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The Latest Foreclosure Settlement

Written by Larry on April 10, 2012 – 3:44 am -

What the foreclosure settlement does…

The $26 billion foreclosure settlement has finally been given the
green light, making it possible for roughly two million of the
nation’s hardest hit borrowers to see a significant reduction in
their mortgage payments.  Agreed to between the nation’s five
largest banks and attorneys general from 49 states and the
District of Columbia, the deal settles charges of foreclosure
processing abuses dating back to 2008.  The settlement, the
details of which were first announced in early February, has been
in the works for more than a year. Here’s what the banks agreed
to and what borrowers can expect in the days ahead.

The banks and servicers have committed at least $17 billion to
reduce principal for borrowers who 1) owe far more than their
homes are worth 2) are behind on payments.  The amount of
principal reduction will average about $20,000 per borrower in
the cases of four of the banks. The Bank of America reductions
will be even steeper, averaging $100,000 or more, according to
spokesman Rick Simon.  Another $3.7 billion will go toward
refinancing mortgages for borrowers who are current on their
payments. This will enable them to take advantage of the
historically low interest rates that are currently available.
The banks will pay $5 billion to the states and the federal
government, the only hard money involved in the deal. Out of that
fund will come payments of $1,500 to $2,000 to homeowners who
lost their homes to foreclosure.

Other funds will be paid to legal aid and homeowner advocacy
organizations to help individuals facing foreclosure or
experiencing servicer abuses.  Another $1 billion will be paid
directly by Bank of America to the Federal Housing Administration
to settle charges that its subsidiary, Countrywide Financial,
defrauded the housing agency.  In addition, the banks agreed to
eliminate robo-signing altogether and to use proper and legal
procedures when putting homeowners through the foreclosure
process. They also agreed to end servicer abuses, like harassing
delinquent borrowers for payments, and to include principal
reductions more often in their mortgage modifications programs.

Iran sanctions to cost 25 cents a gallon
Twenty-five cents a gallon — that’s about how much some
international energy experts say the tough US sanctions on
Iran’s oil industry are costing Americans at the pump.  As US
consumers cope with gas prices that are approaching an average of
$4 a gallon, some international trade experts say the cost of the
sanctions the US imposes — as in the case of the Iran measures
— is something political leaders should discuss more openly.
Instead, they say, most politicians act as if sanctions affect
only the country targeted — something these experts say isn’t
true.  Energy experts say it’s difficult to pinpoint precisely
how much sanctions on Iran are costing consumers as they filter
down to the gas pump. But Lucian Pugliaresi, president of the
Energy Policy Research Foundation, a Washington nonprofit
organization that studies energy economics, says it’s possible
to make an estimate.  The sanctions the US and other countries
have slapped on Iran’s energy sector and on its central bank
(aimed at curtailing its oil exports) are costing Iran about
300,000 barrels a day in exports, Mr. Pugliaresi estimates. When
added to other factors affecting the international oil market,
that decrease in exports may have added about $10 to the current
price of a barrel for crude, he says.  And that $10 increase
translates roughly to about a 25-cent increase in the cost of a
gallon of gas in the US, Pugliaresi says

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Learn why short sales are so hard to close and why there are so many Brevard County foreclosures

Written by Larry on March 4, 2012 – 4:09 pm -

Take 5 minutes to watch this short 60 Minutes video and you will learn the real truth about lenders and what they have done to this country… Brevard county has thousands of homes that are short sales and foreclosures and many homes that are upside down and will eventually become a distressed home. The banks take months to respond to offers on short sales and many more months or years to foreclose on these Brevard County homes. All the Billions of dollars being spent and failed program after failed program while new ones come out almost every month, nothing is getting better with the distressed home mess. This video will make your blood boil

Posted in Brevard Foreclosures, Brevard Home Buying, Brevard Home Selling | No Comments »

Super Home In 55+ Community In Titusville FL

Written by Larry on February 28, 2012 – 5:15 am -

Posted in Brevard County Listings For Sale, Brevard Home Buying, Brevard Home Selling | No Comments »

Best Remodels for Your Upside Down Home

Written by Larry on February 23, 2012 – 3:02 pm -

In Staying Put: Remodel Your House to Get the Home You Want, architect Duo Dickinson gives new meaning to the term ‘housebound.’ He uses the term to refer to homeowners who have decided to stay put instead of moving up to a larger home, including those who made that decision because they are upside down on their mortgages: they owe more than the place is worth. The premise of Dickinson’s book is something I’ve long believed myself: that staying in even an underwater home can be a smart move – and it doesn’t have to involve making do with a home that no longer works for your needs. Blinging out an upside down home with every gadget and doodad known to man can constitute throwing good money after bad, but there are a handful of upgrades that might make sense for homeowners facing negative equity. For the most part, sensible upgrades to upside-down homes can all be described as things that either:

  • make life in the place much more comfortable for the long term – alleviating the want or need to move
  • boost the home’s sagging value or saleability for a relatively small investment, and/or
  • begin saving the homeowners money – or even earn tax credits – immediately.

