The Arizona Republic, by Catherine Reagor - Oct. 25, 2011 12:00 AM
More Arizona homeowners may soon be able to refinance to current low mortgage-interest rates, no matter how far underwater they are in their homes. The Obama administration on Monday announced long-awaited details of an expansion of a program that helps homeowners refinance to reduce their payments.
Mortgage rates have fallen to record lows, and many homeowners would save hundreds of dollars a month if they could reduce the amount of interest they pay. But the housing crash has created a huge barrier.
A refinanced loan typically requires the home have enough value to cover the entire amount of the new loan. But plunging home values means many owners owe far more on their loans than their homes are worth. An estimated 40 percent of metro Phoenix homeowners are currently underwater.
The federal Home Affordable Refinancing Program has allowed certain loans to be refinanced if the borrower owed up to 125 percent of the home's value. But many underwater borrowers in Arizona owe more.
The plan announced Monday would lift the value requirement completely; allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.
Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.
Speaking on a temporary stage in a Las Vegas neighborhood, Obama touted the plan as a way to allow struggling homeowners to save money. "Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago," he said. "And as long as this goes on, our recovery can't take off as quickly as it would after a normal recession."
The plan
The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.
The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply. Among the key elements:
- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.
As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.
The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.
Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.
"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."
The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009. Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.
"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."
- Refinancing will be available to homeowners who are current on their mortgage payments.
To qualify, homeowners must not have missed more than one payment in the past year.
The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.
Instead, the refinancing is open to borrowers who have made their payments. Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.
- Refinancing will be available no matter how much the home is currently worth.
The loan simply must be backed by Fannie or Freddie and be within standard sizes - for example, oversize "jumbo" loans will not qualify.
Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.
The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.
"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."
- Refinancing will cost less.
The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.
Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program. He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."
The doubts
Housing advocates point to past programs that have garnered bad reputations. The Housing Affordable Modification Program, HAMP, was announced in conjunction with the original refinancing program two years ago.
Tens of thousands of homeowners in Arizona alone were promised loan modifications and put in trial programs. These borrowers made the trial payments for more than a year in some cases only later to be denied a permanent modification.
Overall, the federal housing plan called for helping 7 million to 9 million homeowners. Fewer than 2.5 million have been helped with all of the plan's programs.
Phoenix real-estate agent Kevin Kaufman is skeptical of the new plan. "I'm honestly very, very pessimistic about any government program actually helping people," he said. "Having been in the trenches for four years now and seen so many empty promises. I don't believe the government will actually help."
Too late?
When Obama unveiled federal efforts to stem foreclosures two years ago, he traveled to Mesa to make the announcement. At the time, foreclosures were surging.
Today, foreclosures have been steadily slowing in metro Phoenix. So the latest move has been criticized as coming too late.
Also, many market observers note that for many homeowners, the real problem is not just their monthly payment but the fact that they will still owe so much more than their houses are worth, making them unable to sell or move.
The Obama administration is hinting about more aid for people who have lost homes to foreclosure and neighborhoods with many empty foreclosure homes.
But this expansion of HARP does help the homeowners who continued to pay as others walked away. Tom Schroder was turned down for a refinance last year because he owes at least 40 percent more than his Scottsdale home is worth. He said he is angry because he feels like he's being penalized for other people's foreclosures and bad decisions.
"I keep paying my mortgage on time and watching others buy homes at 5 or now even 4 percent (interest rates)," he said. "The changes to the refinancing program sound good. I just want to see some action on it from lenders and fast."
Patricia Garcia Duarte, president of the Phoenix-based non-profit homeownership counseling service Neighborhood Housing Services, said the new refinancing plan rewards homeowners with good credit who have not missed many payments.
"Owing more on a property than it is worth is still problematic for many in Arizona," she said. "Revamping HARP is a good thing, not the entire solution."
Read more: http://www.azcentral.com/business/realestate/articles/2011/10/25/20111025arizona-homeowners-underwater-help-obama.html#ixzz1boN5j8yf
Tuesday, October 25, 2011
Saturday, August 13, 2011
Tracking The Market And Economic Trends That Shape Your Finances
The typical rate on a 30-year fixed mortgage fell this week to 4.39%, the lowest level since November, according to home finance giant Freddie Mac, while other popular loans were at all-time lows in Freddie's weekly survey of lenders.
