Archive for the 'Mortgage' Category

Last February, just as repo homes filings in the country reached more than 290,000, representing a 30 percent increase from a year ago, the Obama Administration launched its Homeowner Affordability and Stability Plan to help distressed homeowners reduce their mortgage payments through refinancing or loan modification.

The rapid spread of repo homes has been blamed by economists and lawmakers on reckless borrowing and irresponsible lending. Since August 2007, about 1.2 million repo homes were reported while 11 percent of mortgages were on the brink of foreclosures.

An estimated 12 million homeowners have mortgages that surpassed the fair market value of their properties, while about 4 million were behind on their mortgage payments. And to top it all, both home prices and sales plummeted to an all-time low.

The $75 billion repo homes prevention plan is expected to help distressed homeowners protect their properties from foreclosures and stabilize the housing market.

Under the refinancing component of the plan, troubled borrowers whose mortgages are owned or backed by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association may be eligible to change their mortgages into 15-year or 30-year fixed-rate loans.

The refinancing plan is expected to help nearly 5 million distressed homeowners whose loans are owned and backed by the two government-sponsored enterprises. To quality, homeowners must not be behind on their mortgage payments for over 30 days in the past year and they must owe not more than 105 percent of the fair market value of their properties.

Meanwhile, the loan modification component allows mortgage servicers to voluntarily lower interest rates to allow troubled borrowers to save their properties from being added to the growing list of repo homes. The federal government would subsidize a portion of the amount needed to reduce borrowers’ mortgage payments.

For the almost 4 million distressed homeowners targeted by the loan modification plan, they must not be behind on their loan payments or on the verge of defaulting to qualify for this component of the repo homes prevention plan.

Qualified homeowners may take advantage of reduce monthly payments to 31 percent of gross income.

Another program aimed at reducing the number of foreclosure properties is aimed at first-time homebuyers. They will be given tax credits of almost $8,000 for every foreclosed home they will purchase from January 1 to November 30, 2009.

The affordability plan is part of the $275 billion foreclosure prevention plan of the Obama Administration.

According to the Mortgage Bankers Association, the volume of mortgage applications for the week that ended May 16 fell by 7.8 percent to 621.6. The week before, volume was pegged at 674.4.

Breaking down the report; the refinance volume dropped by 8.7 percent for the week. Meanwhile, mortgage application for new purchases declined by 6.9 percent. The volume of refinance applications actually accounted for about 48.2 percent of the total applications.

The last time the index peaked was in May 30, 2003 when mortgage application volume was at 1,856.7. Coincidentally, this period was during the last housing boom when millions of homebuyers took out hybrid mortgages that featured zero interest option, no interest terms and adjustable interest rates.

Unfortunately, these hybrid loans were considered to be the reason why many owners lost their homes to foreclosure. Most of them did not realize what kind of mortgage they were getting and their brokers could not care less and were really just after the commission. As soon as the mortgage re-set, they found themselves with ballooning mortgage payments that they could no longer pay.

Declining mortgage application index could be indicative of a market where buyer confidence is waning. With the rising fuel and food prices as well as the weakening dollar, it can be expected.

But even with such sluggish market, many experts believe that there is no better time to buy a real estate property than now. Mortgage rates are low and homes have never been this affordable. With some patience, buyers could even find treasures among the many foreclosed properties up for grabs! The key, of course, is using good foreclosure listings to track down hot leads conveniently and easily. When it comes to providing the best leads, buyers can rely on Foreclosed Properties Data.