Here are five upgrades that might have upside for your lifestyle or bottom line, if you own an underwater home: 1. Cosmetics that boost curb appeal. When your home is mired in negative equity, chances are good that you might have been investing your dollars and cents into keeping your head above water and the property in sound functioning condition – not necessarily keeping the exterior at its most pristine. But if you are looking to boost your home’s value to hit an appraisal mark for refinancing, or even just trying to lure in a buyer to purchase the place as a short sale, primping your home’s exterior cosmetics can be a smart investment. Keep costs down by doing it yourself, or even hiring a reputable handyman to tackle small, but impactful tasks like:

  • painting the shutters, eaves, doors and other trims – if you can paint the whole house, great – but if you can’t afford all that, painting the trims and accents can make a massive visual difference in the look and feel of your home, very inexpensively;
  • adding fresh, new hardware like a mailbox, house numbers, and a front door or door knockers and kick plates; and
  • landscaping – planting lush or fragrant flowers or trees, trimming up overgrown shrubs and even installing low maintenance ground cover can also transform the entire look of your home from the curb.

And while curb appeal is priority number one if you are trying to get your home sold, interior design projects of a similarly small scale can also create massive benefits for your emotions and comfort level for the buck if you’re planning to stay put for the long haul. It’s amazing what a basic paint job in your bedroom, opening (or ditching) your window coverings or installing lighting or shelves can do to make your family happier at home!
2. Economical expansion. If you crave more space and your home can be expanded within its existing footprint, consider an economical expansion – having a professional convert your garage or basement into a rental or mother-in-law type unit can be an especially good investment if you can house more family members or bring in some income within the new living space. In a similar vein, consider adding a prefab unit in your large backyard or even building on additional square footage, if you can afford it and truly need the space. Before you do, though, make sure you get permits and check in with your local real estate pro to be sure that you’re not just overimproving the place vis-a-vis the neighborhood, digging your negative equity hole beyond your financial or emotional tolerance level or even an extended timeline you might have in mind for selling the place. 3. Greening it up. Upgrades that improve your home’s energy efficiency have inherent value in terms of scoring you points as a good citizen of the planet. But they can also improve your day-to-day living comfort – and decrease your utility bills. Buying solar panels can eliminate your electric bill entirely with an upfront investment; leasing the panels can cost you nothing upfront and keep your energy bills fixed for as long as 20 years! And on my own personal home improvement wish list is a tankless water heater – they eliminate the need to pay to keep that big old tank of water hot, and they produce endless hot water – no matter how many showers you take. Endless hot water! (As a side benefit, if you happen to live in earthquake country like I do, you don’t have to worry about strapping the tank or checking to make sure it’s still secure after every tremor or aftershock.)
In many states, green home improvements like these and dual-paned windows, adding insulation or installing efficient heating and cooling appliances might qualify you for tax credits; check with a local tax pro to see what tax advantages you might earn by going green at home.
4. Combining quarters. A home improvement show would be nothing without someone pointing out how gloriously spacious the kitchen/dining room, master bedroom or even two smallest bedrooms could be if they could just (say it with me, folks): “knock out this wall.” If you’ve uttered those very words about your own home, consult with a contractor – many interior walls are relatively easy and inexpensive to remove, even if you might need to leave in and finish off a support beam if the wall does turn out to be load bearing. I know it’s anathema to some agents to even think about combining two bedrooms into one; for resale purposes the rule of thumb is the more bedrooms, the better. But, here’s the deal: (a) two teeny-tiny, unusable bedrooms are not better than one, in the eyes of most homebuyers, and (b) most walls that are easily taken down can be equally easily put back up when it’s time to sell. If you’ve decided to stay put in your underwater home for the next 10, 20 or even 30 years, there’s no reason resale considerations should stop you from taking down a wall that is preventing you from fully enjoying your home. 5. Built-ins that make things work. Built-in work and storage spaces in your office, garage, craft rooms, kitchen and even otherwise unusable nooks and crannies are uber-useful and can give you the feel of a highly customized luxury home without moving – and without spending much cash. (And window seats? Don’t get me started – who doesn’t love a window seat?!) Similarly, functional furniture like loft beds, Murphy beds, pot racks, pantries and armoires can create a highly customized feel and convenient lifestyle, but you can move them around the house – or even take them with you whenever you do decide to move! Investing to improve a home that is upside down should be done very carefully, and only once you have your personal endgame firmly in mind. The budget you set to spruce up a home you need to divest of via a short sell might be vastly different from the investment you’re willing to make to enlarge a home you plan to house your family in for the next 20 years. So be intentional: get clear on your finances and your future plans for your family and career before you start spending on home improvements in this market climate. Then, you’ll be in a position to create a regret-free home improvement plan.

