New Homes Section

Are Fannie and Freddie Emerging?

admin — Mon, 23 Jan 2012 19:18:37 +0000

As mortgage-finance giants Fannie Mae and Freddie Mac start to reimburse taxpayers, the government’s tab for bailing them out has adjusted down.

As the government’s tab for bailing them out has adjusted down, Mortgage finance giants Fannie Mae and Freddie Mac start to reimburse taxpayers.

According to the Federal Housing Finance Agency (FHFA), the projected cost for rescuing the companies is lower by some $30 billion through 2014 – from last year’s estimate of $154 billion.

Over $140 billion have been paid by taxpayers to bailout the
companies, but that amount will start to decline as the firms suffer smaller losses, which will enable them to pay back more. Be that as it may, it’s not likely that the government will ever be fully reimbursed.

Fannie and Freddie must pay annual dividend payments to the Treasury of ten percent – to exclude money borrowed from the Treasury to pay the dividends.

Data show that the firms are stabilizing; however, they are not likely to return to profitability any time soon. This is because dividend payments will eliminate any profit potential. All indications are that the two firms won’t be able to earn their way out of government ownership.

Fannie Mae has received over $100 billion from the Treasury, in addition to another $15 billion it borrowed to pay back the government. The firm must now pay more to the Treasury each year than it ever even earned during the housing boom – more than $10 billion.
Freddie Mac, on the other hand, has actually returned more than it has taken in the last year, and could pay back $15 billion through 2014.

Mortgages, nationwide, are at over $10 trillion. Fannie and Freddie own or guarantee about half of that. Losses resulted mostly from those bought or guaranteed between 2005 and 2008. Since then, the firms have become more stringent with underwriting standards, and loans are expected to be more profitable.

A Look at REITs – Is Now the Time?

admin — Mon, 23 Jan 2012 19:15:27 +0000

For investors considering real-estate income, great deals can be found in real-estate investment trusts (REITs). REITs purchase mainly property such as apartments and office parks. Income taxes are avoided so long as the majority is paid out to shareholders in the form of dividends. REITs are purchased just as regular stocks are, but the focus is on the dividend yield; i.e. the percentage of share price paid out as dividends.

With REITs taking a 20 percent dip, investors may be able to take advantage of low interest rates.

With the recent hit taken by REITs, dropping almost 20%, according to one index, the time may be ripe to take advantage of low interest rates coupled with strong demand and tight supply. Even prices have become more attractive lately.

Investing in REITs requires caution, however, as the specialization in portfolios can be wide-ranging.

Investors do well to compare different portfolios by comparing lease periods for the buildings held. Short leases mean a quicker change in cash flow – corresponding to economic changes. Longer leases are usually steadier investments.

For example, REITs in hotels are on the shorter end, as leases cover room bookings of one or two nights. On the other end of the spectrum is a health-care facility with leases over 10 years on average.
Office space is among the most popular areas of the market, but in this segment where high-demand exists, high costs have had REITs yielding dividends of around 2-3%.

Well-positioned REITs are those focused on multi-family housing. The single-family market is ailing, and homeownership rates continue to lose ground to renting.

REIT purchasers must account for leverage as well. To increase returns, investors use debt -and for now, interest rates are good. Just be cautious of debt levels in excess of 65% of assets.

Planning to Buy a Home? Check these Ways to Make It Happen

admin — Thu, 19 Jan 2012 20:32:18 +0000

It’s 2012, a year for change. If you and your partner are planning to finally buy your own home this year, you should take some concrete steps early on to make sure you achieve your goal. Purchasing real estate is a major investment and should be planned for in advance.

If you want to live in the home of your dreams, you must first develop a plan of action that will help you succeed.

While you don’t need to be a millionaire to own a property, you do need a certain solvency to be able to buy a house. Here are some things to consider:

Do you have enough funds saved up for a down payment? If you have, great, but remember, if that money is all you have, you’d better let it remain in the bank for emergencies. If you plan on looking at homes for sale at the end of the year, you still have a few months to save up for it.

Set aside a percentage of your income monthly to go into your home-buying fund. Before doing this however, keep track of your daily and monthly expenditures first. Look at what expenses you can cut down realistically and stick to your budget.

Settle your debts and refrain from making new ones. This includes paying your long overdue credit card bills and other loans. The longer you put off paying them, the more that you have to pay. Wouldn’t you rather save that money to buy a house?

Do your research in advance. Come up with your criteria about the home you’re going to buy. Will it be a house, condo, or a townhome? Do you want to live in the city or in the suburbs? All these have implications on the cost, so you’ll be better prepared financially when you begin to seriously look at houses for sale if you know what you’re saving for.

