3 new programs aimed at improving the housing market
Can a trio of new policies ease foreclosures and get the market back on track?
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Foreclosed homes continue to plague communities, the housing market and the economy. Banks completed 3.2 million foreclosures between 2008 and 2011, and half again as many lurk in a "shadow inventory" that includes homes with seriously delinquent mortgages, those that are in the foreclosure process and those that have been taken over by banks but not yet listed for sale, according to CoreLogic, a mortgage data firm. Many of those homes are vacant, and they sell for about one-third less than other properties, on average.
Foreclosures have been a drag on the market for years, and relief can't come soon enough. But the latest proposed fixes won't get rolling before year-end.
The Home Affordable Modification Program (HAMP) helps troubled borrowers by reducing their monthly mortgage payment to 31% of their gross monthly income, usually by reducing their interest rate, extending the loan term, deferring repayment of principal or forgiving some of it. The Treasury has extended the program through the end of 2013, tripling the incentives for lenders that choose to reduce loan principal. Borrowers will begin qualifying under the expanded criteria by this summer. Bank analysts estimate that the beefed-up program will help an additional half-million homeowners. For more, visit www.makinghomeaffordable.gov.
A mass-refinancing plan would allow borrowers who owe more than their house is worth but who are current on their loan payments to refinance at today's low interest rates. The plan would save such borrowers an average of $3,000 annually. The catch: Congressional approval of a fee paid by the largest lenders to fund the program is unlikely.
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A pilot buy-to-rent program launching this year in hard-hit markets will let investors buy foreclosures from Fannie Mae, then rent them out. Look for the program in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida. Investors must qualify to participate (for information, go to www.fhfa.gov). The aim is to make a quick dent in the supply of foreclosures for sale. Success depends on whether bargain-hungry investors pay the prices Fannie expects for its properties.
- On our blog, 'Listed': Bank to rent homes to former owners
None of the programs is a quick fix. In fact, the pace of foreclosures will continue to pick up in the wake of a $25 billion settlement reached in February among the federal government, attorneys general in 49 states and the nation’s largest mortgage servicers. Although much of that money is slated for principal reductions, refinancing and other consumer assistance, banks are now free to step up foreclosures that were delayed pending the settlement.
Foreclosure fixes will become moot as the economy gains traction and housing demand picks up, says economist Celia Chen at Moody's Economy.com. By 2013, the number of distressed sales will still be high, but their share of total home sales will decline, allowing home prices to rise. The speed of recovery depends on how big a market share distressed properties represent.
These "new" programs all sound good, until U take a look at the rules. Then U find out U can't qualify for some stupid off the wall reason. Like because U refinanced within too short a time before U reapplied to better your situation from the 1st ripoff refinance the bank gave U. I know this is true because it's happened to me already. On top of that...if they offer anything to U, they will require U to "pay down your loan" with any assets U have, such as your hard earned 401k or your IRA's., etc.. Then after they rip that money off of U, they will make U pay very high & unreasonable closing costs & all to only get an adjustable loan from them. That means...that after another short period of time, the banks will again rip U off for more closing costs to re-do another adjustable loan for U.
U prolly won't qualify anyway, because either your"loan to value" won't cut it...or your "value to income" won't jive. Don't worry...the banks will find a reason not to help U.
Whatever money the Gov't is promising the banks to help U with, U can be sure that money will stay in the banks pocket, or will go to help out somebody who could never afford to buy a home in the 1st place & never will be able to; just to make the bank "look" good...As if they actually helped someone with this "new" Gov't handout. Those few people that the banks will help out, will own a home, all on giveaways !! (Have U seen who gets all those "Homes for Humanity"?)
Is this fair to those of us who have consistently paid our loans on time all the years we have owned a home ? NOPE !!
But really...given all of these scenarios. The simple truth is this. Once again, the Gov't is going to give money to the banks to help us. And the banks are going to take that money, yet not help us. AGAIN !! Will they ever learn ?
Why aren't they giving this Gov't money directly to the people who need it instead of trusting the banks to do it again ? Let us apply to the Gov't instead of applying to the banks, and they can give us the help directly. Why should the banks make more money from us on loans & closing costs, with money they are giving us from the Gov't., that they got free ? AGAIN !!
