Modified «

The Obama administration in attempt to aid the folding housing market has formed a unique modification plan.  The administration dedicated over 75 billion dollars to modifying distressed mortgages.  According to the administration this modification program is different from ones in the past.

Being foreclosed on comes down to one important aspect, the inability to make the required monthly payment.  The new program would give banks an incentive to get the monthly payment down to a reasonable amount for distressed homeowners.  Obama’s plan would make loan servicers reduce payments to no more than 38 percent of a borrowers gross monthly income.  Cash incentives have also been added.  Loan servicers receive $1000 for each modification they do.  Financial hardship is also another shield that the government will recognize and accommodate homeowners.  With this new plan now is the best time to do a home modification.  Financial Relief Law Center is on the cutting edge when it comes to the details of this plan.  If you are unclear about what this new plan means please reach out to us on our website or comment on our blog.

Also, additional resources can be found at:

http://www.usnews.com/articles/business/real-estate/2009/03/04/obamas-loan-modification-plan-7-things-you-need-to-know.html

A recent FoxBusiness article takes a look at the state of the economy.  The author’s conclusions:  The economy has remained “weak or deteriorated further,” that according to Ken Sweet, a FoxNews correspondent.  A survey released by the Federal Reserve supports the idea that the economy is getting stronger and many districts feel that fiscal change won’t really be seen until the end of 2009.  The Fed also believes that even with the stock market gaining momentum and business expectations looking more positive, the economy has not really displayed signs of improvement.

The Fed also looked at other key areas that shed light on the state of the economy.  Manufacturing was down slightly, while Oil prices were on the rise.  Limited credit was a factor because it impedes a consumer’s ability to purchase automobiles.  On a positive note the Fed stated that new home sales were on the rise and new home construction had stabilized at lower levels.  There were, however, no additional signs of rising inflation rates.

LINK:

http://www.foxbusiness.com/story/markets/economy/fed-economy-deteriorated-april/

The above title appears to sound like a good thing.  Anyone struggling to keep their home might feel a sense of relief when hearing these words.  However, the Hope for Homeowners bill which was enacted by congress on Oct 1, did little to help homeowners.  Many critics of the bill have argued that it is a huge disappointment that does very little.

It works like this:  The act would allow for an individual who is in default to get out through the following; the bank could voluntarily reduce a homes mortgage by 90% of a homes current market value.  That same loan then gets refinanced and is now secured by the Federal Housing Administration (FHA).  On paper it sounds good but the reality of it, is not that great.  According to a CNN money article, only one family was helped, after seven months of the programs launch.  ONE FAMILY!

“As of February 2009, only 451 applications had been received and 25 loans finalized, far short of the estimated 400,000 homeowners who were expected to participate. This was attributed to high fees, high interest rates, the need for a reduction in principal on the part of the lender, and the requirement that the federal government receive 50% of any appreciation in value of the house. Congress began hearings on the program in February.”1

How could this be?  I’m asking the same question.  It turns out the problem lies with the word voluntary.  Banks are not required to extend this service to its customers in need.  The incentive to do this type of program is very low.

On May 20 the Obama administration enacted new legislation that would make banks more motivated to help Homeowners.  This new version allows banks to reduce a homeowners balance from  90% to 93%.  And in addition banks receive a $1,000 for every loan they refinance.

Hopefully the program becomes more useful with the new changes made.  However,  this sounds like an all too familiar story of a government program gone bad.  Or, one that takes many revisions and a lot of time to get off the ground.

http://money.cnn.com/2009/05/20/real_estate/new_hope_for_homeowners/index.htm?postversion=2009052107

http://en.wikipedia.org/wiki/HOPE_for_Homeowners_Act_of_2008#HOPE_for_Homeowners_Act_of_2008 1

This was the headline in a recent New York Times article that I felt was very insightful.  The article addresses a key question that many people are asking.  Where is the bailout money going and how many loans have actually been modified?  Here is this writers synopsis on the article in case you don’t have time to read it.

An elderly woman who resides in Mesa Ariz, lost her job and became unable to make her mortgage payment like so many Americans.  However, her bank with which her mortgage was held through, (bank of America)  did not offer her any type of home modification deal.  The question that is asked is who is being helped by the bailout, and how often are they actually being helped.

Here is a full link to the Article.   http://www.nytimes.com/2009/06/03/business/03mortgage.html?pagewanted=1&hp

The U.S. saw a record number of homes being foreclosed on in the month of April thanks to banks taking back homes from defaulting homeowners.  In an already volatile and stifled economy more than 342,038 properties were sent into foreclosure.   A company out of Irvine California called RealtyTrac Inc. issued a statement saying that one in 374 households got a filing, the highest monthly rate since 2005.  One of the main factors that contributed to this data is the fact that Unemployment is hindering the housing market as home prices plummet.  According to the labor department, in the United States,  unemployment rose to 8.9 percent.  This is the highest it’s been within the last twenty five years.   Reality Trac said that filings jumped 32 percent from the year-earlier period.   California was No. 1 in April with 96,560 foreclosure filings.  Florida was second with a rate of 1 in 135 homes being foreclosed on.

But it’s not all bad news.  The silver lining in this cloud may be the fact that home prices may be recovering.  That’s according Shaun Donovan of the secretary of housing and development.

“Since January we’ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate,” Donovan said at an NAR conference in Washington.

http://www.bloomberg.com/apps/news?pid=20601110&sid=aYokz_rb3kbw

President Barrack Obama recently announced his plan called the Homeowner and Stability Plan.  Under this new plan homeowners could get another chance at refinancing into a better rate.  The program is supported by Fannie Mae and Freddie Mac.  Although, every house is not guaranteed to be saved, this will still do much to help turn the economic tide around.

There are some interesting state statistics worth looking at.  The following represents the top five home foreclosure states.

California:  18:19 percent

Michigan: 17:71 percent

Florida: 14:29 percent

Texas:  8.03 percent

New York: 7.93 percent

Additional states listed included: Sacramento; Atlanta; Las Vegas; Miami; and Indianapolis.

http://www.send2press.com/newswire/2009-04-0414-005.shtml

I asked myself this question which led me to some recent internet digging. I wanted to know what other Corporate blogs are talking about.  It was no surprise that the majority of the companies that I looked at were talking about themselves, why they are so great, and why we should lend our valuable time to read their blog.  I decided that I wanted this blog to be different.  I decided that I wanted this blog to be real, not just a mere posting of company info. A blog that would be written by a real person not just corporate banter. I started this blog as a way to foster a more open communication form in regards to the housing market, the economy and what opinions people have and want to share.  This blog is for our clients our employees and our community at large.

In order to ease the housing crisis, a government program was announced on February 18, 2009. $75 billion program to help up to nine million homeowners avoid foreclosure! And it’s that simple. But where is that money today? That’s what so many homeowners are asking. The $75 billion would reduce monthly payments for borrowers, however, many banks that have received this money have been tight fisted when lending to people already struggling with debt. Lenders and financial institutions alike were and currently are weary of giving any more money to investments that could be potentially toxic. Opposition to the bill feel that this could affect bankruptcy type issues and stress that by modifying or adjusting loan terms, this could make an already weak market even more unstable for debt bundled with securities. In any event, money no matter how small or large would be seen as a blessing.

Below is a link to the publication!

http://www.bloomberg.com/apps/news?pid=20601103&sid=adtt9PpAA4fQ&refer=news