WASHINGTON – May 20, 2009 – Help is on the way for many homeowners facing foreclosure, thanks to new details under the Making Home Affordable Program announced by the U.S. Treasury and the U.S. Department of Housing and Urban Development (HUD).
The Making Home Affordable Program is designed to help homeowners modify their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® (NAR) believes that a uniform process for handling short sales will facilitate the process.
“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” says NAR President Charles McMillan. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in a challenging economy.”
Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on the mortgage. Go to www.treasury.gov for detailed information on the program changes.
“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” says McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”
“We have heard from Realtors that the extensive delay in the short sale process caused many buyers to go elsewhere and left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan says.
© FLORIDA ASSOCIATION OF REALTORS
Wednesday, May 20, 2009
Friday, May 15, 2009
Obama administration expands housing plan
WASHINGTON – May 15, 2009 – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don’t qualify for other assistance.
The initiatives are intended to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers’ loans.
“We’re seeing a lot of progress in a very short period of time,” Treasury Secretary Timothy Geithner said.
Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody’s Economy.com expect the number will be less than half of that.
And while the number of success stories is growing, it pales compared with the rate of new foreclosures, and many housing counselors across the country are complaining that the program has been slow getting off the ground.
“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”
Nevertheless, Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn’t expect to see large volumes of loan modifications before July or August. “The basic problem is that the program is very complicated and involved to set up,” Cecala said.
The government program requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
Since the program involves taxpayer dollars, the lending industry needs to make sure it sets up the program correctly, said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose on her home overlooking Seattle’s Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she’s only been able to have one phone conversation with a company representative.
“It’s like this huge, concrete thick wall that you cannot get through,” she said.
Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.
“We offer a wide range of foreclosure prevention options to our customers,” Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman’s case. “In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful.”
So far, 14 companies that serve about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
The homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure. Or, with the lender’s permission, the homeowner can sell the property for less than the value of the loan a so-called “short sale.”
Mortgage companies would get up to $1,000 and borrowers would get up to $1,500 in relocation costs.
For months, real estate agents have complained that it’s difficult to get lenders to agree to a short sale, and the process takes so long that many deals fall apart.
“They do not have their institutions staffed properly, that’s the problem, “said Lisa Gregory, a real estate agent with Prudential California Realty in Del Mar, Calif. “I don’t think encouraging these processors with an extra $1,000 will help because they aren’t motivated,” she said, but added that “this certainly sounds better than nothing.”
Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Real Estate Reporter J.W. Elphinstone contributed to this report from New York.
The initiatives are intended to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers’ loans.
“We’re seeing a lot of progress in a very short period of time,” Treasury Secretary Timothy Geithner said.
Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody’s Economy.com expect the number will be less than half of that.
And while the number of success stories is growing, it pales compared with the rate of new foreclosures, and many housing counselors across the country are complaining that the program has been slow getting off the ground.
“Our experience at the ground level has been, so far, frustrating,” said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He’s going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
“It’s a long process, but I still have a little hope to stay in my home,” said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. “I’m pretty happy.”
Nevertheless, Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn’t expect to see large volumes of loan modifications before July or August. “The basic problem is that the program is very complicated and involved to set up,” Cecala said.
The government program requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
Since the program involves taxpayer dollars, the lending industry needs to make sure it sets up the program correctly, said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. “This is a very well-thought out plan,” she said. “People have to be a little bit patient.”
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclose on her home overlooking Seattle’s Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she’s been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she’s only been able to have one phone conversation with a company representative.
“It’s like this huge, concrete thick wall that you cannot get through,” she said.
Last week, Aurora joined the Obama administration’s loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers’ home loans.
“We offer a wide range of foreclosure prevention options to our customers,” Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman’s case. “In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful.”
So far, 14 companies that serve about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
The homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure. Or, with the lender’s permission, the homeowner can sell the property for less than the value of the loan a so-called “short sale.”
Mortgage companies would get up to $1,000 and borrowers would get up to $1,500 in relocation costs.
For months, real estate agents have complained that it’s difficult to get lenders to agree to a short sale, and the process takes so long that many deals fall apart.
“They do not have their institutions staffed properly, that’s the problem, “said Lisa Gregory, a real estate agent with Prudential California Realty in Del Mar, Calif. “I don’t think encouraging these processors with an extra $1,000 will help because they aren’t motivated,” she said, but added that “this certainly sounds better than nothing.”
Copyright © 2009 The Associated Press, Alan Zibel (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Real Estate Reporter J.W. Elphinstone contributed to this report from New York.
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