Fannie Mae and Freddie Mac to halt Foreclosures...at least for now!

URGENT NOTICE: Fannie Mae and Freddie Mac Foreclosure Freeze
by Tim Harris on November 20, 2008

As predicted, expect to see more foreclosure moratoriums…typically for 90 days. California tried this and it didn’t have any sort of significant effect. Expect to see a massive number of foreclosures hit the market after this artificial reprise….

Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures for about 16,000 households during the holiday season.

The two companies said Thursday that they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program announced last week.

As you may recall when the government seized Indymac back the FDIC implemented their own “Mortgage Loan Modification” program. Overall, very few loans were actually modified as a percent of the whole. Now we are seeing that even after the homeowners have had their mortgages modified they are still missing payments. Loan Mods are a great solution in theory. But, the newest research about what happens post loan modification isn’t encouraging. Clearly, simply massive numbers of homes will become REO listings.

Fannie Mae said about 10,000 households would be affected, while Freddie Mac said the changes would affect about 6,000 borrowers who are facing foreclosure. The change does not apply to vacant homes.

Read that again….only 16,000 borrowers would be ‘affected’….that’s assuming they want to do a loan modification. Remember, a loan modification temporarily makes the payment lower….rarely, are there any principle reductions. In other words, they are still upside down in their homes. If they want to sell..and they don’t want a foreclosure on their credit one of their best options is doing a short sale.

OK, you will love this next part…..in order to qualify for this new initiative a borrower has to miss 3 mortgage payment….

Fannie and Freddie’s loan modification plan aims to help abate the foreclosure crisis by aiding homeowners who have fallen at least three months behind on their payments, but only if their loans are held by the two companies.

More fun facts….when I first read this next point a week or so ago I thought it was a misprint. Can we all agree that one of the (many) reasons we are in this immense real estate mess is because lenders gave mortgages to people who didn’t qualify? Assuming we are in agreement…then WHY the heck is it that the FHA is now allowing people to have mortgages with a 38% housing ratio? Get this, the actual housing debt to income ratio that the FHA uses is………..28%. So, the FHA is now becoming the worlds largest….SUB-PRIME lender!

Under the program, the new primary mortgage payments — including taxes and insurance _shouldn’t total more than 38 percent of homeowners’ pretax monthly income.

It very important that you read and clearly understand the next point…THIS year…2008…the NAR is estimating that there will be around 5 million home sales….the FDIC is expecting that by the end of THIS year…2008 there will be 4.4 MILLION borrowers who are deliquent on their mortgages. If you are a HREU Coaching Student you know that the best opportunities for helping the millions (and millions) of homeowners is still ahead of us. If the government predictions are correct nearly 50% of ALL sales in 2009 will be REOs and Shortsales.

Fannie and Freddie are the dominant players in the U.S. mortgage market but hold only 20 percent of delinquent loans. Ultimately about 400,000 households are likely to qualify for the loan modification program, according to Priya Misra, a mortgage analyst with Barclays Capital.

By contrast, the Federal Deposit Insurance Corp. estimates that more than 4.4 million borrowers will become delinquent by the end of next year, not including loans backed by Fannie and Freddie.

The 4 Point Plan - Economic Recovery Proposal

These tips would certainly help San Diego Real Estate, and the country!

Here is the 4 Point Plan from the NAR: National Association of Realtors! Call your congressman!

The Four Point Plan
The most recent economic stimulus bill, the Emergency Economic Stabilization Act, was a good first step towards stabilizing our nation’s economy. Unfortunately, a number of the Act’s provisions have not proven to be as useful at stabilizing the nation’s housing markets as was first thought.

Congress may consider second economic stimulus bill this month. If they do, there are a number of changes that could help to provide more stability to the nation’s real estate markets which most agree is a necessary step towards recovery.

NAR has urged Congress to include the following provisions in any future legislation:

Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.

Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don't just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage on the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

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For everything you need to survive in the N. San Diego Real Estate market, go to: http://www.MarcVonMusser.com

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The FED's back away from Helping Homeowners

Well, the FED has backed away from helping homeowners with the 700 Billion Dollar bailout. The Government has decided to apply these funds to help the credit markets and other entities. This isn't a huge surprise for San Diego Homeowners facing foreclosure. Disappointing, but not surprising.

Here is the new assistance program being put forth. Unfortunately, this will only and estimated 5-10% of San Diego Homeowners facing foreclosure.

FEDERAL HOUSING FINANCE AGENCY ANNOUNCES NEW FORECLOSURE MITIGATION EFFORT
The Federal Housing Finance Agency yesterday announced a new loan modification program designed to reduce preventable foreclosures with a simplified, streamlined program to put struggling homeowners into mortgage they can afford. The goal is to have a uniform process for loan modifications that the majority of lenders and servicers will use. Participants include Fannie Mae, Freddie Mac, Federal Home Loan Banks, Hope Now participants, the U.S. Dept. of the Treasury, the Federal Housing Administration and the Federal Housing Finance Agency, and Wells Fargo.

To be eligible, the borrower must: have missed three or more payments; own and occupy the property as a primary residence; have not filed for bankruptcy; and be able to have their mortgage modified so their entire mortgage payment, including association dues, if applicable, is no more than 38 percent of their gross income.

Program details are still forthcoming, with a targeted implementation set for Dec. 15. Troubled homeowners should inquire with their lenders or servicers as to participation and eligibility for this new program.

The best solution when facing foreclosure in today's market is talk with someone, like me, that understands the foreclosure process and the options to avoid foreclosure.

We can't help if we don't know you are in trouble. Timing is critical in today's market!

All the best
Marc

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Don't just survive this RE Market....THRIVE!!! Go to my website for more!

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