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.
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To those who think only low income people are losing their homes. WRONG….middle-class folks are losing their homes MORE than low income folks are. I think it makes some people feel good to try to put a rationale on this that it has to be people with low income, than to accept the fact that it is middle income folks more so.
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No matter how one looks at it, there’s always going to be housing markets that are overhyped. If somehow those markets can support whatever the hype is all about, the real estate price will remain high. If they don’t then house prices will plummet. A typical example of the latter is Southern Cal (San Diego and the Southern OC come to mind). SF is in an unusual situation. RE prices will continued to go up as long as people are willing to blow their money on housing, even if it’s exorbitantly overpriced. Meanwhile, the city’s infrastructure is crumbling. That can only go that far. As more and more middle-class people and families abandon SF, the city will be stuck with the hyper-rich and the indigent, neither of which will contribute much (or anything) to the tax-base. The moneyed rarely have any desire to plow money into their “beloved” city, and the indigent don’t have any. My bets are on “going down”.
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FANNIE MAE AND FREDDI MAC are the public companies traded on stock market. When there was profit the investors got the profit. When they are in loss WHY Taxpayers are asked to pay for the loss. ??????????????? FANNIE MAE AND FREDDI MAC should NOT be bailed out.
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They are raising interest rates to shore up the banks. They don’t care diddlysquat about the struggling homeowners. The rising interest rates now will cause more with adjustable mortgages to go into default. This is just a temporary slowing and even if the slow figure holds, the bottom line is more people are going to default despite bailing out Fannie Mae which is basically giving money to the foreign investors like China and Russia. Let them default! The price of housing NEEDS to go down another $200,000! Why should our tax dollars and the Federal Treasury print monies to devalue our dollars to keep people in overpriced housing they could not afford to begin with? They can walk away now and buy cheaper homes.
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Although the foreclosures may have plateau, the correction still has a little ways to go. Sorry, fundamental values stand for SOMETHING and are really your best bet against big losses.
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And this is just the tip of the iceberg. When the dust finally settles, both housing prices and mortgage rates will be subsidized by the taxpayer. This, amigos, is just the next step on the glorious road to socialism. It truly does take a village.
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