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Home buyers to get more time
Associated Press - Thu, Jul. 1, 2010
WASHINGTON - Congress has sent President Obama a plan to give home buyers an additional three months to finish qualifying for federal tax incentives that boosted home sales this spring.
The legislation would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000.
Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.
The bill allows only people who already have signed contracts to finish at the later date.
The National Association of Realtors had estimated this week that about 180,000 home buyers who already signed purchase agreements were likely to miss the Wednesday deadline.
The House approved the measure Tuesday.
Legislation in the Senate, sponsored by Majority Leader Harry Reid (D., Nev.), was approved Wednesday night by unanimous consent.
The popular tax credit has helped to stabilize the nation's slumping housing market. Nearly three million taxpayers claimed the tax credit through May 22 - claiming more than $21 billion - according to the Treasury Department.
The Realtors group said the tax credit had generated one million home sales that would not have happened otherwise.
The bill would also make it easier for the Internal Revenue Service and state prison officials to share information about inmates in order to fight fraud.
The Treasury Department's inspector general for tax administration reported last week that nearly 1,300 prison inmates had improperly received more than $9 million in tax credits for home buyers while they were locked up.
The report said the IRS did not have up-to-date information on inmates.
The tax credit for first-time home buyers was part of Obama's economic-recovery package enacted last year. In November, Congress extended the credit and expanded it to longtime owners who bought new homes. First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.
The Realtors group had been pushing hard in Congress for the extension. Mortgage lenders, the trade group said, have been swamped with borrowers trying to get approved by the end of the month.
Delays with mortgage lending and appraisal companies have meant that home sales are taking far longer to complete this year.
There have been particularly long delays for buyers of so-called short sales, in which banks agree to accept less than the total mortgage amount. In Las Vegas, for example, short sales made up nearly a third of all sales last month.
Fannie Mae to penalize homeowners who walk away
By EILEEN AJ CONNELLY
The Associated Press
Wednesday, June 23, 2010; 3:11 PM
WASHINGTON -- Government-sponsored mortgage purchaser Fannie Mae is trying to encourage distressed homeowners to find alternatives to foreclosure by banning those who walk away from getting new loans for seven years.
Troubled borrowers who do not try in good faith to work out a deal, but have the capacity to pay, are targeted by the policy announced Wednesday.
"Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting," said Terence Edwards, executive vice president for credit portfolio management.
A strategic default occurs when a homeowner stops making payments on a mortgage despite being able to do so. It has become increasingly common in communities where housing values fell sharply and homeowners are "underwater," or owe more than their houses are worth.
Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default. The company plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases to pursue for such judgments.
A spokesman for Freddie Mac, the other government-sponsored mortgage buyer, could not immediately say if it will institute a similar policy. Freddie Mac's current policy requires at least a five-year wait.
Fannie and Freddie were created by Congress to buy mortgages from lenders and package them into bonds that are resold to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
In announcing the new policy, Fannie Mae said homeowners who make a good faith effort to resolve their situation with their mortgage services, and those who have extenuating circumstances, will be eligible for new loans in a shorter time period, but did not detail how long the wait might be.
In afternoon trading, Fannie Mae shares fell 2.1 percent to 41 cents. Fannie Mae shares were unchanged at 48 cents. Both companies plan to delist their shares from the New York Stock Exchange because they don't meet listing requirements that they remain above $1 per share.
High Default Rate Seen for Modified Mortgages
By JAMES R. HAGERTY
JUNE 16, 2010
Fitch Ratings Ltd. forecasts that most borrowers who get lower mortgage payments under a federal government program will default within 12 months.
Among those with loans that aren't backed by any federal agency, the redefault rate within a year is likely to be 65% to 75% under the Obama administration's Home Affordable Modification Program, or HAMP, according to a report to be released Wednesday by Fitch, a New York-based credit-rating firm. Almost all of those who got loan modifications have already defaulted once.
FULL STORY
Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case
June 14, 2010, 3:00 AM EDT
By Lorraine Woellert and John Gittelsohn
June 14 (Bloomberg) -- The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.
Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.
“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.
FULL STORY
Fannie Lowers Minimum Rehab for Deeds-in-Lieu
American Banker (04/16/10) P. 5; Berry, Kate
On April 14, Fannie Mae announced that distressed borrowers who agree to a deed-in-lieu of foreclosure will have to wait only two years to obtain a new mortgage backed by the firm, provided they can make a 20 percent down payment. However, borrowers who can front only 10 percent will have to wait the standard four years. Experts say the program will reward borrowers who work with their loan servicers, deeming them better risks than those who simply walk away from their mortgages.
Foreclosures rise as banks repossess more homes
By Renae Merle
Friday, April 16, 2010; A20
More people lost their homes to foreclosure during the first quarter of this year as banks worked through a backlog of troubled borrowers and repossessed more properties, according to data released Thursday by RealtyTrac.
