close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
Buyers can claim the credit on their 2009 taxes, even if the purchase is made in 2010 by filing an amended return. Buyers who don't owe taxes can have the credit refunded to them.
The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.
Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.
Fortunately, the tax credit also has been available at a time when often have been below 5 percent.
Fortunately, the first-time home buyer tax credit's availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.
As the Nov. 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.
A TIGTA audit also revealed last month that nearly 90,000 taxpayers -- including nearly 600 children -- may have fraudulently enjoyed the credit, hoodwinking the government out of more than $600 million.
The new legislation includes provisions to stifle fraud after the Internal Revenue Service identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.
Cheating the IRS is a federal felony that comes with a fine of up to $250,000 and three years in a federal pen, or both.
To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.
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Only 12 percent of mortgages qualified for modifications under the Obama Administration's Home Affordable Modification Program, or HAMP, have been modified. Even if all 3 million were modified, the housing crisis would continue.
Worse news -- even if lenders get off their assets and significantly improve the number of mortgage modifications, it probably won't stop the housing crisis until it has run its course.
The U.S. Treasury Department's "Making Home Affordable Program Servicer Performance Report" for the period ending in August, said only 12 percent of mortgages qualified for modifications under the Obama Administration's Home Affordable Modification Program, or HAMP, have been modified.
Source: Making Home Affordable Program Servicer Performance Report through August 2009
That's little better than the 9 percent during the first such performance report for the period ending in July.
HAMP launched in March. An estimated 3 million mortgages are eligible for modification, but by August only about 360,000 had been modified.
Lenders appear to be rationing mortgage modifications and the small number of loan workouts that do get through are being swallowed by a foreclosure pandemic. Several lenders with 30,000 or more eligible mortgages have not changed one loan and large banks that received billions in federal bailout money lag behind government expectations.
The Treasury hopes to see 500,000 trial modifications by November 1. A trial modification becomes permanent once a borrower makes three reduced monthly payments.
However, yesterday, written testimony for a U.S. House of Representatives subcommittee on housing and community, Michael S. Barr, the Treasury's Assistant Secretary for Financial Institutions suggested even if all eligible mortgage are modified "we should still expect millions of foreclosures."
Some analysts say more than six million Americans are at risk of foreclosure in the next three years.
The Center For Responsible Lending warns, unless there's serious intervention, foreclosures are on track to soar to 13 million during the next five years.
The outlook is grim for assistance from so-called federal "cram-down" legislation. If passed into law, it would allow bankruptcy judges to reduce mortgage loan amounts.
Similar legislation went down in defeat last year.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Certain borrowers current on mortgage payments are now eligible for refinancing into new loans even if they owe as much as 125 percent of the home's current value. That's up from the previous 105 percent.
Borrowers current on payments with Fannie Mae or Freddie Mac guaranteed loans could be eligible for refinancing into new loans even if they owe as much as 125 percent of the home's current value.
It's the latest Obama Administration effort to help more homeowners refinance their mortgage at a lower rate and reduce their monthly payments. A refinance can help owners buck up and keep homes that are worth less than they owe.
Also, if the existing mortgage was written without mortgage insurance, the new loan won't be burdened with the extra cost.
Fannie Mae and Freddie Mac loans typically require mortgage insurance when the loan is more than 80 percent of the home's value.
Of course, if the current mortgage has mortgage insurance and the new loan is 80 percent or more of the home's value, mortgage insurance comes with the deal.
As usual, high-coast areas including many in California, New England, New York and most resort and second home areas won't see much relief. Until the Fannie Mae Freddie Mac conforming loan limit was raised in high-priced areas last year, high-cost area homes were too expensive to be purchased under Fannie and Freddie guidelines.
The new 125 percent limit also may not apply if a second mortgage combined with the first exceeds the limit. The new deal also doesn't allow homeowners to take cash out.
The higher loan-to-value ratios are available now to qualified borrowers who apply through their existing servicer. After Oct. 1 a homeowner can shop around and refinance through any Fannie or Freddie lender.
To check your eligibility for a refinance under the new provision, go to Making Home Affordable.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
The Obama Administration's newest efforts to save the economy focus on greater Hope for Homeowners, stiffer regulations for mortgage brokers and cracking down on mortgage fraud.
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Deadline Newsroom - A new one-two legislative combination punch may not put the housing crisis down for the count, but it should keep more homeowners on their feet and put real estate fraud on the ropes.
"These landmark pieces of legislation will protect hardworking Americans, crack down on those who seek to take advantage of them, and ensure that the problems that led us into this crisis never happen again," said President Obama in a prepared statement.