While that's welcome news for anyone willing and able to buy or refinance a home, the cause is the sputtering economy, which had investors bailing out of stocks and seeking protection in U.S. Treasury securities.
That trend drove the yield on the 10-year Treasury note to 2.58% Thursday morning -- it had been above 3.7% in February -- and home lending rates followed suit.
FRE-sign-AP-Pablo Martinez Monsivais "The first half of this year was the worst six-month period since the economic recovery began in June 2009," Freddie Mac economist Frank Nothaft said.
He noted that consumer spending fell 0.2% in June, the first decline since September 2009.
The record lows were for 15-year fixed mortgages, a popular option for people refinancing their homes, and for loans with a fixed rate for five years that then become variable. The previous records for these mortgages also were set in November.
Lenders were offering the 15-year loan at an average of 3.54%, down from last week's 3.66% and eclipsing the previous low of 3.57% in the Freddie Mac survey.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, down from 3.25% a week earlier, which had tied the previous low.
The average offering rate for 30-year fixed-rate mortgages had briefly dropped below 4.2% in the survey last fall. The 4.39% rate that Freddie reported Thursday was sharply below last week's 4.55%.
Borrowers would have paid less than 1% of the loan amount in upfront lender fees to obtain the rates, Freddie Mac said. Solid borrowers often can find slightly better rates by shopping around, and it's also possible to lower mortgage rates by paying more upfront.
Indeed, experts said this week that it was possible for the lowest-risk borrowers to obtain 30-year home loans with rates fixed at less than 4% -- as long as they were willing to fork over 3% or more of the loan amount in upfront fees and discount points to certain lenders.
The Freddie Mac survey asks lenders what terms they are offering to borrowers with good credit ratings who have 20% down payments or 20% equity in their homes.
The above article is from the LA Times written on August 4, 2011
Since this article was written, Standard & Poors downgraded the U.S. Economy to A++ and now the current administration says that rates will be low for the next 2 years. Nothing makes sense any more!
While that's welcome news for anyone willing and able to buy or refinance a home, the cause is the sputtering economy, which had investors bailing out of stocks and seeking protection in U.S. Treasury securities.
That trend drove the yield on the 10-year Treasury note to 2.58% Thursday morning -- it had been above 3.7% in February -- and home lending rates followed suit.
FRE-sign-AP-Pablo Martinez Monsivais "The first half of this year was the worst six-month period since the economic recovery began in June 2009," Freddie Mac economist Frank Nothaft said.
He noted that consumer spending fell 0.2% in June, the first decline since September 2009.
The record lows were for 15-year fixed mortgages, a popular option for people refinancing their homes, and for loans with a fixed rate for five years that then become variable. The previous records for these mortgages also were set in November.
Lenders were offering the 15-year loan at an average of 3.54%, down from last week's 3.66% and eclipsing the previous low of 3.57% in the Freddie Mac survey.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% this week, down from 3.25% a week earlier, which had tied the previous low.
The average offering rate for 30-year fixed-rate mortgages had briefly dropped below 4.2% in the survey last fall. The 4.39% rate that Freddie reported Thursday was sharply below last week's 4.55%.
Borrowers would have paid less than 1% of the loan amount in upfront lender fees to obtain the rates, Freddie Mac said. Solid borrowers often can find slightly better rates by shopping around, and it's also possible to lower mortgage rates by paying more upfront.
Indeed, experts said this week that it was possible for the lowest-risk borrowers to obtain 30-year home loans with rates fixed at less than 4% -- as long as they were willing to fork over 3% or more of the loan amount in upfront fees and discount points to certain lenders.
The Freddie Mac survey asks lenders what terms they are offering to borrowers with good credit ratings who have 20% down payments or 20% equity in their homes.
The above article is from the LA Times written on August 4, 2011
Since this article was written, Standard & Poors downgraded the U.S. Economy to A++ and now the current administration says that rates will be low for the next 2 years. Nothing makes sense any more!
Wednesday, August 3, 2011
Real-estate expert sees disconnect in lending
by J. Craig Anderson - Jul. 31, 2011 12:00 AM
The Arizona Republic
Read more: http://www.azcentral.com/business/articles/2011/07/31/20110731real-estate-disconnect-lending.html#ixzz1TyZd8t4H
Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.
Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.
He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.
Stapp explained the problem this way:
"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."
Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.
"This overlooked the nuances of the individual properties," he said.
Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.