Can U wake up and smell the coffee yet ??
Don't U believe one word of their promises again. It's ALL crap....and it's ALL Lies !! Just like lawyers do to U.. U pay them to protect U against a lying ex, but all they do is force U to give in when U shouldn't. So U lose both ways. U lose what your entitled to get from your ex. Plus U lose all the legal fees your lawyer ripped U off for. All supposedly..."to keep the peace". Oh yeah...keep the peace for who ? I know very well, who. But that's another story altogether.
In summation....Do NOT fall for these "new" Lies any more than the older ones we got told about helping the housing crisis & those of us who rightfully need it. Ain't gonna happen. AGAIN !!!!
The biggest problem in this whole scheme by another program is that they want to help those who are defaulting in their payments. I ask why, because if they are defaulting now, they will probably will default in the future. If they have extended themselves on a home, then look at the rest of their financial picture and you will see that they are living paycheck to paycheck. It is a domino effect, once you fall behind on your mortgage, you probably started falling behind on your other commitments, such automobiles, credit cards, student loans, and medical bills.
I have lived in my home for 10 years, I used my money from my previous home sale to buy this home. We have a conventional loan and have been making our payments. We thought that we would keep this home until our kids finished school. We have one daughter and could now move into a smaller home, but we cannot. Since our payments are current, no one will help us buy into a lower mortgage. I would have to cash out my savings and part of my 401k to buy down my loan. I refuse to do that especially since 65% of the homes in my area have been foreclosed on, are a quick sale, or are being rented out. My equity has dropped by 45% and there is no recovery in site. I live in Colorado where we are supposed to be pretty stable, it is if you bought a home in the last two years. But my equity is gone and still going, who is going to standup for us type of people who are responsible, yet suffer because of poor lending practices and corrupt banking?
Everyone is talking about the low wage jobs and how bad the economy is. Guess what? NOTHING is going to get resolved until the price for houses has fallen to the point where regular income people can afford them again.
Homes are still way over priced. I based this on 'percent of income' it would cost the average person to buy a house. Raising wages wont fix anything becasue it just drives prices for everything up by even more. Costs have to fall on housing. The end. Until that happens there will be no recovery.
Section eight housing is for complete idiots who drive lowerd Honda Preludes with fat mufflers and walk around the streets with a hoodie saying stuff like "Y, U wann no wussup....Y, U wanna no wussup" and then owning a home in the burbs they cannot afford because they spend all their money on Crack and guns. Section eight was designed by a pack of idiots for millions of idiots. I mean think about this. You work at McDonalds because as a Crack head that os the only job you can get but you have this dream of owning your home so you go the bank to see the loan officer and when introduced you say "Yo wut up cuz..I wants to buy me a new home n'sit....no wut I'm sayin" The loan officer says sure I see you make $15,000 per year working at Micky Dee's. How about we sell you this house right here out in the burbs for $500,000 at 9.9%? Now here is the funny part.....the guy flipping the burgers says yeah ok I can do that. This was not the banks fault. This was the fault of the people who bought the homes who were all too stupid to begin with.
I understand the National Board of Realtors is having their convention in Washington this week. Meeting with congress people , etc. to "Rally to Protect the American Dream of Home Ownership". Still unable to accept the reality of the situation created by their organization, and their collaborators the financial system and the bureaucracy. The price fixing and mortgage scam has destroyed "the Dream" and continues to crush the average homeowner. Fixing it will be impossible, as the only answers they can offer are more creative scams to steal yet more from the common people. The common people have lost faith, and the trust that once was the corner stone of our system, and once trust is lost, it is gone forever. Most of the common peole now view the entire system as a cursed burden we must carry.
Another Sam to let Banks and Shylock Investors Enjoy the Good Life!
What About those Out in the Cold?
OUT OF Work or Fixed Income!
PS - Good Old Fannie Mae ready to make a Bundle on the Backs of the Folks Who Bailed it OUT!
The same thing happened in 1980. After sitting empty for years, the houses sold for pennies on the dollar and had to be gutted because of the mold build up.