Posted by: Alan Brown in Tax Savings, Tax Benefits, Refinance, Recession, Real Estate Investment, Real Estate, Property Ownership, Preforeclosure, Mortgage, Market Prediction, Legislation, IRS, Investment, HUD, Homes on the Market, Homeowners Act, Government, Foreclosure, Financing, Economy, Buying Homes, Bank Owned, ARMs on
Oct 26, 2009
Buying opportunities, for those looking for bargain deals, are still good and should extend well into 2010 and 2011. Housing starts according to the Commerce Dept. have come in lower than expected for 2009.
One would naturally think, as home builders attempt to reduce inventory, that home prices would stabilize. To a certain extent they have stabilized albeit temporary.
First time home buyers who have been sitting on fences, automobiles and motorbikes are now out in force trying to take advantage of the $8,000 tax credit set forth by the U.S. government. Ironically, the tax credit is due to expire on November 30'th. This small flood of home buyers has temporarily created a high demand in low to middle income housing which in turn has created more competition among investors seeking cheap deals on foreclosures and HUD homes.
The new law or Hope for Homeowners Act of 2008, signed by President Bush is aimed at attempting to save 400,000 struggling homeowners from foreclosure and possibly losing their homes. The following expands upon exactly what the law entails and who will benefit the most from such legislation. There are many concerns that arise out of the current situation and the actions trying to remedy the problem. The paragraphs below aim to discuss these issues for the American public.
Many are wondering if this law is a little too late. What exactly will it do? Essentially the law allows those who qualify to abandon their existing mortgage but substitute the debt with a 30-year fixed rate loan for a maximum of 90 percent of the home's current value. The Federal Housing Association or FHA will step in and back the loan amounts up to $300 billion worth of bad mortgages. Still the final decision remains with the banks to underwrite the loans because the bottom line is the banks are losing money either way. They take the chance that the existing mortgage will be foreclosed upon, resulting in them owning the property or the other loss is the new mortgage not being as large the existing loan due to housing values dropping substantially over the years. It is a lose-lose situation for the bank but many of them will see this time period as a chance for their portfolios to recover.
This does not mean that every Tom, Dick or Harry and their cousins can qualify or be eligible for the program. There are strict guidelines that must be adhered to. The borrower must be spending more than 31 percent of their housing payment as of March 1, 2008. The existing but distressed loan needs to have been written no later than January 1, 2008, and the borrower must reside in the property. As with any loans, the borrower's income must be documented. Even though this country is facing a lot of economic problems and it is certain many troubled homeowners will be in the bandwagon, this program does not start until October 1st of this year. It will run until 2011. A word of warning however is that FHA, already a burdened government agency, may not be up to full running capacity until after New Year's, to handle this new legislation.
It is also important to consider the fact that your credit will be a deciding factor in this scenario. One option will be to consult your local bank to discuss if this program will even assist your needs or be a benefit to solving a huge problem. It is important that once you realize you are in trouble making mortgage payments, to discuss the matter with the existing mortgage provider. There may be other options and solutions. Ask the customer service representative to put you in touch with the Workout Department.
Posted by: Investors Lounge Online in Short Sale, Refinance, Recession, Pre Foreclosure, Mortgage, Market Prediction, Market Bubble, Loan To Value, Legislation, Investment, Homeowners Act, Foreclosure, Financing, Economy, Bankruptcy on
Jul 11, 2008
Like holding your breath underwater, homeowners facing foreclosure are desperate for air. While the solution of coming up and taking a breath seems simple, the work needed to get out of water can be a challenging journey. Many struggling homeowners face the journey of avoiding foreclosure and seek help to prevent it, thus beginning the quest loan workouts and restructuring.
When the pressure of foreclosure begins to mount, the goal becomes as clear as a ray of light on a cloudy day. Fix the loan. It is at this point where the journey becomes a cat-string game, the excitement of lenders dangling the string (loan details, interest rates) over the cats (borrowers) heads and the cat making desperate attempts to grab hold of the string and gain composure once again. Essentially, avoiding foreclosure comes down to numbers and the fact that what is best for the borrowers is often not in the best interest of the lenders. 
With that in mind if you are feeling the pressure of foreclosure mounting down on you, the first step you need to take is having a discussion with your lender, sit them down and talk numbers. While with your lender present your financial situation. Show the lender details about your income, where your money is being extended to, and what your family spends on food, clothing, car payments, credit card debt, and student loans. Homeowners also need to present copies of their pay stubs, bank statements, and utility bills to back up their claims. Homeowners will need to make some changes in order to stay in there homes, so say goodbye to premium cable packages and give up your expensive habits because it is time to buckle down.