Posted in Brevard County Listings For Sale, Brevard Home Buying, Brevard Home Selling | 1 Comment »

President Obama’s Plan to Help Responsible Homeowners and Heal the Housing Market

Written by Larry on February 3, 2012 – 4:32 pm -

The White House

Office of the Press Secretary

For Immediate Release
February 01, 2012

FACT SHEET: President Obama’s Plan to Help Responsible Homeowners and Heal the Housing Market

In his State of the Union address, President Obama laid out a Blueprint for an America Built to Last, calling for action to help responsible borrowers and support a housing market recovery. While the government cannot fix the housing market on its own, the President believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief when there are measures at hand that can make a meaningful difference, including allowing these homeowners to save thousands of dollars by refinancing at today’s low interest rates. That’s why the President is putting forward a plan that uses the broad range of tools to help homeowners, supporting middle-class families and the economy.

Key Aspects of the President’s Plan

• Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will:
Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
Streamline the refinancing process for all GSE borrowers who are current on their loans.
Give borrowers the chance to rebuild equity through refinancing.
• Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:
Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
Full disclosure of fees and penalties.
Guidelines to prevent conflicts of interest that end up hurting homeowners.
Support to keep responsible families in their homes and out of foreclosure.
Protection for families against inappropriate foreclosure, including right of appeal.
• First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.
• Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.
• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.
• Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.
1. Broad Based Refinancing Plan
Millions of homeowners who are current on their mortgages and could benefit from today’s low interest rates face substantial barriers to refinancing through no fault of their own. Sometimes homeowners with good credit and clean payment histories are rejected because their mortgages are underwater. In other cases, they are rejected because the banks are worried that they will be left taking losses, even where Fannie Mae or Freddie Mac insure these new mortgages.  In the end, these responsible homeowners are stuck paying higher interest rates, costing them thousands of dollars a year.
To address this challenge, the President worked with housing regulators this fall to take action without Congress to make millions of Americans eligible for lower interest rates. However, there are still millions of responsible Americans who continue to face steep barriers to low-cost, streamlined refinancing. So the President is now calling on Congress to open up opportunities to refinancing for responsible borrowers who are current on their payments.
Under the proposal, borrowers with loans insured by Fannie Mae or Freddie Mac (i.e. GSE-insured loans) will have access to streamlined refinancing through the GSEs. Borrowers with standard non-GSE loans will have access to refinancing through a new program run through the FHA. For responsible borrowers, there will be no more barriers and no more excuses.
Key components of the President’s plan include:
• Providing Non-GSE Borrowers Access to Simple, Low-Cost Refinancing: President Obama is calling on Congress to pass legislation to establish a streamlined refinancing program. The refinancing program will be open to all non-GSE borrowers with standard (non-jumbo) loans who have been keeping up with their mortgage payments. The program will be operated through the FHA.
Simple and straightforward eligibility criteria: Any borrower with a loan that is not currently guaranteed by the GSEs can qualify if they meet the following criteria:
• They are current on their mortgage: Borrowers will need to have been current on their loan for the past 6 months and have missed no more than one payment in the 6 months prior.
• They meet a minimum credit score. Borrowers must have a current FICO score of 580 to be eligible. Approximately 9 in 10 borrowers have a credit score adequate to meet that requirement.
• They have a loan that is no larger than the current FHA conforming loan limits in their area: Currently, FHA limits vary geographically with the median area home price – set at $271,050 in lowest cost areas and as high as $729,750 in the highest cost areas
• The loan they are refinancing is for a single family, owner-occupied principal residence.  This will ensure that the program is focused on responsible homeowners trying to stay in their homes.
Streamlined application process: Borrowers will apply through a streamlined process designed to make it simpler and less expensive for borrowers and lenders to refinance. Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed. (Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, a lender will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.)
Program parameters to reduce program cost: The President’s plan includes additional steps to reduce program costs, including:
• Establishing loan-to-value limits for these loans. The Administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify. This would reduce the risk associated with the program and relieve the strain of negative equity on the borrower.
• Creating a separate fund for new streamlined refinancing program. This will help the FHA better track and manage the risk involved and ensure that it has no effect on the operation of the existing Mutual Mortgage Insurance (MMI) fund.

