Archive for the 'Stop Foreclosures' Category

The widespread credit crunch in the financial industry has affected most sectors in the country, especially the housing market which is suffering from the unabated increase in the number of repo homes.

To address the devastating and widespread impact of the credit crunch, U.S. Treasury Secretary Timothy F. Geithner has announced the Public-Private Investment Program. Experts hope that Geithner’s program would bring relief to the financial industry and distressed homeowners who are on the brink of losing their properties to foreclosures.

The credit relief plan called on taxpayers to help insurance companies, bankers and other players in the financial industry to sell their mortgage-related assets.

Experts hope that the program will influence lawmakers to shift their attention from corporate bonuses to other substantive issues, particularly the growing number of repo homes that are weakening assets that the U.S. government will acquire.

Under the program, the government and investors will form a partnership to purchase repo homes loans or securities.

However, the program works against homeowners who will shoulder 94 percent of the risk for the loan pools.

Furthermore, guarantees or loans will be provided by the government to investors who in turn, will negotiate payments for assets and absorb the initial losses in an effort to mitigate the expected cost to the federal government.

According to experts, the success of the program designed to stabilize the financial industry and control the spread of repo homes in the country, depends on the willingness of homeowners to accept the proposed prices.

Meanwhile, Geithner explained that the government does not have any intention to impose pay or bonuses limitations on its partners. However, experts believed that investors are skeptical over Geithner’s program and whether it would success on reducing the number of repo homes.

They said that investors have every right to doubt following efforts of the Congress to enforce unreasonable taxes on bonuses and compensation paid by financial companies, such as American International Group.

Experts pointed out that it would be for the benefit of taxpayers if the Congress intensifies its efforts to help mortgage lenders prevent the spread of repo homes.

They believed that lawmakers can help a lot in foreclosure prevention by encouraging loan modifications that allow distressed borrowers to remain in their homes.

If you are a homeowner distressed by thoughts of repo homes, read on. Your mortgage loan might qualify for modification under President Barack Obama’s program to mitigate repo homes. If your loan is modified by your mortgage lender, your monthly payment will be reduced to an affordable level so that you would not struggle too much and you would save your house from following the fate of repo homes.

Here are the qualifications issued by the Treasury Department for homeowners applying for loan modification under Obama’s foreclosure prevention program.

The first qualifications are about the characteristics of the home. The home must be occupied by the borrower and must be the primary residence. Residence requirements are examined through credit reports, utility bills and tax returns. It must also be a single-family housing structure with up to four units, which could be a condo, a cooperative or a manufactured house based in a site and taxed as a real state property. The home also must not have been condemned or left vacant.

The second qualifications concern the borrowers. Homeowners whose mortgages are in active litigation can apply for modification under Obama’s program to mitigate repo homes without prejudice to their legal rights. Likewise, homeowners who have filed for bankruptcy are not excluded from the program. They can still apply for loan modification.

The third qualifications are about the mortgage loans. Mortgages must have been initiated and taken on or before the first of January 2009. The loans must be first lien loans and their current unpaid balance just before modification must not be more than $729,750 for one-unit homes, $934,200 for two-unit homes, $1,129,250 for three-unit homes and $1,403,400 for four-unit homes. Each mortgage is entitled to only one modification under Obama’s program to avert the rise in repo homes.

Other rules are about liens, deadlines, monitoring and actions related to repo homes. Secondary liens, such as home equity loans, lines of credit or second mortgages, are excluded from the front-end debt-to-income computation, but are considered when back-end debt-to-income are calculated. For eligibility screenings, minimum or maximum loan-to-value ratios are not considered.

The application period for mortgage modification under Obama’s program ends on December 31, 2012. Cash incentive programs for borrowers however will continue for up to 5 years starting from the date the borrower’s modification application was approved.

Lastly, remember that these instructions are only guidelines. Contact your lender or a mortgage modification specialist to check whether you are qualified or not under the program.

A day after US President Barack Obama unveiled his foreclosure prevention initiative, Department of Housing and Urban Development (HUD) Secretary Shaun Donavan urged banks and other financial services institutions to take aggressive steps to ensure the success of the $75 billion program.

The foreclosure abatement initiative includes refinancing arrangements that will provide a chance to almost 9 million borrowers to reduce their mortgage payments.

The initiative will greatly help homeowners who are on the threshold of foreclosures, those making payments but are struggling to do so regularly and those who are at risk of defaulting.

In addition, the Treasury Department has pledged another $200 billion to help home mortgage providers Federal National Mortgage Association and Federal Home Loan Mortgage Corp. maintain low mortgage rates.

Furthermore, the foreclosure prevention initiative also includes incentives of $1,500 for distressed homeowners and $500 for lenders provided that loans have been modified before they defaulted.
The incentives are designed to encourage lenders to offer home refinancing to homeowners whose mortgages surpassed the fair market value of their properties.

Donovan, during an interview on the NBC program “Today Show”, said that the foreclosure problem started as a crisis in the mortgage market and spread to become an employment crisis.
He pointed out that the Obama Administration is certain that there are enough requirements to ensure and sustain heavy bank refinancing. This, he added, could mean a great deal to help owners of distressed properties.

He explained that those eligible for mortgage refinancing are homeowners who have good credit. He admitted that there are homeowners of distressed properties who would not benefit from the foreclosure prevention initiative, citing in particular investors owners who purchased homes they never occupied.

Meanwhile, Federal Deposit Insurance Co. Chairman Sheila Bair said that the foreclosure prevention initiative will have a significant impact on the Obama Administration’s effort to curb the number of repossessed homes.

In an interview on the ABC television show “Good Morning America”, Bair empathized with homeowners who are good mortgage payers who feel that they are being left out from the initiative and that the Obama Administration is instead rewarding distressed homeowners for their risky behavior.

She pointed out that what is important right now is to put a stop on foreclosures and halt falling home prices which could all lead the way to stabilizing the housing market.

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