You Should Be…In the Know

Housing and Urban Development Announced today that homeowners who are “upside-down” in their mortgages may be eligible for refinancing.

This is excellent news for all homeowners - The more that people can save their homes, the fewer foreclosures we’ll see. The fewer the foreclosures and other distressed properties there are hitting the market, the more the market can stabilize and turn around.

Press Release July 1, 2009
HUD SECRETARY DONOVAN ANNOUNCES EXPANDED ELIGIBILITY FOR MAKING HOME AFFORDABLE REFINANCING

Announces eligibility for borrowers up to 125% underwater in Las Vegas with Senate Majority Leader Harry Reid and Congresswoman Dina Titus

WASHINGTON - U.S. Housing and Urban Development Secretary Shaun Donovan today announced an expansion of the Obama Administration’s Home Affordable Refinance Program to include participation by borrowers who are current but up to 125 percent underwater on their mortgage. Under authorization provided by the Federal Housing Finance Agency, borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will now be allowed to refinance those loans according to the terms of the Home Affordable Refinance program established earlier this year.

Read entire release.

Dear Obama,
I know you are working hard to find solutions to the foreclosure problem.

I am a Realtor in Southern California, seeing first-hand what the declining market is doing to our families and neighborhoods.

PROBLEM:
We all agree that foreclosures are a giant problem. Whether it’s you or a neighbor that’s having problems paying their mortgage, a foreclosed property hurts the banks, the homeowners, the surrounding neighborhood and the overall economy.

The White House is trying to slow the tide of foreclosures by keeping rates low and encouraging banks to re-finance at an LTV of up to 103%.

This solution will not help the Southern California market at all. Most homeowners that bought or re-financed in the past five or six years are more than 103% upside-down and can’t qualify for new loans.

IDEA:
Freeze adjustable mortgage rates. No re-fi’s. No applications or needing to qualify for a new loan - just make the old loans work by freezing the rates.

Of course it is an expense for a bank to freeze a rate. Of course they accounted for the loan adusting upwards and expected increased profit on many existing loans. Unfortunately, in this environment, an increase in rate will not result in an increase in profit. It’s more likely that the increase will result in a foreclosure.

Banks have taken federal money. Now it’s time for them to give something to the public. A rate freeze for a long enough period (ten
years?), would cause a dramatic decrease in the number of foreclosures, would cause the banks to lose less money, would take the strain off of families and would help our overall economy.

Thank you for considering my idea.

Margot Winters, REALTOR
Dream Design Realty

Bank-owned properties aka foreclosures, can be the source of  great deals for buyers in today’s real estate market.Purchasing a foreclosure can require extra patience from a buyer.

I said in the past that foreclosure transactions generally go smoother and are more likely to close than short sale transactions. That is still the case. Now foreclosure transactions are starting to see problems basically associated with the banks being overwhelmed with the numbers of these transactions.

I do recommend that buyers consider foreclosure properties. If you come prepared for the possibility of a longer-than-planned escrow and can go with the flow when unexpected snags come up, then you may end up with a great deal.

See this article in the Washington Post, “Foreclosures Stalled by Red Tape.”

Send me an email if you would like more information on foreclosure properties in San Diego.