EXAMPLE: How Refinancing Can Benefit a Borrower With a Non-GSE Loan

 A borrower has a non-GSE mortgage originated in 2005 with a 6 percent rate and an initial balance of $300,000 – resulting in monthly payments of about $1,800.
 The outstanding balance is now about $272,000 and the borrower’s home is now worth $225,000, leaving the borrower underwater (with a loan-to-value ratio of about 120%).
 Though the borrower has been paying his mortgage on time, he cannot refinance at today’s historically low rates.
 Under the President’s legislative plan, the borrower would be eligible to refinance into a 4.25% percent 30-year loan, which would reduce monthly payments by about $460 a month.
• Refinancing Plan Will Be Fully Paid For By a Portion of Fee on Largest Financial Institutions: The Administration estimates the cost of its refinancing plan will be in the range of $5 to $10 billion, depending on exact parameters and take-up. This cost will be fully offset by using a portion of the President’s proposed Financial Crisis Responsibility Fee, which imposes a fee on the largest financial institutions based on their size and the riskiness of their activities – ensuring that the program does not add a dime to the deficit.
• Fully Streamlining Refinancing for All GSE Borrowers: The Administration has worked with the FHFA to streamline the GSEs’ refinancing program for all responsible, current GSE borrowers. The FHFA has made important progress to-date, including eliminating the restriction on allowing deeply underwater borrowers to access refinancing, lowering fees associated with refinancing, and making it easier to access refinancing with lower closing costs.
To build on this progress, the Administration is calling on Congress to enact additional changes that will benefit homeowners and save taxpayers money by reducing the number of defaults on GSE loans. We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress to do what is in the taxpayer’s interest, by:
a. Eliminating appraisal costs for all borrowers: Borrowers who happen to live in communities without a significant number of recent home sales often have to get a manual appraisal to determine whether they are eligible for refinancing into a GSE guaranteed loan, even under the HARP program. Under the Administration’s proposal, the GSEs would be directed to use mark-to-market accounting or other alternatives to manual appraisals for any loans for which the loan-to-value cannot be determined with the GSE’s Automated Valuation Model. This will eliminate a significant barrier that will reduce cost and time for borrowers and lenders alike.
b. Increasing competition so borrowers get the best possible deal: Today, lenders looking to compete with the current servicer of a borrower’s loan for that borrower’s refinancing business continue to face barriers to participating in HARP. This lack of competition means higher prices and less favorable terms for the borrower. The President’s legislative plan would direct the GSEs to require the same streamlined underwriting for new servicers as they do for current servicers, leveling the playing field and unlocking competition between banks for borrowers’ business.
c. Extending streamlined refinancing for all GSE borrowers: The President’s plan would extend these steps to streamline refinancing for homeowners to all GSE borrowers. Those who have significant equity in their home – and thus present less credit risk – should benefit fully from all streamlining, including lower fees and fewer barriers. This will allow more borrowers to take advantage of a program that provides streamlined, low-cost access to today’s low interest rates – and make it easier and more automatic for servicers to market and promote this program for all GSE borrowers.
• Giving Borrowers the Chance to Rebuild Equity in their Homes Through Refinancing: All underwater borrowers who decide to participate in either HARP or the refinancing program through the FHA outlined above will have a choice: they can take the benefit of the reduced interest rate in the form of lower monthly payments, or they can apply that savings to rebuilding equity in their homes. The latter course, when combined with a shorter loan term of 20 years, will give the majority of underwater borrowers the chance to get back above water within five years, or less.
To encourage borrowers to make the decision to rebuild equity in their homes, we are proposing that the legislation provide for the GSEs and FHA to cover the closing costs of borrowers who chose this option – a benefit averaging about $3,000 per homeowner. To be eligible, a participant in either program must agree to refinance into a loan with a no more than 20 year term with monthly payments roughly equal to those they make under their current loan. For those who agree to these terms, the lender will receive payment for all closing costs directly from the GSEs or the FHA, depending on the entity involved.