The Arizona Republic
Read more: http://www.azcentral.com/business/articles/2011/07/31/20110731real-estate-disconnect-lending.html#ixzz1TyZd8t4H
Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.
Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.
He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.
Stapp explained the problem this way:
"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."
Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.
"This overlooked the nuances of the individual properties," he said.
Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.
Tuesday, July 19, 2011
Housing and Economic Forecast Points to Rising Activity
Walter Molony
WASHINGTON, May 12, 2011
Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.
Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”
Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.
“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”
Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.
Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.
Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.
Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.
Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”
Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.
Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.
Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.
Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to home buyers,” Nothaft said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
WASHINGTON, May 12, 2011
Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.
Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”
Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.
“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”
Yun said that if credit requirements returned to normal, safe standards, home sales would be 15 to 20 percent higher. He added that some parents are buying homes with cash for their children, and offering them loans which provide better returns than bank accounts or CDs.
Yun projects the Gross Domestic Product to grow 2.5 percent this year and 2.7 percent in 2012, adding 1.5 million to 2 million jobs yearly over the next two years. The unemployment rate should decline to 8.8 percent by the end of 2011 and average 8.6 percent next year, returning to a normal level of 6 percent around 2015.
Housing starts are forecast to rise but remain below long-term trends, reaching 603,000 in 2011, up from 595,000 last year, and continue growing to 908,000 in 2012. New-home sales are seen at a record low 320,000 this year, rising to 487,000 in 2012. “A recovery in new homes will be slow because of the extra price discount in the existing home market,” Yun noted. In March, the typical new single-family home cost $53,300 more than an existing home.
Inflation appears to be relatively modest for now, with the Consumer Price Index rising 2.9 percent this year. “We’ll be closely watching the impact of fuel costs on consumer spending and inflation – that would slow economic growth, job creation and home sales,” Yun said.
Apartment rents are trending up, and are likely to rise at faster rates as vacancies decline. Following the correction in home prices, it has now become more affordable to buy in most of the country. “Twice as many renters had enough income to buy a home in 2010 in comparison with 2005, so we have a much larger pool of financially qualified renters,” Yun said. “Rising rents and excellent housing affordability conditions will encourage potential buyers who’ve been on the sidelines.”
Yun expects the median existing-home price to remain near $170,000 over the next two years, which would mark four consecutive years of essentially no meaningful price change.
Frank Nothaft, chief economist at Freddie Mac, holds similar views on the outlook. “Economic activity will accelerate this year – there will be no double dip in the economy,” he said. Nothaft is more optimistic on job growth, expecting 2.0 million to 2.5 million jobs created in 2011 with unemployment dropping to 8.4 percent by the end of the year.
Nothaft expects the 30-year fixed-rate mortgage to trend up to 5.25 percent by the end of the year, and for home sales to rise 5 percent. “National home price indices are close to a bottom and prices are likely to bottom sometime this year,” he said.
Refinancing activity in 2011 will be only half of what it was last year. “As a result, banks may become more willing to lend to home buyers,” Nothaft said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Saturday, July 16, 2011
ARIZONA DEPARTMENT OF REAL ESTATE-INFORMATIONAL ALERT
July 15, 2011
COMMISSIONER LOWE ANNOUNCES CHANGES TO MARS RULING-
The Department has been monitoring closely the Federal Trade Commission (FTC) Mortgage Assistance Relief Services (MARS) Rule and its affect on the real estate licensees. Today, the FTC issued a press release- FTC WILL NOT ENFORCE MANY OF THE PROVISIONS OF MARS RULE AGAINST REAL ESTATE PROFESSIONALS HELPING CONSUMERS OBTAIN SHORT SALES”.
The direct link to the FTC Press release/enforcement policy: http://www.ftc.gov/opa/2011/07/mars.shtm
Remember- the Arizona “Short Sale Negotiator Regulations” issued by the ADRE on February 15, 2011 remains in effect, as well as the requirements of A.R.S. §32-2155 which states: Restriction on employment or compensation of person as broker or salesperson
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is collected that the broker or salesperson is receiving compensation both for real estate brokerage, when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
To review these Regulations, the direct link is: http://www.azre.gov/PublicInfo/Documents/Short_Sale_Negotiator_Regulations.pdf
COMMISSIONER LOWE ANNOUNCES CHANGES TO MARS RULING-
The Department has been monitoring closely the Federal Trade Commission (FTC) Mortgage Assistance Relief Services (MARS) Rule and its affect on the real estate licensees. Today, the FTC issued a press release- FTC WILL NOT ENFORCE MANY OF THE PROVISIONS OF MARS RULE AGAINST REAL ESTATE PROFESSIONALS HELPING CONSUMERS OBTAIN SHORT SALES”.
