The Wall Street Journal announced that the two entities will deploying a new faster paced loan modification program designed to avoid foreclosure.
1. There seems to be some questions about whether the program will allow principle reduction.
2. Will it change the re-default rate which so far has been very high. (I have read that it is around 40% withing the first year. (how many more will default next year)
3. Will these loan modifications - effect the borrowers anti-deficiency protections? (You should probably have a lawyer review your documents to see if you would still be protected by California's anti deficiency laws.)
4. What will be done with second loans?
5. This program is for people who are 90 days late. Before a homeowner allows themselves to be 90 days late, they should determine all of their options.
6. This program does not apply to investment properties.
For more information on Loan Modification.
Friday, November 28, 2008
Investing Blog Posts powered by BlogBurst
Investing Blog Posts powered by BlogBurst: "Fannie Mae, Freddie Mac and U.S. officials are expected to announce plans Tuesday to speed up the modification of hundreds of thousands of loans held by the housing finance giants, marking the latest effort to try and prevent more foreclosures, people familiar with the matter said.
The announcement could mark the government’s most assertive use of Fannie Mae and Freddie Mac to help homeowners since the companies were taken over in September.
The streamlined effort will target certain loans that are 90 days or more past due, these people said. The program will aim to bring the ratio of mortgage payments for these homeowners to 38% of their income by modifying interest rates and in some cases forgiving portions of principal debt, these people said.
Borrowers would have to provide a statement or affidavit showing that they have encountered some sort of hardship that has impacted their ability to pay their mortgage. It would only apply to loans made on or before Jan. 1, 2008, and borrowers will be disqualified if they file for bankruptcy. The homes must be owner-occupied and escrows for real estate taxes and insurance must already be set up."
The announcement could mark the government’s most assertive use of Fannie Mae and Freddie Mac to help homeowners since the companies were taken over in September.
The streamlined effort will target certain loans that are 90 days or more past due, these people said. The program will aim to bring the ratio of mortgage payments for these homeowners to 38% of their income by modifying interest rates and in some cases forgiving portions of principal debt, these people said.
Borrowers would have to provide a statement or affidavit showing that they have encountered some sort of hardship that has impacted their ability to pay their mortgage. It would only apply to loans made on or before Jan. 1, 2008, and borrowers will be disqualified if they file for bankruptcy. The homes must be owner-occupied and escrows for real estate taxes and insurance must already be set up."
Wednesday, November 26, 2008
FOXNews.com - Fed Aid Sets Off a Rush to Refinance - Local News | News Articles | National News | US News
FOXNews.com - Fed Aid Sets Off a Rush to Refinance - Local News | News Articles | National News | US News: "The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs."
For the moment lenders seem to be favoring loan modifications to short sale. It looks like their strategy is to put off the day of reckoning as long as possible. I suppose there is a slight chance they could spread the problem of over price housing over such long period of time, they could let inflation erase the main problem.
That problem being that in many areas there are not enough buyers who can qualify for the homes, seller wish to sell.
Loan Modification
For the moment lenders seem to be favoring loan modifications to short sale. It looks like their strategy is to put off the day of reckoning as long as possible. I suppose there is a slight chance they could spread the problem of over price housing over such long period of time, they could let inflation erase the main problem.
That problem being that in many areas there are not enough buyers who can qualify for the homes, seller wish to sell.
Loan Modification
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