The number of homes repossessed, the final stage of the foreclosure process, reached 257,944 during the quarter. That is up 9 percent from the previous quarter and 35 percent from the first quarter of 2009, according to RealtyTrac, an online service that estimates that it tracks about 90 percent of the housing market.
Foreclosures have been suppressed over the past year by government and industry mortgage relief programs to keep people in their homes. But as those efforts have faltered, economists and industry experts expect more borrowers to lose their homes through foreclosure or short sales, in which properties are sold for less than what's owed.
During the first quarter, banks repossessed about 130 homes in the District, about the same number as during the corresponding period last year. But more were repossessed in Maryland and Virginia in the first quarter of 2010 -- 2,500 and 5,000, respectively.
"We're not surprised to see an influx of [repossessed properties]. We thought this would be coming, we just didn't know when," said Daren Blomquist, spokesman for RealtyTrac.
Distressed sales have started to make up a growing part of home sales, according to data from First American CoreLogic, a research firm. Foreclosures and short sales accounted for 29 percent of home sales in January, compared with about 23 percent in July.
This comes as the Obama administration revamps its foreclosure prevention program to provide more help to borrowers who owe more than their homes are worth, a situation known as being underwater.
According to data released Wednesday by the Treasury Department, about 1 million borrowers have received help under the Making Home Affordable program, which lowers homeowners' payments to 31 percent of their income. But the majority are at risk of losing the mortgage aid and still have to prove they qualify.
Only about 230,000 U.S. homeowners had secured permanent loan modification under the program through last month, according to the data, and more than 150,000 had been dropped from the program because they didn't keep up with their payments or their lender determined they did not qualify after all.
More keep up with mortgage payments
By Stephanie Armour, USA TODAY
The share of homeowners behind on their mortgages fell in the first quarter, the first drop in four years and a possible sign that the foreclosure crisis has peaked.
The portion of mortgages that were delinquent 30 days or more fell to 6.57% in the first quarter from 6.60% in the last three months of 2009, according to Equifax and Moody's Economy.com
That's a drop of about 16,630 delinquent loans and, though modest, it is the first decline in the delinquency rate since early 2006.
"It will take years to work through all the troubled mortgage loans in the foreclosure pipeline, but this is the first indication that the number of loans entering the pipeline is declining," says Mark Zandi, chief economist for Moody's Economy.com. "It portends a peaking of the foreclosure crisis."
Delinquencies in almost all categories — 30-, 90- and 120-day delinquencies on single-family properties — declined.
Reasons for the improvement in the foreclosure rate:
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Tougher lending standards since the housing bubble burst have kept riskier borrowers from getting mortgages.
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Mortgage modifications have helped tens of thousands of troubled homeowners stave off delinquencies.
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A more stable job market is preventing new mortgage delinquencies. The unemployment rate held steady at 9.7% in March, and non-farm jobs increased by 162,000.
"I wouldn't be surprised if we're at the peak," says Joel Naroff of Naroff Economic Advisors.
But the foreclosure problem won't disappear quickly.
In the past two years, more than 5 million homes have received foreclosure notices, and more than 3 million are expected to get them this year, according to RealtyTrac.
One issue is strategic defaults by borrowers who walk away from their mortgages — even though they can afford to pay — because they owe more than their homes are worth.
Millions of homes have negative equity and perhaps 20% to 25% of recent defaults have been strategic, according to a new Moody's Economy.com analysis.
More strategic defaults could increase the pace of home foreclosures and hamper new borrowers' attempts to get mortgages, it says.
"There is still a foreclosure problem that is going to cause people to lose their homes, but in terms of new delinquencies starting, those are probably at their peak," Zandi says. "This summer will be the peak of foreclosures started."
Major Lenders Push for Options to 2nd-Lien Cuts
American Banker (04/14/10) P. 19; Borak, Donna
Executives from big lenders told lawmakers that principal reductions on second mortgages may not be enough to heal the housing crisis and should not be their sole option for modifications. They warned that forcing write-downs on second liens could rattle the markets, inflate down payment requirements, tighten credit criteria more and boost risk premiums for mortgage credit. Executives also noted that they have been able to modify first lien loans without also modifying second lien loans.
Homeowners making sacrifices in tough economy
By ADRIAN SAINZ (AP)
MIAMI — More than two thirds of Americans who've been unable to sell their home and buy one that better fits their needs have cut back on household expenses such as food, entertainment and clothing in order to pay their mortgage, a survey released Tuesday shows.
Homeowners who have fallen on financial hard times have made other sacrifices and lifestyle changes: About a third have downsized to a smaller home or delayed expanding their family as planned.
And, a quarter of homeowners who want to sell their current home and buy another say they need to make the move in order to lower their monthly expenses due to financial problems.
FULL STORY
U.S. unveils plan to shrink some home loans
New effort would also help jobless keep paying their mortgages
By Alan Zibel
The Associated Press
March. 26, 2010
WASHINGTON - After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.