The direct link to the FTC Press release/enforcement policy: http://www.ftc.gov/opa/2011/07/mars.shtm
Remember- the Arizona “Short Sale Negotiator Regulations” issued by the ADRE on February 15, 2011 remains in effect, as well as the requirements of A.R.S. §32-2155 which states: Restriction on employment or compensation of person as broker or salesperson
C. A real estate broker or real estate salesperson shall not collect compensation for rendering services in negotiating loans secured by real property unless all of the following apply:
1. The broker or salesperson is licensed pursuant to title 6, chapter 9 or is an employee, officer or partner of a corporation or partnership licensed pursuant to title 6, chapter 9.
2. The broker or salesperson has disclosed to the person from whom the compensation is collected that the broker or salesperson is receiving compensation both for real estate brokerage, when applicable, and for mortgage broker services.
3. The compensation does not violate any other state or federal law.
To review these Regulations, the direct link is: http://www.azre.gov/PublicInfo/Documents/Short_Sale_Negotiator_Regulations.pdf
Tuesday, July 5, 2011
HUD To Give Away $1 Billion To Struggling Homeowners
From the Washington Post
By Cezary Podkul, Published: July 4
Sandra Allwine has been pleading with her bank for more than two years to modify the mortgage on her Arlington County home. Despite exhausting all her savings and having her daughter move in to help with her $3,000 mortgage payment, Allwine, 65 and unable to find work, is struggling to save her home from foreclosure.
In June, a potential lifeline opened up. The newly launched $1 billion Emergency Homeowners’ Loan Program, or EHLP, is targeting homeowners who are among the most difficult to help: those who fell behind on their payments because of job loss or unexpected medical bills. For many of them, it might be the last chance to save their homes.
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and government officials have taken action after discovering that many mortgage documents were mishandled.
“We were normal middle-class Americans who had saved and lived very carefully and frugally . . . and still wound up getting kicked in the teeth,” Allwine said. She applied as soon as she heard about the program.
If she is approved, the government will subsidize Allwine’s mortgage payments for a maximum of $50,000 over two years. After that, the interest-free loan will be forgiven over five years if she stays in her home and stays current on her payments.
EHLP is the latest government program targeting the nearly 1.8 million homeowners like Allwine facing foreclosure. It is going to have to move fast: The program was supposed to start last year, but implementation delays mean that the Department of Housing and Urban Development must spend all its $1 billion by the end of the federal government’s fiscal year, Sept. 30.
That gives homeowners in 27 states, including Virginia, until July 22 to complete their applications. If demand outstrips available funds, HUD will run a lottery to pick successful applicants. Five additional states, including Maryland, are subject to slightly different rules, which gave them more time to spend the funds, because they started taking EHLP applications earlier under similar state-run programs.
Terri Ware of Greenbelt applied for the program in May after she was unable to get her bank to modify the $238,000 mortgage on her condominium. Her daughter Micah was born last year with a heart defect that requires around-the-clock care. So Ware, 43 and a single mom, left her job as an emergency room nurse at Prince George’s Hospital Center in Cheverly so she could care for her. But with her income shrinking and medical expenses escalating, she quickly burned through all her savings and her 401(k) and fell five months behind on her mortgage. Foreclosure loomed.
“I said, ‘I can’t be homeless — my baby needs help,’ ” Ware recalled.
Within a month, Ware was approved for $29,608 in aid through EHLP. The interest-free loan will repay $8,636 worth of mortgage payments that she owes in arrears to J.P. Morgan Chase and then pay about half her $1,727 mortgage payment for the next 24 months.
Ware was ecstatic when she found out. “I picked my daughter up and said, ‘We’re going to keep our home,’ ” she said with tears in her eyes. She plans to resume working and making mortgage payments on her own as soon as her daughter’s health improves.
Maryland has committed $4.2 million in EHLP loans to 121 homeowners, Maryland Department of Housing and Community Development Deputy Secretary Clarence Snuggs said, and “we’re going to be working up until the last minute” to spend the $40 million that the state has been allocated under EHLP.