Yes, it is possible for you to achieve your dream of buying a home. Just keep firm on your budget, resist the temptation to buy non-essential things, and be positive that you can do it if you really want to.

Budgeting to Buy: Manage Your Finances and Buy a Home

admin — Thu, 19 Jan 2012 20:27:13 +0000

With home prices at incredibly affordable levels, and interest rates on loans at rock bottom, many households are realizing that this is an excellent time to buy a home. But for many, saving up enough cash to handle a downpayment and fund closing costs is holding them back. With a plethora of federally-funded programs to aid with these costs, families face a much shorter time horizon in which they need to save money. 2012 could very well be the year in which you buy a home, if you just make some small financial adjustments and save up the small amount of cash it will take to buy a home.

Making small financial adjustments can save the average household a significant amount of money annually.

Open separate savings accounts so that you can keep track of your expenditures. You could start with three—regular savings, medical/health, and for emergencies. If you have kids, you can also open a college fund for them. Every month, budget a little of your income into these accounts, keeping in mind that you can only use your regular savings account for your daily needs.

Monitor your credit card use. Charge only what you can pay in full when the bill comes. Remember that interest is cumulative. The longer you put off your payment, the more that you’ll have to pay just for the interest alone. Before swiping, think twice. Will you be able to pay that in a month? If not, put off buying it for next time.

Be creative in looking for cheap (or free!) entertainment options for your family. You don’t have to spend a lot to have a good time. Simply going to the park, for example, and having a picnic there can save you a lot of money. It’s healthier too! You can also find out if there are free events in the community which your family can attend.

Being financially fit this 2012 is not an impossible task to take. Discipline yourself and you can manage to stretch your dollars this new year, saving up the money you’ll need to finally become a homeowner.

Keeping Your House After Filing Bankruptcy

Mitch Ribak — Tue, 13 Dec 2011 20:53:40 +0000

Foreclosure is a crisis that has hit our country hard over the past few years. The financial crisis that we call “The Great Recession” has taken the US by storm. Many consumers are turning to filing bankruptcy just to get a little relief from the debt they’ve accumulated. As this option becomes more of a reality for some homeowners, the question is frequently asked, “If I file bankruptcy, will I still be allowed to keep my home?”

Filing for bankrupcty doesn't mean you have to foreclose on your home.

If this is the situation you find yourself in, options may be available to help you. Filing a Chapter 7 Bankruptcy may help delay the foreclosure process by a few months. On the other hand, a Chapter 13 Bankruptcy may be helpful in helping you avoid foreclosure completely. Let’s take a look at some of the options that may be available to you.

Reaffirmation Agreement

When filing for bankruptcy, this reaffirmation agreement is a signed contract between the lender and the debtor. The details are as follows:
The agreement reaffirms (or re-establishes) the personal liability of the homeowner’s debt.
The agreement must be made (reaffirmed) before the filing of the Discharge in Bankruptcy.
The reaffirmation agreement must be approved by the court (bankruptcy judge).
It is usually to the lender’s advantage to sign the agreement because it keeps the homeowner binded to the original debt.
The homeowner has 60 days after the agreement is signed to change their mind and revoke it.

Loan Modification

A loan modification is a permanent change in the terms of the homeowner’s original mortgage loan.
It allows the loan to be reinstated under the new terms agreed upon.
The new terms of a loan modification will include modified, lower mortgage payments that the homeowner can now afford.

FDIC Sponsored Loan Modification Program

This program is known as the Homeowner Affordability and Stability Plan.
This program was set up to help borrowers who can no longer make their mortgage payments due to financial hardships and insufficient income.
It provides alternatives for borrowers who aren’t past due on their mortgage payments, but cannot refinance because the value of their home has decreased substantially.
In order to further help borrowers get on their feet, there are no fees charged to borrowers under this program.

Can I Keep My Home in Bankruptcy?

The answer to this question is yes, and no. There are ways to avoid foreclosure when filing bankruptcy. But, it must be done right to get the best results. Let’s take a look at some of the options that may be available to you:

Order of Relief

When anyone, including a homeowner, files for bankruptcy, the courts will automatically issue an Order of Relief. This is helpful to the distressed homeowner in two ways:

An “automatic stay” is included with the Order of Relief. This is a legal court order that demands that all creditors, including mortgage lenders, cease all collection actions immediately.
Per this order, your scheduled foreclosure sale will be immediately postponed during the pending phase of your bankruptcy.

Chapter 13 Bankruptcy Mortgage

1^st Mortgages & Chapter 13

The arrears are paid off over the length of the new repayment plan.
As long as repayment plan is followed, foreclosure is avoided.

