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| HUD enforces job creation 03.10.2010 HUD has initiated a campaign amongst state and local governments to increase the number of jobs for low-income persons. More than 3,100 agencies have responded to the call to expand hiring and contracting opportunities for the low-income. In 2008 HUD funding generated more than 17,000 new employment and training opportunities. |
| Purchase Applications Increased 03.10.2010 The weekly application survey by the Mortgage Bankers Association (MBA) showed that for the week ending March 5, 2010, the Market Composite Index increased 0.5% from the previous week. This index measures the loan application volume in the US. The same survey indicated that the Refinance Index decreased 1.5% from the week before. The refinance share of applications is at its lowest since October 2009 when it was at 66.1%. The latest figures had it at 67.2%. ARMs were up in the survey to 5.1% of the total applications. This was the highest ARM share since November 2009. The MBA is the national association representing the real estate finance industry. |
| Appraisal Institute Opposes Plan for "Short Sales" 03.10.2010 The Appraisal Institute, which is 25,000 national members strong, and four other appraisal organizations have opposed the Obama's Administration's plan for short sales. The main objection centers around Broker Price Opinions (BPOs). With a broker price opinion, a realtor gives his or her opinion of what the property is worth. A full appraisal is not conducted. This in itself is very subjective. It is cheaper. But in the long run it could end up being very expensive. A letter raising the concern of potential mortgage fraud was sent to Treasury Secretary, Timothy Geithner. It was signed by the Appraisal Institute, the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and by the National Association of Independent Fee Appraisers. The big question is "how do we prevent fraud and protect the homeowner who has just lost a home?". Let's say a house has a market value of $400,000. The realtor issues a BPO for $375,000. The bank accepts this and approves the short sale for this amount. The bank doesn't know that the buyer is a relative of a friend of the realtor, and that they are all in on the "flop". A few weeks later the house is resold at the market price of $400,000. There's a profit of $25,000 which is split three ways. This is just one of the problems facing the new plan. |
| Foreclosure Rate Getting Better 03.11.2010 A report issued by RealtyTrac, showed that house foreclosures were down 2.3% in February, when compared to January. This is the second straight month that we saw a drop in foreclosures. There were 308,524 properties that received a foreclosure notice. According to the report Nevada had the highest foreclosure rate for the 38th consecutive month. One in every 102 properties in the state received a foreclosure notice. Foreclosures seem to be slowing, however the housing crisis is not in recovery yet. Homeowners who choose strategic default as their option are on the increase. What choices do they have? If you have lost 40% equity in your house, do you want to wait for another 10 to 15 years to get back to where you were 20 years ago? Strategic defaults will possibly be the next tidal wave to hit the US housing market. |
| Permanent Modifications Increased 45% 03.15.2010 The Obama Administration issued a performance report through February 2010 highlighting the Making Home Affordable Program. HAMP is gaining popularity. After a slow start the government's modification program is finally on track. A total of 170,207 permanent loan modifications have been granted to homeowners. These homeowners are guaranteed lower payments for 5 years and their monthly savings average $500. There have been approval for 91,800 modifications and are awaiting borrower signature. The goal is 3 to 4 million offers by 2012. So far more than 1.3 million homeowners have received offers. As an added bonus, homeowners can receive up to $1,000 that goes towards the outstanding mortgage balance. To qualify the homeowner has to be on time with their monthly payments for one year. Of all modifications started only 8.2% have been canceled. Californians led the way in getting modification help, while North Dakota and South Dakota lags behind. ND and SD weathered the housing crisis better than other parts of the country. The chart below shows how some states fared. |
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| Habitat for Humanity Foreclosure help 03.16.2010 Habitat for Humanity Sarasota is putting families into foreclosed and abandoned homes. In today's economy it is cheaper to buy a house and renovate it, than to build from scratch. The non-profit organization has $17 million to spend on this project. The money is stimulus funds from the Federal Government, and must be spent by February 11, 2013. This is an idea that can be duplicated in many distressed communities across America. It is a strategy that would get many foreclosed and abandoned houses off the market. |
| 2nd Lien Modification Gains Another 03.20.2010 Wells Fargo has become the second bank to joint the loan modification program that focuses on second mortgages. The first bank was Bank of America. Wells Fargo will modify second mortgages for its customers as well as for customers of Wachovia. To qualify homeowners must have the first mortgage approved and signed to the Home Affordable Modification Program. In other words, you can not modify the second without modifying the first. The rate on the second mortgage will be reduced to either 1% or 2% and it is expected that about 1.5 million homeowners will be helped. Many of these borrowers had "piggyback" loans when they first purchased their homes. This was the "downpayment" and was a common practice up until 2006. Hopefully more banks will jump on the bandwagon before it's too late. |
| Bank of America To Cut Principal 03.24.2010 Bank of America has initiated a program to cut the principal on mortgages that are severely underwater. This makes Bank of America the first lender to tackle principal reduction. Earned Principal Forgiveness Program will be launched in May, 2010. The plan will focus on homeowners who have subprime loans, and who purchased their houses with no downpayment or little downpayment.. Candidates must be 60 days delinquent to qualify, and must owe 20% more than their home is worth. The aim of the plan is to reduce the principal by up to 30% over a 5 year period. It is estimated that the Bank of America will help approximately 45,000 customers. |
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| AIG To Pay Huge Fine Two of AIG's subsidiaries were ordered to pay $6.1 million to about 2,500 African American borrowers. This works out to be about $2,300 per borrower. In addition, the companies must spend approximately $1 million in a consumer financial education program. There is a lot of gray area in this case. The mortgage brokers put the deals together and they charged excessive fees. The fees were more than those charged to white borrowers with the same qualifications. Can we pin this apparent wrongdoing on the lender who loaned the money? Did the lenders know what fees were charged? The companies in questione were AIG Federal Savings Bank and Wilmington Finance. They are no longer in the wholesale mortgage business. This case sends a clear message to lenders. Big Brother will be watching you. Roy DeLoach, Chief Executive of the National Association of Mortgage Brokers, said "...we think the government target should be the persons who actually do the discriminating." This settlement could cause many lenders to scale back their broker network and just work with a handful of seasoned professionals. The good news is that borrowers get better service and lower fees. The bad news is that there will be fewer mortgage brokers, and thus a smaller pool for the borrower to shop from. |
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