Nationwide, HUD is hoping to help 30,000 homeowners through the program, including 1,120 in Maryland and 1,223 in Virginia, which received $46.6 million in funding. The District is hoping to assist as many as 1,000 homeowners under a separate program for which it has $20 million, said D.C. Housing Finance Agency Executive Director Harry Sewell.
But not everyone sees the merits of programs such as these during lean fiscal times.
“The best foreclosure mitigation program in America is a job. It’s not a government check, it’s a paycheck,” Rep. Jeb Hensarling (R-Tex.) said in a statement. In February, Hensarling sponsored a bill to kill the EHLP, calling the program “an act of fiscal child abuse.” By a vote of 242 to 177, the House agreed. But the Senate didn’t act on it.
Rep. Barney Frank (D-Mass.) fought to include the program in the 2010 financial reform bill. “If you took out a reasonable mortgage in the first place and the only reason you can’t pay it is because you became unemployed, there’s reason to help,” he said in an interview.
Frank proposed taxing large financial firms to fund EHLP, but House Republicans opposed that proposal. Some analysts say that leaves Congress with difficult moral questions.
“What’s the moral superiority of the borrower who did nothing wrong versus the taxpayer who did nothing wrong?” said Mark Calabria, director of financial regulation studies at the Cato Institute, a free-market think tank. In the end, he thinks EHLP will amount to “a drop in the bucket” for America’s foreclosure problem, while future generations will have to pick up its $1 billion tab.
By Cezary Podkul, Published: July 4
Sandra Allwine has been pleading with her bank for more than two years to modify the mortgage on her Arlington County home. Despite exhausting all her savings and having her daughter move in to help with her $3,000 mortgage payment, Allwine, 65 and unable to find work, is struggling to save her home from foreclosure.
In June, a potential lifeline opened up. The newly launched $1 billion Emergency Homeowners’ Loan Program, or EHLP, is targeting homeowners who are among the most difficult to help: those who fell behind on their payments because of job loss or unexpected medical bills. For many of them, it might be the last chance to save their homes.
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and government officials have taken action after discovering that many mortgage documents were mishandled.
“We were normal middle-class Americans who had saved and lived very carefully and frugally . . . and still wound up getting kicked in the teeth,” Allwine said. She applied as soon as she heard about the program.
If she is approved, the government will subsidize Allwine’s mortgage payments for a maximum of $50,000 over two years. After that, the interest-free loan will be forgiven over five years if she stays in her home and stays current on her payments.
EHLP is the latest government program targeting the nearly 1.8 million homeowners like Allwine facing foreclosure. It is going to have to move fast: The program was supposed to start last year, but implementation delays mean that the Department of Housing and Urban Development must spend all its $1 billion by the end of the federal government’s fiscal year, Sept. 30.
That gives homeowners in 27 states, including Virginia, until July 22 to complete their applications. If demand outstrips available funds, HUD will run a lottery to pick successful applicants. Five additional states, including Maryland, are subject to slightly different rules, which gave them more time to spend the funds, because they started taking EHLP applications earlier under similar state-run programs.
Terri Ware of Greenbelt applied for the program in May after she was unable to get her bank to modify the $238,000 mortgage on her condominium. Her daughter Micah was born last year with a heart defect that requires around-the-clock care. So Ware, 43 and a single mom, left her job as an emergency room nurse at Prince George’s Hospital Center in Cheverly so she could care for her. But with her income shrinking and medical expenses escalating, she quickly burned through all her savings and her 401(k) and fell five months behind on her mortgage. Foreclosure loomed.
“I said, ‘I can’t be homeless — my baby needs help,’ ” Ware recalled.
Within a month, Ware was approved for $29,608 in aid through EHLP. The interest-free loan will repay $8,636 worth of mortgage payments that she owes in arrears to J.P. Morgan Chase and then pay about half her $1,727 mortgage payment for the next 24 months.
Ware was ecstatic when she found out. “I picked my daughter up and said, ‘We’re going to keep our home,’ ” she said with tears in her eyes. She plans to resume working and making mortgage payments on her own as soon as her daughter’s health improves.
Maryland has committed $4.2 million in EHLP loans to 121 homeowners, Maryland Department of Housing and Community Development Deputy Secretary Clarence Snuggs said, and “we’re going to be working up until the last minute” to spend the $40 million that the state has been allocated under EHLP.