EXAMPLE: How Rebuilding Equity Can Benefit a Borrower

 A borrower has a 6.5 percent $214,000 30-year mortgage originated in 2006. It now has an outstanding balance of $200,000, but the house is worth $160,000 (a loan-to-value ratio of 125). The monthly payment on this mortgage is $1,350.
 While this borrower is responsibly paying her monthly mortgage, she is locked out of refinancing.
 By refinancing into a 4.25 percent 30-year mortgage loan, this borrower will reduce her monthly payment by $370. However, after five years her mortgage balance will remain at $182,000.
 Under the rebuilding equity program, the borrower would refinance into a 20-year mortgage at 3.75 percent and commit her monthly savings to paying down principal. After five years, her mortgage balance would decline to $152,000, bringing the borrower above water.
 If the borrower took this option, the GSEs or FHA would also cover her closing costs – potentially saving her about $3,000.
• Streamlined Refinancing for Rural America: The Agriculture Department, which supports mortgage financing for thousands of rural families a year, is taking steps to further streamline its USDA-to-USDA refinancing program. This program is designed to provide those who currently have loans insured by the Department of Agriculture with a low-cost, streamlined process for refinancing into today’s low rates. The Administration is announcing that the Agriculture Department will further streamline this program by eliminating the requirement for a new appraisal, a new credit report and other documentation normally required in a refinancing. To be eligible, a borrower need only demonstrate that he or she has been current on their loan.
• Streamlined Refinancing for FHA Borrowers:  Like the Agriculture Department, the Federal Housing Authority is taking steps to make it easier for borrowers with loans insured by their agency to obtain access to low-cost, streamlined refinancing.  The current FHA-to-FHA streamlined refinance program allows FHA borrowers who are current on their mortgage to refinance into a new FHA-insured loan at today’s lower interest rates without requiring a full re-underwrite of the loan, thereby providing a simple way for borrowers to reduce their mortgage payments.
However, some borrowers who would be eligible for low-cost refinancing through this program are being denied by lenders reticent to make loans that may compromise their status as FHA-approved lenders. To resolve this issue, the FHA is removing these loans from their “Compare Ratio”, the process by which the performance of these lenders is reviewed. This will open the program up to many more families with FHA-insured loans.
2. Homeowner Bill of Rights
The Administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards   As we have learned over the past few years, the nation is not well served by the inconsistent patchwork of standards in place today, which fails to provide the needed support for both homeowners and investors. The Administration believes that there should be one set of rules that borrowers and lenders alike can follow. A fair set of rules will allow lenders to be transparent about options and allow borrowers to meet their responsibilities to understand the terms of their commitments.
The Administration will therefore work closely with regulators, Congress and stakeholders to create a more robust and comprehensive set of rules that better serves borrowers, investors, and the overall housing market. These rules will be driven by the following set of core principles:
• Simple, Easy to Understand Mortgage Forms: Every prospective homeowner should have access to clear, straightforward forms that help inform rather than confuse them when making what is for most families their most consequential financial purchase. To help fulfill this objective, the Consumer Financial Protection Bureau (CFPB) is in the process of developing a simple mortgage disclosure form to be used in all home loans, replacing overlapping and complex forms that include hidden clauses and opaque terms that families cannot understand.

