Mortgage Foreclosure Home Update
(c) Copyright 2009 Walter O. Smith, CFP, ChFC, CLU All rights reserved
A Rose of Sharon Publication
6/20/09
Notice: The content of this newsletter is intended for purposes of consumer financial education only. The content is not, nor intended to be, acounting, tax, legal, or financial planning advice of a personal nature to readers. If you want, or need, professional advice, you are advised to consult a properly qualified professional. The author is solely responsible for all content. This newsletter is a free benefit to members of GMAX1, a faith-based consumer financial educational organization.
A Special Kind of Unemployment On Saturday, June 20, 2009, it was announced that our young veterans returning from war are having a problem trying to find jobs. The unemployment figures for the local area where we live were given in the announcement I heard: for PA it's 22,000; for NJ, it's 9,000. I know a lot of people can't find a job, not just our vets. But, I think we all owe a special thanks and feeling of indebtedness to these young people. We asked them to do a very tough job for all of us, and they answered our call, no matter how we might feel about the wisdom, or lack of it, about those wars. This is personal. To them. If you can help a vet, or you know someone who can, you know what to do. At a minimum, ladies and gentlemen, let's all say a prayer to God for all our people in uniform, active and retired or separated from service. A lot of them gave all for all of us. Walt
Note: See the earlier issue of our financial newsletter on how to get help to stop a foreclosure. One of our members reported to us on Thursday, June 18,2009, that he followed the advice in that newsletter and got the help he needed. It stopped the foreclosure on his home. We thank God for that.
The Lord did it, not us. If you've got a foreclosure problem confronting you, read that issue of the newsletter.
"Foreclosures Heading Through the Roof" That was the front page headline in the Friday, June 19, 2009 issue of USA Today. In essence, the article deals with problems people are encountering in connection with federal government programs intended to modify mortgage monthly payments, down, to an affordable level. Some lenders (Chase Bank was named) are dragging their feet in responding to people seeking help. They don't really want to be of help, but neither do they want to be "politically incorrect" in saying that explicitly.
* The federal refinaning option is available only for loans owned by Fannie Mae and Freddie Mac, with a balance equal to, or less than, $729,750.;
* The option is not available if you're delinquent on your mortgage.;
* You must have enough income to pay the new mortgage.;
* Your mortgage must have been originated before January 1, 2009, and your first mortgage can't exceed 105% of the current value of your home that you occupy.;
* You must have had a significant change in your income or expenses, to the point that you can't afford your current mortgage payment.;
* Those are some of the provisions of this federal program that the government put $75 billion into to get mortgage payments down to a target of no more than 31% of your income.
For more information: Go to the web, www.financialstability.gov
This is one possible solution, but not the only one. Contact community assistance organizations, (211 call Centers; see our newsletter on that), lenders in your area, or your local bar association for legal help at no cost (or reduced cost). Members of your local bar association volunteer to help people "pro bono" (our member referred to eariler in this article did just that, and now has an attorney helping him.)
"The Phiadephia Plan" Your city, or town, may have adopted the mediation plan developed in Philadelphia that has had a 78% success record. Look into it for your city, or town. It was recently reported that Mayors of other communities across the nation have adopted it. Simplicity is the essence of the Philadelphia Plan. It calls for court-supervised dsicussion/negotiation between borrowers and lenders. People get together and talk it out. Foreclosure is not of benefit to anyone; borrowers, or lenders.
The Forecast for Foreclsoures Isn't Good This is the grim part of the story.
* 607,974 homes foreclosued upon or auctioned;
* 396,724 homes are in default.;
* According to RealtyTrac, since President Obama's plan was introduced (3/09), lenders have either started or advanced, foreclosure proceedings against more than 1 miion homes. (The Presiden'ts plan has led to offers of more than 190,000 mortgage modifications. The aim is to help 9 million homeowners);
* The Center for Responsible Lending estimates that 2.4 million people are at risk of foreclosure in 2009, and 8.1 million people could be, over the next 4 years.
* These estimates are based on timing of adjustable-rate mortgage "resets", and, now I'd have to presume, job losses.
Obviously, this is an enormous problem. If you even think you could have a problem in the future (even if everything is ok, now) get help early, before you start falling behind. It will put you in the strongest negotiation position, plus, the federal program discussed in this newsletter is not availabe to you if you're in default.
HUD/FHA Developments In a late-breaking related development, it was announced that HUD is seeking an additional $400 billion for it's FHA insurance program. If they succeed in getting it, the $400 billion will expand the authority of HUD to endorse 2.25 million mortgages in 2010. (These are new mortgages) FHA's share of mortgage originations in 2006 was less than 2% of the market. Today, it's 24%, and growing. The agency "monetizes" the $8,000 income tax credit for qualified first-time home buyers. (using it, for example, as part of down payments, closing cost, etc.)
News Break: June 21, 2009 Now it's being reported that the federal government program to avoid foreclosures through refinancings and loan modifications has -- as it's put -- "hit a snag".
The companies that are suppose to handle that aren't up to speed to handle the loads. (called, "servicers") And, the loads are enormous. These "servicers" are doubling their staffs, retooling their systems etc. Because, as described, the loads are in the "tens of thousands". The realities of the depth of the problem are materializing. Look into all your options, as I've previsouly recommended. Just make sure whatever you're looking into is legitimate.
* As usual, crisis brings the crooks out of the woodwork.
* "Mortgage modificaton services for $2,900".
* HUD-approved counseling agencies do it for free
There's no shortage of nerve. These guys actually advertise their $2,900 "services". And, the media actually carry the ads. But, wait. There's more...."For $2,900 these borrowers are giving all the wrong information"; according to David Berenbaum of the National Community Reinvestment Coalition. You fill-in the next line. My thoughts aren't printable.
* It's nuts, but some mortgage brokers are still at it.
** You remember the subprime crisis that caused all this mess we're in?;
* Have you heard about "regulatory changes" that are coming? It's
been in the news lately.;
* Guess what that David Betrenbaum said. I'll quote it so you won't
think I made this stuff up.
"Despite regulatory changes made as the subprime crisis erupted in the summer of 2007, unscrupulous mortgage brokers continue to put people in homes they cannot afford, using mortgages they should not have qualified for." (Must be motivated by the commissions they make.)
What planet are these people on? I mean, the brokers, and the people going into these deals. Well, I'm out of ammo.
Till next time. My best regards to each of you, and God bless.
Walt