Nationwide, HUD is hoping to help 30,000 homeowners through the program, including 1,120 in Maryland and 1,223 in Virginia, which received $46.6 million in funding. The District is hoping to assist as many as 1,000 homeowners under a separate program for which it has $20 million, said D.C. Housing Finance Agency Executive Director Harry Sewell.
But not everyone sees the merits of programs such as these during lean fiscal times.
“The best foreclosure mitigation program in America is a job. It’s not a government check, it’s a paycheck,” Rep. Jeb Hensarling (R-Tex.) said in a statement. In February, Hensarling sponsored a bill to kill the EHLP, calling the program “an act of fiscal child abuse.” By a vote of 242 to 177, the House agreed. But the Senate didn’t act on it.
Rep. Barney Frank (D-Mass.) fought to include the program in the 2010 financial reform bill. “If you took out a reasonable mortgage in the first place and the only reason you can’t pay it is because you became unemployed, there’s reason to help,” he said in an interview.
Frank proposed taxing large financial firms to fund EHLP, but House Republicans opposed that proposal. Some analysts say that leaves Congress with difficult moral questions.
“What’s the moral superiority of the borrower who did nothing wrong versus the taxpayer who did nothing wrong?” said Mark Calabria, director of financial regulation studies at the Cato Institute, a free-market think tank. In the end, he thinks EHLP will amount to “a drop in the bucket” for America’s foreclosure problem, while future generations will have to pick up its $1 billion tab.
Sunday, July 3, 2011
California Investors To Plead Guilty In Bid-Rigging
June 30, 2011
(06-30) 16:55 PDT Sacramento, Calif. (AP) --
Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.
The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.
Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.
advertisement | your ad here
"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.
The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.
The men charged were:
_ Thomas Franciose, of San Francisco
_ William Freeborn, of Alamo
_ Robert Kramer, of Oakland
_ Thomas Legault, of Clayton
_ David Margen, of Berkeley
_ Brian McKinzie, of Hayward
_ Jaime Wong, of Dublin
_ Jorge Wong, of San Leandro
No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.
Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.
In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.
At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.
It was unclear whether the new case was related to the earlier investigation.
(06-30) 16:55 PDT Sacramento, Calif. (AP) --
Eight California real estate investors have agreed to plead guilty in a bid-rigging scheme to buy foreclosed real estate at public auctions in two San Francisco Bay area counties, the U.S. Department of Justice said Thursday.
The men were charged with bid-rigging and conspiracy to commit mail fraud as part of a joint investigation by the FBI and the antitrust division of the Justice Department.
Investigators say the men conspired or made payoffs from 2008 through 2011 so they would not bid against each other for properties sold at foreclosure auctions in Alameda and Contra Costa counties. After one bought a property at an artificially low price, they would hold a private auction among themselves to resell it and split the extra money paid by the winning bidder.
advertisement | your ad here
"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the antitrust division, in a prepared statement.
The felony charges were filed in U.S. District Court for the Northern District of California, in Oakland. Court records did not list attorneys for the defendants or indicate whether they were in custody; court personnel said the cases were newly filed and they could not provide any information about them.
The men charged were:
_ Thomas Franciose, of San Francisco
_ William Freeborn, of Alamo
_ Robert Kramer, of Oakland
_ Thomas Legault, of Clayton
_ David Margen, of Berkeley
_ Brian McKinzie, of Hayward
_ Jaime Wong, of Dublin
_ Jorge Wong, of San Leandro
No Justice Department spokesperson could be reached to clarify whether the men were in custody, when they might enter a plea, their ages or other details. An FBI spokeswoman referred questions to the Justice Department.
Investigators said in a prepared statement that the charges were part of an ongoing investigation into collusion by real estate investors in foreclosure sales, both in Northern California and elsewhere.
In March, federal prosecutors said Yama Marifat of Pleasanton had pleaded guilty to conspiring to rig bids at foreclosure auctions in San Joaquin County, about 50 miles east of the Bay Area and one of the areas hardest hit by the housing bust. The scheme described was similar to that cited in the charges filed Thursday.
At the time, investigators said Marifat was the fifth person to plead guilty in connection with the probe, and he faced up to 10 years in prison for bid rigging and 30 years for conspiracy to commit mail fraud, plus fines of as much as $2 million.
It was unclear whether the new case was related to the earlier investigation.
Subscribe to:
Comments (Atom)