• No Hidden Fees and Penalties: Servicers must disclose to homeowners all known fees and penalties in a timely manner and in understandable language, with any changes disclosed before they go into effect.
• No Conflicts of Interest: Servicers and investors must implement standards that minimize conflicts of interest and facilitate coordination and communication, including those between multiple investors and junior lien holders, such that loss mitigation efforts are not hindered for borrowers.
• Assistance For At-Risk Homeowners:
Early Intervention: Servicers must make reasonable efforts to contact every homeowner who has either demonstrated hardship or fallen delinquent and provide them with a comprehensive set of options to help them avoid foreclosure. Every such homeowner must be given a reasonable time to apply for a modification.
Continuity of Contact: Servicers must provide all homeowners who have requested assistance or fallen delinquent on their mortgage with access to a customer service employee with 1) a complete record of previous communications with that homeowner; 2) access to all documentation and payments submitted by the homeowner; and 3) access to personnel with decision-making authority on loss mitigation options.
Time and Options to Avoid Foreclosure: Servicers must not initiate a foreclosure action unless they are unable to establish contact with the homeowner after reasonable efforts, or the homeowner has shown a clear inability or lack of interest in pursuing alternatives to foreclosure. Any foreclosure action already under way must stop prior to sale once the servicer has received the required documentation and cannot be restarted unless and until the homeowner fails to complete an application for a modification within a reasonable period, their application for a modification has been denied or the homeowner fails to comply with the terms of the modification received.
• Safeguards Against Inappropriate Foreclosure
Right of Appeal: Servicers must explain to all homeowners any decision to take action based on a failure by the homeowner to meet their payment obligations and provide a reasonable opportunity to appeal that decision in a formal review process.
Certification of Proper Process: Prior to a foreclosure sale, servicers must certify in writing to the foreclosure attorney or trustee that appropriate loss mitigation alternatives have been considered and that proceeding to foreclosure sale is consistent with applicable law. A copy of this certification must be provided to the borrower.
The agencies of the executive branch with oversight or other authority over servicing practices –the FHA, the USDA, the VA, and Treasury, through the HAMP program – will each take the steps needed in the coming months to implement rules for their programs that are consistent with these standards.
3. Announcement of Initial Pilot Sale in Initiative to Transition Real Estate Owned (REO) Property to Rental Housing to Stabilize Neighborhoods and Improve Housing Prices
When there are vacant and foreclosed homes in neighborhoods, it undermines home prices and stalls the housing recovery. As part of the Administration’s effort to help lay the foundation for a stronger housing recovery, the Department of Treasury and HUD have been working with the FHFA on a strategy to transition REO properties into rental housing. Repurposing foreclosed and vacant homes will reduce the inventory of unsold homes, help stabilize housing prices, support neighborhoods, and provide sustainable rental housing for American families.
Today, the FHFA is announcing the first major pilot sale of foreclosed properties into rental housing. This marks the first of a series of steps that the FHFA and the Administration will take to develop a smart national program to help manage REO properties, easing the pressure of these distressed properties on communities and the housing market.
4. Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work
Last summer, the Administration announced that it was extending the minimum forbearance period that unemployed borrowers in FHA and HAMP would receive on their mortgages to a full year, up from four months in FHA and three months in HAMP. This forbearance period allows borrowers to stay in their homes while they look for jobs, which gives these families a better chance of avoiding default and helps the housing market by reducing the number of foreclosures. Extending this period makes good economic sense as the time it takes the average unemployed American to find work has grown through the course of the housing crisis: nearly 60 percent of unemployed Americans are now out of work for more than four months.
These extensions went into effect for HAMP and the FHA in October. Today the Administration is announcing that the market has followed our lead, finally giving millions of families the time needed to find work before going into default.
• 12-Month Forbearance for Mortgages Owned by the GSEs: Fannie Mae and Freddie Mac have both announced that lenders servicing their loans can provide up to a year of forbearance for unemployed borrowers, up from 3 months. Between them, Fannie and Freddie cover nearly half of the market, so this alone will extend the relief available for a considerable portion of the nation’s unemployed homeowners.
• Move by Major Servicers to Use 12-Month Forbearance as Default Approach: Key servicers have also followed the Administration’s lead in extending forbearance for the unemployed to a year. Wells Fargo and Bank of America, two of the nation’s largest lenders, have begun to offer this longer period to customers whose loans they hold on their own books, recognizing that it is not just helpful for these struggling families, but it makes good economic sense for their lenders as well.
• A New Industry Norm: With these steps, the industry is gradually moving to a norm of providing 12 months of forbearance for those looking for work. This is a significant shift worthy of note, as only a few months ago unemployed borrowers simply were not being given a fighting chance to find work before being faced with the added burden of a monthly mortgage payment.
5. Joint Investigation into Mortgage Origination and Servicing Abuses
The Department of Justice, the Department of Housing and Urban Development, the Securities and Exchange Commission and state Attorneys General have formed a Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force that will be responsible for investigating misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The Department of Justice has announced that this working group will consist of at least 55 DOJ attorneys, analysts, agents and investigators from around the country, joining existing state and federal resources investigating similar misconduct under those authorities.
The working group will be co-chaired by senior officials at the Department of Justice and SEC, including Lanny Breuer, Assistant Attorney General, Criminal Division, DOJ; Robert Khuzami, Director of Enforcement, SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, DOJ. The working group will also be co-chaired by New York Attorney General Schneiderman, who will lead the effort from the state level.  Other state Attorneys General have been and will be joining this effort.
6. Putting People Back to Work Rehabilitating Homes, Businesses and Communities Through Project Rebuild
Consistent with a proposal he first put forward in the American Jobs Act, the President will propose in his Budget to invest $15 billion in a national effort to put construction workers on the job rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures – including those piloted through the Neighborhood Stabilization Program – Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks.
In addition, the Budget will provide $1 billion in mandatory funding in 2013 for the Housing Trust Fund to finance the development, rehabilitation and preservation of affordable housing for extremely low income families. These approaches will not only create construction jobs but will help reduce blight and crime and stabilize housing prices in areas hardest hit by the housing crisis.
7. Expanding HAMP Eligibility to Reduce Additional Foreclosures and Help Stabilize Neighborhoods
To date, the Home Affordable Mortgage Program (HAMP) has helped more than 900,000 families permanently modify their loans, providing them with savings of about $500 a month on average. Combined with measures taken by the FHA and private sector modifications, public and private efforts have helped more than 4.6 million Americans get mortgage aid to prevent avoidable foreclosures. Along with extending the HAMP program by one year to December 31, 2013, the Administration is expanding the eligibility for the program so that it reaches a broader pool of distressed borrowers. Additional borrowers will now have an opportunity to receive modification assistance that provides the same homeowner protections and clear rules for servicers established by HAMP. This includes:
• Ensuring that Borrowers Struggling to Make Ends Meet Because of Debt Beyond Their Mortgage Can Participate in the Program: To date, if a borrower’s first-lien mortgage debt-to-income ratio is below 31% they are ineligible for a HAMP modification. Yet many homeowners who have an affordable first mortgage payment – below that 31% threshold – still struggle beneath the weight of other debt such as second liens and medical bills. Therefore, we are expanding the program to those who struggle with this secondary debt by offering an alternative evaluation opportunity with more flexible debt-to-income criteria.
• Preventing Additional Foreclosures to Support Renters and Stabilize Communities: We will also expand eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single-family homes are an important source of affordable rental housing, and foreclosure of non-owner occupied homes has disproportionate negative effects on low-and moderate-income renters.
8. Increasing Incentives for Modifications that Help Borrowers Rebuild Equity
Currently, HAMP includes an option for servicers to provide homeowners with a modification that includes a write-down of the borrower’s principal balance when a borrower owes significantly more on their mortgage than their home is worth. These principal reduction modifications help both reduce a borrower’s monthly payment and rebuild equity in their homes. While not appropriate in all circumstances, principal reduction modifications are an important tool in the overall effort to help homeowners achieve affordable and sustainable mortgages. To further encourage investors to consider or expand use of principal reduction modifications, the Administration will:
Triple the Incentives Provided to Encourage the Reduction of Principal for Underwater Borrowers: To date, the owner of a loan that qualifies for HAMP receives between 6 and 21 cents on the dollar to write down principal on that loan, depending on the degree of change in the loan-to-value ratio. To increase the amount of principal that is written down, Treasury will triple those incentives, paying from 18 to 63 cents on the dollar.
Offer Principal Reduction Incentives for Loans Insured or Owned by the GSEs: HAMP borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to its underwater borrowers, Treasury has notified the GSE’s regulator, FHFA, that it will pay principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.