• Modifications to Federal Housing Administration (FHA) and federally guaranteed farm loans - This provision targets FHA, federally guaranteed farm loans and rural loans with loan modification help. • Increasing the flow of credit -- Provisions to expand the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) include extending the temporary increase in deposit insurance; increasing the borrowing authority of the FDIC and increasing the borrowing authority and creation of a stabilization fund for the NCUA. The efforts are designed to enhance the availability of credit to consumers. • Increased housing consumer protections - Provisions provide for new protections for renters, including Section 8 tenants, living in foreclosed homes; establish the right of homeowners to know who owns their mortgage so they know who to contact when trouble comes; provide resources for the homeless including more direct aid to the homeless; provide for the consolidation of homelessness programs to streamline their administration and targets assistance to families with children.
• Adding private mortgage brokers and others to enforcement efforts - More than 50 percent of subprime mortgages were originated by private mortgage institutions and similar entities not currently covered under federal bank fraud criminal statutes. FERA extends mortgage fraud enforcement to these companies and all private mortgage brokers and companies not previously regulated or insured by the feds.
• Extending prohibition of mortgage lending manipulation to private operations - Previously, making a materially false statement or willfully over valuing a property to influence a mortgage lending decision was a crime applying only to federally-regulated institutions. Under the new law enforcement is extended to private mortgage brokers and other private lenders.
• Further funding enforcement efforts - For fraud prevention and enforcement the new law authorizes $165 million in new resources for 2010 and 2011 to hire fraud prosecutors and investigators.
Also to strengthen the federal regulatory and enforcement capacity the legislation authorizes $140 million for the Federal Bureau of Investigations (FBI); $50 million for U.S. Attorney's Offices ($20 million for the Criminal Division, $15 million for the Civil Division, $5 million for the Tax Division); $30 million for the US Postal Inspection Service; $30 million for the Inspector General at the Department of Housing and Urban Development; $20 million for the Secret Service; and $21 million for the Securities and Exchange Commission.
• The new law also creates a bipartisan Financial Crisis Inquiry Commission to investigate the financial practices that contributed to the current financial crisis, in order to prevent future economic calamity.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
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Some homeowners are getting a second chance at a mortgage modification and others may now be able to make a short sale work for them. Both possibilities could stave off foreclosure.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
For the second mortgage, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner is taxed.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and accepting the proceeds as full repayment, rather than a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
Need a break from doom and gloom in the housing market? Get off the beaten news track and stop by the DeadlineNews Group's Offbeat News Examiner outlet for a few laughs.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime Read more!
The Obama administration's "Making Home Affordable" (MHA) initiative calls for mortgage modifications with interest rates as low as 2 percent, slashing in half the 4 percent bottom previously sought by consumer advocates.
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - Some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent under the Obama administration's new "Making Home Affordable" (MHA) initiative.
A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one. Modifications are designed to make mortgages more affordable.
Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments.
The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750 in some high-cost areas.
The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, comes with financial incentives for both homeowners and lenders.
Loan servicers get thousands of dollars for modifying mortgages and borrowers get a principal reduction also for thousands of dollars over five years for paying on time.
MHA modifications are designed to make the monthly cost of housing more affordable by reducing the mortgage payment to as little as 31 of household income. Lenders can accomplish that by reducing interest rates, extending the life of the loan and even reducing the principal -- though to date most lenders have balked on forgiving debt.
"To reach the target affordability level of 31 percent, interest payments will first be reduced down to as low as 2 percent. If at that rate the debt to income level is still over 31 percent, lenders then extend the term or amortization period up to 40 years, and finally forbear principal at no interest, until the payment is reduced to the 31% target," according to the Treasury's "Making Home Affordable Updated Detailed Program Description."
The program runs through 2012, allows borrowers to modify a loan only once and applies only to loans made on Jan. 1 2009 or earlier. Mortgages for single-family homes worth more than $729,750 are excluded.
• There's more mortgage modification news that really hits home by helping you make the right choices to get the lender on your side.
Refinancing help
MHA also includes a refinancing provision for those with loans held by Fannie Mae or Freddie Mac.
Homeowners with less than 20 percent equity in their homes, who now find it difficult if not impossible to refinance, may be eligible to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.
The refinanced loans can be as large as $729,750 in high cost areas and go to those who are current and on time with their mortgage payments.
Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!
(Also, while waiting for real estate to recover, the DeadlineNews Group is going off the beaten path for a while...)
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