2^nd and 3^rd Mortgages & Chapter 13

The courts have the right to “strip off” 2^nd and 3^rd mortgages, making the homeowner no longer liable for them.
The courts also have the option to re-categorized 2^nd and 3^rd mortgages to unsecured debt. This will make them the last priority on the list of debtors.

Chapter 7 Bankruptcy Mortgage

Start Saving – During the pending phase of your Chapter 7 bankruptcy, you will still be allowed to live in your home. You can live there, free of charge, for up to several months during this phase. Utilize this time to save your money in case you have to relocate after foreclosure. There is also the possibility of being able to save your home. So, be sure you are saving just in case this option becomes available to you.
Canceled Debt – Chapter 7 Bankruptcy can cancel any and all debt that was secured by your home. This can include your 1^st and 2^nd mortgages, as well as your home equity loans.

* Disclaimer: This article is for informative purposes only. It is in no way intended to be used as legal advice. If you are thinking about filing for bankruptcy, contact a bankruptcy attorney for further assistance.

Trouble at Fannie Mae?

admin — Mon, 12 Dec 2011 22:33:02 +0000

According to some familiar with the matter, a few Fannie Mae employees have been placed on leave pending a federal investigation of a transaction that involves distressed debt on multifamily property.

Fannie Mae employees are under investigation by Federal law-enforcement officials.

Although it is isn’t clear what exactly is being examined by Federal law-enforcement officials, whether any wrong doing is being investigated, whit is known is that the inspector general of the Federal Housing Finance Agency is the one carrying out the investigation. The FHFA is the agency that regulates Fannie and Freddie.

The investigation appears to be focusing on a single transaction involving distressed apartments; however, the investigation doesn’t involve the issuance of debt or securities by Fannie.

A spokesperson for Fannie Mae stated that the scope of the investigation isn’t very broad and that Fannie is fully cooperating. The employees placed on administrative leave was in accordance with regular practice pending a review’s outcome.

An inventory of distressed apartments was being delivered to an existing joint venture between Fannie and a New York developer. Earlier this year, Fannie sold a stake in many foreclosed apartments to the same developer who, as part of the deal, is maintaining and managing the properties.

Fannie increased its inventory of foreclosed properties, 232 over the previous year; this is more than twice what it held in 2009. Additionally, it held over 480 properties with seriously delinquent loans.

The investigation occurs while officials at Fannie and the FHFA consider similar joint ventures on single-family properties that are foreclosed.

Fannie and Freddie are tasked with unloading hundreds of thousands of foreclosure in the upcoming years.
As you’ll remember, Fannie and Freddie were taken over in conservatorship by the U.S. government about three years ago. The bailout has cost the taxpayers over $140 billion.

Borrowers May be Eligible for Relief from Lender Errors

admin — Mon, 12 Dec 2011 18:37:46 +0000

Federal regulators are planning a comprehensive review that may give millions of homeowners (both current and former) an opportunity to have their foreclosure cases examined. An examination may call for compensation to be made by banks for mistakes made in the process.

Borrower's are desperately seeking some form of financial relief and compensation for being victimized by lenders practicing robo-signing mortgage lending.

Borrowers that may be affected are those who were in some phase of the foreclosure process in ’09 or ’10. This means that several million borrowers could be eligible.

Any borrower determined to have sustained financial harm could be eligible for compensation which would be determined by a third-party firm with each case being reviewed individually. A review would have to be requested by a borrower before a specific date likely to be near the end of the first-quarter of 2012. As yet, no estimate has been offered as to how much money eligible borrowers might get. Still, it’s not expected that many borrowers will have their cases overturned, if any.

The review process is one of many efforts to address the robo-signing scandal wherein bank employees signed off on large numbers of foreclosures and claiming to personally have reviewed each case.

This is a separate effort than the attempt between federal agencies, banks, and state attorneys general to reach a multi-billion dollar settlement over foreclosure abuses. That effort ran into a hurdle as California’s state attorney general withdrew from negotiations.

This seriously hinders hopes of reaching a settlement as California has one of the nation’s largest volumes of foreclosures, and banks aren’t rushed to settle without California’s participation. Spokespersons for both sides say they’re still hopeful about reaching a deal despite the setback.

In the review process, financial injury can be defined as occurring in misrepresentation s or errors made by mortgage companies. So banks could be liable if they miscalculated mortgage payments or applied fees inappropriately. And banks may have to provide compensation if it’s found that it pushed a borrower to foreclosure while receiving partial payments as part of a loan modification.