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Why the Condo Market is Still In Trouble – FHA Financing Has Dried Up

Written by Larry on January 29, 2012 – 6:07 am -

FHA Financing to buy a CondoNothing is being done it seems to help the stagnant condo market. Condo owners are facing an uphill battle when it comes to selling their property. The article below will shed some light on why condo buyers are unable to get FHA financing. If you own a condo and are thinking about selling it, this article is a must read.  If you own a condo, I highly recommend you send this to everyone in YOUR association and post it on your Facebook page.
Here is a link to see where you can find out if your Condo is approved for financing using an FHA mortgage. (opens in new window)



Condo buyers frustrated in hunt for FHA mortgages

CHICAGO – Jan. 27, 2012 – Buying a condominium is getting trickier for anyone who wants to put down only 3.5 percent and have the government insure their mortgage.

The issue isn’t just the borrower’s financial wherewithal. It’s the building’s, and plenty of condos no longer get a thumbs-up from the Federal Housing Administration.

Since Feb. 1, 2010, condo buyers haven’t been able to secure unit-by-unit “spot” approval for FHA-backed mortgages if an entire building was not certified. Instead, the federal government set criteria to determine the financial viability of an entire building before deeming the project as FHA-approved, even if it had previously been certified. An approval lasts two years.

The number of rejected buildings is adding up, due to bad paperwork and bad balance sheets, as an increasing number of condo associations struggle with rentals, short sales and foreclosures. It is jeopardizing the plans of condo sellers who rely on the FHA’s stamp of approval as a marketing tool and condo buyers who either want or need an FHA-approved building.

The effects of those rejected buildings are likely to linger, particularly if more stringent downpayment requirements take effect for homebuyers, and could hamper any recovery of the housing market.

For the first nine months of 2011, the FHA’s share of the overall home purchase market was 37.4 percent nationally, but the share for condos would have been higher because FHA-insured loans are popular with condo purchasers, said Guy Cecala, CEO and publisher of Inside Mortgage Finance. “They have the most-used program out there,” he said.

Since Oct. 1, 38 percent of condominium communities that have gone through the certification process have been rejected by the FHA.

“It’s a critical year for buildings,” said David Hartwell, a Chicago attorney who represents condo and homeowner associations. “This is a whole new world that we live in now. I see more rejections than acceptances, and the reasons I see clients rejected aren’t quickly curable.”

