Archive for the 'Foreclosure Help' Category

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.

During the housing boom, many homeowners took second mortgages as lenders enticed borrowers with mortgage loans that had little or no down payments. About 50 percent of distressed borrowers have second mortgages, according to the federal government.

The second loans have been making modifications more complicated both for borrowers and lenders under Obama’s government foreclosures program. Some lenders refuse to modify first mortgages because the second mortgages were sustained. For many lenders, the second mortgages put their debts to unaffordable levels.

Under the expanded government foreclosures program, rates for second mortgage loans will be cut down to 1 percent for loan payments that cover principal and interest and to 2 percent for loan payments that cover only interest. The program will help mortgage lenders by subsidizing the rate reduction.

The lenders will also be enticed with $500 for every loan modification and $250 every year of 3 years that the borrower sustains the loan. Borrowers would be given up to $250 every year for 5 years that they can use to pay their first mortgage.

The government foreclosures program also pays investors if they eliminate the second lien for troubled borrowers. Investors would be paid between 4 cents to 12 cents for loans less than 6 months in default and 3 cents per dollar on loans in default by more than 6 months.

Obama’s government foreclosures program has now also incorporated the Hope for Homeowners program, which was launched by the Bush administration last year. Currently, the program is being reviewed by Congress. Obama is asking lenders to offer the Hope for Homeowners program as another option for borrowers.

The Obama administration decided to add the Hope program to address the needs of homeowners with underwater loans.

Lenders rejected the Hope for Homeowners program because it compelled them to reduce principal balances to 90 percent of the home’s current market value. Legislators are changing the reduction requirement to 93 percent of the home’s current market value and reducing the loan modification fees.

Under this revised government foreclosures program, servicers will be given $2,500 for every loan modification while lenders will be given up to $1,000 per year for up to 3 years that the modified loan is current.

Related Information:

• Foreclosure Houses for Sale
• Bank Owned Foreclosures for Sale
• Repossessed Houses
• Cheap Houses for Sale

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.

The senators are being exhorted to look at the real role of the financial industry in the current crisis, the same industry sector lobbying most fiercely against the bankruptcy reform proposal.

Housing analysts argue that if large financial institutions and mortgage lenders only implemented standard loan screening procedures, they would have not extended loans to most of those whose houses are now foreclosed homes. Financial service businesses are also to be blamed, according to community advocates, because they enticed low-income borrowers with adjustable mortgage loans that they know the borrowers would not be able to pay after just a few months.

Community advocates argue that these large banks which received billions of bailout money from taxpayers should help taxpayers in return by helping qualified Americans save their houses from becoming foreclosed homes.

House legislators have already approved the proposal to empower judges with the authority to order loan restructuring for homeowners in bankruptcy, but they included conditions burdensome to borrowers. Certainly, the pressure from groups lobbying for the influential financial services industry is too great for them to resist.

There are at least two reasons why the Senators need to pass the bankruptcy reform, according to housing advocates. One is the failure of voluntary loan modification programs under the Bush administration. In August 2008, only a little over 3 percent of subprime loans in default were modified, according to reports from Credit Suisse. In many cases also, the restructured loans even increased the monthly payments instead of reducing them. A foreclosure prevention network of banking commissioners and state attorneys found that about 8 of 10 homeowners in default were not given any chance to modify their loans and save their houses from becoming foreclosed homes.

Another is the nationwide economic impact of foreclosures. Most everyone now knows the adverse effects of foreclosures on everyone. The mass layoffs, business closures and the soaring unemployment rates all started when the waves of bank foreclosed houses became unstoppable.

Legislators should not listen to arguments that the bankruptcy proposal would help irresponsible and reckless borrowers or wealthy but underwater borrowers. The proposal has requirements in place so only Americans who deserved to be saved from being forced out of foreclosed homes would be saved.

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.

Patrick Lynch, housing director of the Bay Area city of Richmond, and his staff visited several foreclosed homes around the city and identified units that can be purchased by the city to be repaired. He said the city will be equipped to stabilize some neighborhoods of foreclosed homes with the NSP funds and with the help of community housing developers.

The Bay Area funds were distributed to cities and counties with the highest number of foreclosed homes. Richmond got $3.3 million, higher than what Vallejo and Alameda County received — $2.7 million and $2.1 million, respectively. The highest allocations were given to Oakland and Contra Costa County, which had the highest number of foreclosed homes, receiving $8.3 million and $6 million, respectively. San Jose got $5.6 million while Antioch got $4 million.

Under the NSP rules, the funds must be used to buy, repair and sell or rent out foreclosed homes to low-income families. Homebuyers must also be assisted in getting affordable financing. The money can also be used to buy land for future redevelopment or acquire condemned foreclosure properties for demolition and rehabilitation.

Rose Cade, an executive of the housing nonprofit Northern California for Enterprise Community Partners, said the funds are timely because blighted neighborhoods will deteriorate into worse conditions if they are not rehabilitated.

Richmond has already identified the locations of foreclosed homes it is going to rehabilitate. At the Iron Triangle, it will buy foreclosed homes near the Trinity Plaza and the Nevin Park revitalization projects. In North Richmond, it will rebuild foreclosed houses near a housing complex for seniors.

Richmond’s housing director Lynch said it will leverage the NSP funds by requiring contractors to support the apprentice program of Richmond Build. Contractors will hire Richmond Build graduates to do electrical work, carpentry, solar installations and plumbing work on the foreclosure properties.

Lynch said his agency can buy good foreclosed homes up to $60,000, fix them and make them available for lower-income families.

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.

Two housing advocates in California have called on President Barack Obama’s administration to expand its foreclosure program in order to help more distressed homeowners. They said the requirement that borrowers’ loans must not be more than 5 percent higher than the value of their homes will exclude many homeowners in California.

On February 18, 2009, President Barack Obama showed his administration’s commitment to boost the country’s economy and strengthen the housing market by announcing an economic stimulus package that includes a foreclosure prevention plan.

Advocates for homeowners across the country are reacting with anger to critics of efforts by the Obama administration to help homeowners troubled by lender foreclosures. Critics are accusing Obama and his advisers of using the hard-earned money of responsible citizens to abet the foolishness of borrowers defaulting on their mortgage loans. They assert that losers should be blamed for their losses and should face the consequences. Some say persons who have lost assets to tax foreclosures are not laying the consequences on other taxpayers.