Archive for the 'Foreclosure Help' Category

An estimated total of 750,000 jobs would be developed or saved by August under programs launched by the administration of President Obama to fight the effects of foreclosures.

According to President Obama’s Council on Economic Advisers, the American Recovery and Reinvestment Act, which was funded by $787 billion, will save or develop thousands of jobs in about three months.

The estimated additional jobs are expected to reduce or halt the rising unemployment rate, which has been a major factor in the continued increase in foreclosures in many areas of the nation.

The council reported that the act was designed to save or develop 3.5 million job slots by 2010. The act also funds the creation of more job creation programs to be able to create 6.8 million job slots by 2012.

Last month, President Obama explained in his meeting with the press that the stimulus program has already saved or created 150,000 jobs and that more jobs are expected to be created or saved.

An official with President Obama’s administration said that the 150,000 estimate was conservative because calculations were based on conservative indicators. He could not however state what kinds of jobs were created and where they were created. He added that states are still compiling their job creation reports.

Officials with the administration have been careful about saying that the stimulus program has stopped job losses because the unemployment rate has continued to rise to higher levels. They just say the job creation program has slowed down job losses and indirectly foreclosure home for sale. The jobless rate in April has jumped to 8.9 percent, the highest unemployment level in 25 years.

Christina Romer, chairperson of the Council on Economic Advisers, said the council will make job loss and job creation reporting more accurate beginning in August. She said she will update Congress about the progress of job creation programs every quarter.

The council says that the reported impact of the economic downturn largely caused by foreclosures on employment is lower than the impact on GDP because they used conservative factors in estimating the effects of the economic crisis on employment.

Additionally, the council reported that the government spends around $92,000 to develop one job that lasts for a year. It says that the method used does not include differences in wage levels and other factors in different areas of the country and indirect factors such as foreclosures.

FICO, previously Fair Isaac and Co., has launched a Web site that aims to help lower bank foreclosed home rates in the United States. The FICO Web site is welcomed by industry experts who are concerned over companies that fail to fulfill their promises to help distressed homeowners arrange loan modifications.

FICO developed a scoring system used by lending institutions to determine potential good borrowers. Now, the company is using the same concept to help distressed homeowners overcome difficulties they are facing when they try to negotiate with their lenders.

The FICO Mortgage Recovery Initiative Web site offers distressed homeowners free assessment of their financial situation, certified credit counseling service and a way for them to negotiate with their lenders.

FICO Chief Executive Officer Mark Greene explained that the federal government’s mortgage remediation guidelines have allowed the company to provide in depth solutions that can address every individual’s concerns.

Meanwhile, consumer complaints are growing in number each day indicating a failure to help homeowners avoid foreclosure. Some consumer complaints include difficulty to reach lenders and loan servicers and unresponsiveness of lenders to homeowners’ needs.

These complaints belie statistics showing thousands of distressed borrowers able to save their distressed properties from foreclosures because of loan modification.

Even worse, market studies showed that almost 50 percent of homeowners who have successfully availed of the loan modification plan are defaulting on their monthly mortgage payments as soon as they have modified their loans.

The high number of homeowners who re-defaulted is blamed on the failure of mortgage relief efforts to take into consideration the general financial situation of the borrower.

The FICO initiative will address this flaw in the mortgage relief program by assessing the distressed borrower’s other financial obligations, their total debt and ability to effectively manage their debt.

FICO explained that these factors play crucial role in determining the ability of the borrower to succeed with a modified mortgage.

On the other hand, borrowers who are having financial difficulties but still manage to pay their monthly mortgages can also be helped by the FICO Web site. The free Internet portal can help borrowers determine whether they are qualified for assistance under the Obama Administration’s Making Home Affordable scheme.

The scheme is the main program of the Obama Administration to help more than 9 million homeowners keep their properties from becoming bank foreclosed home.

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Bargain-priced homes in foreclosure listings are attracting first-time homebuyers nationwide.

According to the National Association of Realtors, up to 45 percent of bank home sales in recent weeks involve home purchases made by first-time homebuyers taking advantage of bargain prices in foreclosure listings. In March, over half of total home sales were made to first-time homebuyers, with most of the purchases involving bargain-priced homes in foreclosure listings.

However beneficial the bargain prices are to first-time homebuyers, low prices have been dragging down nationwide home prices to distressed levels. Homes in foreclosure listings typically are priced 20 percent less than new homes.

In March, the national home median price for existing homes decreased by 12.4 percent to $175,200, compared to the median price in March 2008 based on NAR’s report.

But on the other hand, economists say first-time homebuyers could be the group that would pull up the drowning market from the depths by their sheer number. Large numbers of first-time homebuyers could remove much of the unsold inventory in foreclosure listings that are pushing down home prices nationwide.

As homes in foreclosure listings are being snapped up by first-time homebuyers, the total number of previously-bank owned homes for sale on March 31 dropped by 1.6 percent to 3.74 million units.

Housing analysts expect more first-time homebuyers to buy existing homes and houses in foreclosure listings because of record low prices, record low mortgage rates, large numbers of choices in foreclosure listings and the tax credit available for first-time homebuyers.

Distressed homes are attracting more interest because oftentimes they sell well below market value and they are priced lower by over 20 percent than new homes.

NAR’s chief economist Lawrence Yun said the fact that more first-time homebuyers are attending open houses is one positive sign pointing towards market improvement. He said it is encouraging that first-time homebuyers are taking advantage of record low mortgage rates and the tax credit.

Based on NAR’s report, first-time homebuyers are choosing loans insured by the Federal Housing Administration because FHA requires only about 3.5 percent for the down payment. Last year, the nationwide median down payment for first-time homebuyers was 4 percent, an increase from the 2-percent down payment in 2007.

The volume of FHA-insured loans covering single-family homes has increased last year to over $180 billion, up from the $59 billion volume in 2007. FHA expects billions more in 2009 as first-time homebuyers find in foreclosure listings properties that they can turn into their dream homes.

Now, President Obama has widened the scope of his government foreclosures program by adding second mortgages to the program and directing more distressed homeowners to the revised Hope for Homeowners program which was launched in October last year.

Senators are being called upon by housing advocates, economists and journalists to help save their constituents from being forced out of foreclosed homes by approving the bankruptcy reform proposal. The proposal would allow judges to force lenders to restructure the mortgage loans of homeowners in danger of foreclosure.

Bay area communities received a total of $32 million from President Obama’s Neighborhood Stabilization Program to purchase foreclosed homes and then rehabilitate them for affordable housing and rental properties. The money was the area’s share of the $3.92 billion budgeted in 2008 by Congress for the stabilization program. This year, Congress allocated another $2 billion to the program.

Several economists working for federal reserve banks argued that unemployment is triggering more private lender and government foreclosure than high mortgage rates. They argue that the continued focus of the government foreclosures program on loan modifications and loan refinancing may not be able to solve the foreclosure problem.

JPMorgan Chase, a global financial services company, has intensified its campaign to help distressed homeowners prevent repo homes.

As the number of distressed homeowners who want to save their properties from bank and government foreclosures continues to grow, so are companies that took advantage of the desperation of homeowners.

The Obama Administration has added another weapon on its arsenal of programs and strategies to help millions of distressed homeowners save their properties from becoming foreclosed homes.