For buyers like Kristy Fender, of Chicago, FHA certification is a must-have on her list, and not just because it lets Fender and her fiancé, Dan Harvey, make a smaller downpayment on a home purchase. She also figures that in approving buildings the FHA is doing the due diligence that she would otherwise have to do.

But the process has been much more complicated than Fender imagined, and she’s wasted a fair amount of her time. During the past few months that she’s looked at units in Chicago’s South Loop, she’s incorrectly been told that a unit can get spot approval and has looked at units that were listed as FHA approved, only to find out the certification had expired. Her real estate agent, Bette Bleeker of Prudential Rubloff, wound up routinely checking property listings against the FHA’s website of approved buildings.

“It’s been very frustrating,” Fender said. “There’s a lot of wishy-washy information out there.”

Fender and Harvey now plan to make an offer on a South Loop condo, but the offer will be contingent on the association getting the building certified for FHA financing. Bleeker has spoken with the building’s management company.

“If sellers were aware of it, they would certainly be more proactive with their management companies and not let their certification lapse,” Bleeker said. “There’s a whole education curve that needs to be done here, at the buyer level and the seller level.”

Many times, particularly in smaller buildings, it is a real estate agent or lender that informs an association that its certification has expired.

In addition to not knowing about the process, a lack of knowledge of the rules and the many gray areas within them is compounding issues for condo buildings. So, too, is not submitting all the required documentation. Many buildings are denied simply for missing or incomplete paperwork, which has led to the creation of a cottage industry of companies and attorneys that help shepherd associations through the process.

“It seems like there’s always something additional that (the FHA) wants,” said Steve Stenger, president of Condo Approval Professionals LLC. “Once it expires, FHA lending stops. Lenders can’t get case numbers; the FHA won’t insure them. That whole section of financing dries up.”

Among the specifics that the FHA looks at is that a building is 50 percent owner occupied, that no more than 10 percent of units are owned by one investor or entity, that no more than 15 percent of the units are 30 days past due on their monthly assessments, and that at least 10 percent of the association budget be set aside for capital expenditures and deferred maintenance. But some of those rules also come with a little wiggle room.

The FHA also looks at special assessments and pending litigation, two areas that can raise red flags.

“It’s really not that onerous,” said an FHA spokeswoman. “A lot of it is just basic information. We do have some that have been appropriately rejected because they are unstable.”

Financially, the 249-unit condo building at 1620 S. Michigan Ave. in Chicago is stable, said condo board President Jeanette Johnson. Nevertheless, she worries that the building won’t pass the test when its certification expires next month because of the high number of renters residing in units.

“I’m anticipating that the board will try to do the recertification, but I don’t know if we’ll qualify,” she said. “We’ll need to evaluate that before we spend any money. It’s definitely on the radar screen.”

If the building doesn’t qualify, Johnson said, it’s likely the board would look to change its declarations and bylaws, itself a difficult and lengthy process, to gradually reduce the number of renters allowed in the building.

The Community Association Institute believes the FHA’s requirements are having a “chilling” effect on the market, and the trade group has asked for flexibility in the guidelines.

“When it comes to the condo market, that is the gateway to affordable housing, and FHA should play a critical role in that,” said Andrew Fortin, a vice president at the trade group.

The FHA hopes to publish its condo certification rules in the Federal Register this year for public comment. Among the areas that may be open to additional flexibility is the requirement that no single entity can own more than 10 percent of a building’s units, a spokeswoman said.

But in the meantime, associations continue to grapple with the rules.

“There are new, more onerous guidelines to comply with, and there are definitely challenges,” said Jason Will, national condominium sales manager for Wells Fargo Home Mortgage. “The smaller or self-managed homeowners association might not be aware of the guidelines changes until they have a buyer. You actually have a real transaction in jeopardy.”

Some associations are deciding that the effort and the expenses tied to the application process, which can run into the thousands of dollars, aren’t worth the payoff and are letting their certifications lapse. In some instances, that position reflects a bias against what are thought to be lower-caliber buyers who need the FHA’s backing.

“It’s the owners that are trying to sell their units versus the owners that want to live in their units,” said Jonathan Bierman, a property manager at Forth Group, a condo association management company.

Many in the housing industry say that position is short-sighted, given consumer demand for FHA-backed mortgages.

“In an economy where it’s difficult to sell your condo, (FHA approval) is almost imperative,” said Kerry Bartell, a Buffalo Grove, Ill., attorney who represents homeowners associations. But, she noted, “We have a lot of clients that say they want to do FHA certification, and we say, ‘Don’t spend the money, because you’re not going to make it.’”

Copyright © 2012 the Chicago Tribune, Mary Ellen Podmolik. Distributed by McClatchy-Tribune News Service.

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