Mortgage Servicer Revamping Foreclosure Procedures

admin — Wed, 07 Dec 2011 19:41:34 +0000

Last September’s robo-signing scandal was brought to the fore by GMAC Mortgage LLC. This giant in the industry claims it has revamped its foreclosure procedures since then, in order in order to improve its foreclosure and the rest of its servicing business procedures.

GMAC Mortgage LLC revamped its foreclosure procedures to improve its foreclosure & its s servicing business procedures.

A number of measures have been implemented to get GMAC to where it wants to be, business-wise and in the minds of the public. For one, GMAC is requiring its employees that work on foreclosures to undergo an additional 40 training hours and thereafter they are tested on their learning objectives. Those firms outside of GMAC who handle some of its foreclosures most divulge their procedures as well as submit to on-site reviews.

These changes were put in place to remedy a since acknowledged weakness in GMAC’s foreclosure procedure. One employee claimed in a deposition last year that the had signed off on up to 100,000 foreclosure documents without properly reviewing them.

The firm says that it has focused on overhauling and improving its servicing business since it has resumed its suspended foreclosure sales. After a review of around 25,000 loan files, a GMAC spokesperson says that there has not been a single instance in which a borrower was foreclosed on who wasn’t in significant default.

Although GMAC’s performance in the mortgage-modification arena has improved, some say that the servicer’s willingness to assist financially-distressed borrowers has back-slid since last year. Some are finding it difficult to work with the firm.

One complaint is that GMAC is slow about its foreclosure operations. A lawyer representing homeowners says he has seen very little activity in the many GMAC-related cases that he is handling. A GMAC representative blames courtroom backlogs and new firms taking on cases for the delays.

Robo-Signing Loan Settlement Battle

admin — Wed, 07 Dec 2011 19:31:02 +0000

Banks are trying to negotiate a settlement over the home-foreclosure fiasco, but have run into a new problem – how to split the bill.

Banks are being held accountable for robo-signing loans which help cause the mortgage market meltdown.

Bank stocks have been affected by the failure to reach a deal among the country’s largest home-loan service’s, and drawn out negotiations could only increase investors’ sense of unease.

The fight over which large bank should pay the most has put off a resolution and could delay the months-long uncertainty over the cost of ending one of the largest issues to come out of the financial crisis. Negotiations have already gone past a target set by officials.

Despite many differences among the banks on how much each should pay, all have agreed to a structure that would control how banks meet their obligations when a deal is reached. Included in this framework are principal reductions on particular mortgages, forgiveness of second-lien loans, and restitution to borrowers.

The commotion all started last fall when the banks were disallowed to continue home seizures resulting from the robo-signing allegations. Originally banks expended effort at showing unity in negotiations with regulators; however, as discussions move on, some banks differed on what they viewed on the proper treatment for themselves as compared to the others.

Apart from arguments from each bank, another potential issue involves the tensions between U.S. and state officials over how quickly to finish the deal. Some officials would like to deal that offers immediate aid to borrowers.

Many have been critical of any deal that would give banks relief from further legal claims. One attorney general refuses to sign any agreement with banks that includes a release regarding securitization of loans into mortgages securities and the conduct of a mortgage-loan liaison.

Refinancing Rules Revamped to Help Millions of Homeowners

admin — Tue, 06 Dec 2011 19:25:58 +0000

A mortgage-refinance program aimed at helping millions of Americans with declining home values is set to undergo a major overhaul.

The changes to refinancing rules are designed to aid homeowners.

The revamp will allow borrowers to refinance no matter how far their homes have fallen in value, removing previous limits. The refinance process will be facilitated as appraisals and many underwriting requirements will be eliminated. A couple of years ago the Home Affordable Refinance Program (HARP) was unveiled, which opens up a refinancing opportunity to borrowers with less than 20% in equity so long as their loans are backed by Fannie and Freddie. The program hasn’t delivered as hoped, with only a small portion of borrowers (under 900,000) actually using it, and even less (about 70,000) being significantly underwater – or owing more than their home’s value. It’s hoped that the revamp will make refinancing available to up to a million more borrowers.

The changes that federal officials are preparing will allow bans to avoid having to buy-back a loan (which Fannie and Freddie can require in the event of an underwriting flaw) on HARP mortgage as long as borrowers are current on mortgage payments for the last 6 months and can show they have some steady source of income.

The pricing details won’t be available until the middle of November, and lenders may start refinancing under the refurbished programs as early as the 1st of December. The current loan limit is 125% of the property’s value; any loans that exceed this limit will not qualify to participate until next year. The program will not expire mid-2012 as initially planned, but will be extended through 2013. HARP is only open to loans which have been guaranteed by Fannie and Freddie as of June 2009.