New Relief Program For Homeowners at Risk of Foreclosure
Effective December 15, Fannie Mae and Freddie Mac the government-controlled mortgage underwriters, are sponsoring various relief plans for homeowners at risk of foreclosure.
Fannie and Freddie hold almost 60 percent of all U.S. mortgages. With this kind of reach, the new programs should have a real impact. Government officials said the program said it wasn't likely to stem the housing downturn on its own, but said it could help hundreds of thousands of homeowners. Plus, banks will receive an $800 fee for every loan that is reworked.
Like most homeowner relief plans, there are requirements that borrowers must meet to qualify:
- Be at least three months behind on their mortgage payments
- Owe the bank at least 90 percent of what the home is worth
- Live in the home as a primary residence
- Not be in bankruptcy
- Be able to prove that they're not just trying to skip out on the loan
- Loan must have been written before Jan. 1, 2008
- Loan must be held by Fannie or Freddie, or investors agreeing to participate.
Lenders will adjust interest and the length of the mortgage — extending them up to 40 years — and even principal to bring payments within 38% of the household gross income of the homeowner. The principal will still be owed, but it won't accrue interest.
Cramer Calls the Bottom in Real Estate Market
A Record Number of Homeowners Avoid Foreclosure in the Second Quarter
Summary of the “Housing and Economic Recovery Act of 2008
President Bush Signs Historic Housing Bill
Second Home Foreclosure Tax Penalty
Goverment’s FHASecure Refinances 200,000th Mortgage
183,000 Homeowners Get Help To Stay In Their Homes
Real Estate Subprime Mortgage Five-Year ARM Freeze Announced
Subprime Loan Perspective – Interview with Former Golden West Financial CEO
Another view on the subprine home loan mess from an industry insider. This is a serious interview with the former head of Golden West (i.e World Savings) that was bought by Wachovia in 2006:
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Prior related posts:
Jumbo Financing and the Impact on The San Diego Real Estate Market
Home Builders Pushed 100% Loans to Move Properties
Housing Values Will Cause Hundreds of Banks Will Fail
Summary of the “Housing and Economic Recovery Act of 2008
President Bush Signs Historic Housing Bill
San Diego City Attorney Wants City To Be Foreclosure Sanctuary
Reworked Subprime Loans … 40% End Up Defaulting
Fed Approves New Rules For Mortgage Loans … Too Little Too Late
Housing Slump Will Go Continue at least To 2009
Nation’s Mortgage Lender Records Loss of $2.2 BILLION +$1.1 BILLION Charge Off
Reworked Subprime Loans … 40% End Up Defaulting
Moody’s Investors Service: More than two of every five subprime borrowers whose mortgages were reworked in H1’07 are defaulting anyway. Among subprime adjustable-rate mortgages modified in H1’07, 42% were at least 90 days late on March 31. Modifying loans granted to consumers with poor credit records has gained favor as record numbers fail to keep up with payments and home prices tumble. San Diego California real estate
Fed Approves New Rules For Mortgage Loans … Too Little Too Late
The Federal Reserve approved new rules for home mortgage loans to protect consumers from questionable lending practices. Most of the new rules apply to subprime owner occupied home loans and go into effect 10-1-09.
Two of the best of these new loans are:
The lender must verify the borrower’s income and assets the borrower is relying on to pay the mortgage.
Lenders to escrow property taxes and homeowner’s insurance on subprime loans. This rule will be phased in during 2010.
The requirement to have escrow accounts on sub-prime loans should have been there all along but the lenders did not want the extra work. FHA and VA loans have always required escrow accounts because it addresses the stupidity factor. If you are not smart enough to save a down payment, you are obviously not going to save for your property taxes and insurance when they come due. So your lender has to set up a forced savings account to do it for you.
San Diego California real estate agent