The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.
FULL STORY
Visit msnbc.com for Breaking News, World News, and News about the Economy
Few homeowners get through mortgage loan modification program
By Stephanie Armour, USA TODAY
Only about 4% of homeowners whose home loans were reworked through a government-led program have successfully completed a trial period required to get permanent modifications — a slow pace of progress that has some now calling for change.
A total of 31,382 homeowners have gotten a permanent home loan modification since details of the program were announced in March, the Treasury Department said Thursday. There are more than 728,000 trial modifications underway.
Trial modifications last for three months before becoming eligible for permanent status; during that time, homeowners must remain current with their payments and submit documentation showing proof of income and that they are owner-occupants.
On Thursday, the Treasury Department released a list of servicers and the number of permanent modifications each has made.
About a quarter of borrowers in trial modifications already are in default again on their mortgages, according to Treasury, which has criticized banks for not doing more to make trial modifications permanent. Servicers have countered that borrowers have frequently failed to provide documentation of income or other paperwork.
FULL STORY
One in Four Borrowers Is Underwater
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.
Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau.
FULL STORY
Fannie Mae Launches Deed-for-Lease Program
Sorohan, Mike
Fannie Mae yesterday announced it would launch a Deed-for-Lease program, giving borrowers facing foreclosure the opportunity to remain in their home through a voluntary transfer of property to the lender.
Fannie Mae released released Servicing Guide Announcement 09-33: Introduction of the Deed-for-Lease Program. D4L allows qualifying borrowers facing foreclosure (or their tenants) to remain in their home by signing a lease in connection with the voluntary transfer of the property to the lender through a deed-in-lieu of foreclosure transaction. The D4L program is for borrowers who do not qualify for or have not been able to sustain other loan workout solutions, such as a modification. Servicers can begin offering D4L immediately.
Fannie Mae said D4L is designed to “minimize family displacement, deterioration of neighborhoods caused by vandalism and theft to vacant homes and the effect these have on families, communities and home price stabilization.”
To participate in D4L, a borrower must live in the home as his or her primary residence or lease the home to a tenant who uses it as a primary residence. Once approved for the program, borrowers or their tenants lease back the home at a market rate, and must be able to document that the new market rental rate is no more than 31 percent of their gross income.
Fannie Mae said servicers are expected to follow established process in considering a borrower for a DIL according to Fannie Mae’s workout hierarchy. Once a servicer determines a borrower is eligible for a DIL, the servicer will notify Fannie Mae that the borrower may also qualify for a D4L based on a pre-screen for borrower eligibility. The lease-back option is dependent on successful completion of the DIL.
Complete D4L program details and servicer processes can be viewed at https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp. Additionally, Fannie Mae has set up a Deed-for-Lease web page at https://www.efanniemae.com/sf/servicing/d4l/.
For questions or comments about the Deed-for-Lease Program, contact the Fannie Mae Servicer Support Center by phone at: 1-888-FANNIE5 (1-888-326-6435) or via e-mail: servicing_solutions@fanniemae.com.
Fannie to Rent to Owners in Foreclosure
By NICK TIMIRAOS NOVEMBER 6, 2009
Fannie Mae will allow homeowners facing foreclosure to stay in their homes and rent them for as long as a year, as part of the government's latest effort to help troubled borrowers, while keeping more foreclosed properties from hitting the housing market.
Fannie Mae plans to allow homeowners facing foreclosure to stay in their homes and rent them. WSJ's Constance Mitchell Ford breaks down whether this will really help troubled borrowers, in the News Hub.
The "Deed for Lease" Program lets borrowers who don't qualify for loan modifications transfer their property to Fannie Mae in exchange for a lease. Borrowers-turned-tenants will pay market rents, which in most cases are lower than the cost of mortgage payments, and might be offered extensions when their leases expire.
Fannie Mae wouldn't say in its Thursday announcement how many homeowners it expects would take advantage of the program. The company acquired 57,000 properties through foreclosure during the first half of the year.
FULL STORY
The "Making Home Affordable" Program
On March 4, 2009 President Obama's Homeowner Affordability and Stability Plan "Making Home Affordable," took effect. Many lenders have completed thier review of the modification eligibility criteria for GSE (Fannie Mae and Freddie Mac) and select non-GSE loans. To begin assessing if you may qualify for a modification or refinance, contact your lender or servicer as they may have posted a notation regarding your eligibility. We anticipate having more information in the coming weeks.
Lenders continue reviewing the guidelines and analyzing the information to determine how the plan may help you. Visit your lender or servicer's Web site for further details and ongoing updates.
If you are current on your mortgage, we encourage you to stay current as there are plan options for current borrowers.
If you do not think you are eligible for President Obama's plan, there are currently a full range of loan workout programs designed to help homeowners who are unable to meet their home loan obligations. Contact your lender/servicer or your local bank/mortgage lender for more information.
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