Making Home Affordable Program: The President's plan created to help millions of homeowners refinance or modify their mortgages.

In my quest to find help for homeowners who were caught up in the mess of toxic high-interest adjustable rate mortgages, I found some information regarding a new federal program introduced by President Obama in his plan to help at-risk homeowners struggling to hang on to their homes.

While this program may not help every homeowner in trouble, I found basic information via the FinancialStability.gov website containing eligibility requirements for two options available under the new Making Home Affordable program. On this web site, there is a mini quiz comprised of a few "yes" or "no" answers to determine whether or not a homeowner meets the eligibility requirements under the program. The program has two options available, refinancing or loan modification. From what I have read, to qualify for a refinance under this program, a homeowners' mortgage must currently be a Fannie Mae or Freddie Mac loan. Otherwise, a homeowner may qualify under the programs' loan modification option depending on whether they answer "yes" to all of the following questions:

1. Is your home your primary residence?

2. Is the amount you owe on your first mortgage equal to or less than $729,750?

3. Are you having trouble paying your mortgage? For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)?

4. Did you get your current mortgage before January 1, 2009?

According to information I found on the FinancialStability.gov website, "Servicers received the detailed program requirements on March 4, 2009 and it may take some time before they are fully operational. However, Treasury has encouraged servicers to immediately assist delinquent borrowers at the greatest risk of foreclosure."

Source Link: http://www.financialstability.gov/makinghomeaffordable/modification_yes.html

To find out whether a homeowner can qualify to participate in either of these programs, the following link will take you to the self-assessment tool to find out:

http://www.financialstability.gov/makinghomeaffordable/refinance_eligibility.html

If you are a homeowner in trouble, I encourage you to try the self-assessment tool to see if you are eligible to participate in this program. If you know of a homeowner who would find this information helpful, I encourage you to pass this along.

Fed Action Creates Best Interest Rates in 50 Years, Realtors(R) Report

Just received a news alert about a new Realtor Report regarding how action by the Fed is creating best interest rates in 50 years:

"WASHINGTON, Dec 17, 2008 /PRNewswire via COMTEX/ -- The National Association of Realtors(R) applauds the actions of the Federal Reserve Board in lowering interest rates for home buyers and homeowners who need to refinance. This will significantly impact housing sales, home valuations, and the nation's overall economy" (National Association of Realtors)

(photo: hullstudent.com)

New Low Mortgage Rates May be Out of Reach for Some Buyers!

New lower mortgage rates are out of reach for many buyers because of new stringent qualifying requirements. In a December 3rd article by David M. Dickson, a writer for the Washington Times discusses significantly tighter credit standards, new qualification criteria, and how mortgage rates dramatically dropped after the Fed announced its plan to "spend $600 billion dollars to purchase debt and mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae" (Dickson).

To read entire article, click here: Mortgage Rates May be Out of Reach for Some Buyers

Feds Bail Out Fannie Mae and Freddie Mac

Just an hour ago, Malden Read, a reporter for the Washington Post, annoucned that the Feds are bailing out Fannie Mae and Freddie Mac. According to Read, this move by the Feds, "could aid a recovery of the broken U.S. housing market and arrest a slide in stock and credit markets worldwide."

Read the full story:

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/08/AR2008090800542.html

Home Buying Experts Warn - Builder Loan Fine Print Could Cost You Thousands

Here is an interesting news release by the National Association of Exclusive Buyer Agents about what buyers should look out for when dealing with a builder's mortgage company:


AVONDALE, Ariz., May 19 /PRNewswire/ -- The home loan packages offered by builders are often touted as being very convenient. But when it comes to evaluating the true benefits the picture is often quite different, according to the home buying specialists at the National Association of Exclusive Buyer Agents, (NAEBA). Recent difficulties in the mortgage marketplace bear this out.

"Mortgage shopping can take a significant level of sophistication. In addition, negotiations with a builder's mortgage company can sometimes be stressful and costly," stated Barry Nystedt President of NAEBA. "Home buyers still need to compare the builder's loan offerings to what is available on the open market. Complications arise when the buyer becomes obligated to the builder's lender without being able to compare the rates and fees other lenders may offer months later when the home is complete. Sometimes the builder's lender takes advantage of a buyer by providing an overpriced loan, which the buyer accepts, not wanting to risk losing the builder's incentives."

Read the full news release from the National Association of Exclusive Buyer Agents (NAEBA)

The House Passes H.R. 3915: The Mortgage Reform Bill!

Some interesting news that will impact the mortgage industry.

"On Thursday, by a vote of 291-127, the House passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, sponsored by Representative Brad Miller. The bill would enact standards on mortgage brokers, lenders, and Wall Street companies. Brokers and lenders would be responsible for guaranteeing that borrowers will be able to repay "adjustable rate" mortgages that will reset to higher payments in the future. They would also have to show that refinancing is to the borrower's advantage. Mortgage brokers and loan officers would have to be licensed and registered with the government."

Good Information: How to Shop for a Mortgage Today

A recent article in Kiplinger’s Personal Finance magazine entitled, “How to Shop for a Mortgage Today,” by Pat Mertz Esswein, discusses the new lending environment in the mortgage market. In general, it touched on the major changes that will be affecting homebuyers. However, one specific point stood out that illustrates the importance of an improved credit score, as well as, the impact on monthly payments:

Is it worth waiting to buy until I can improve my credit score?

“Probably. The average rate on a 30-year fixed-rate mortgage is typically at least 1.5 percentage points lower for someone with a credit score of 760 to 850 than for someone with a score of 620 to 639. On a $216,000 loan, a borrower with a top-tier score would pay $232 less per month -- a saving of $2,784 per year -- than a borrower near the bottom, according to MyFICO.com.”

Cite Source: Klipinger.com

The Mortgage Meltdown, and What it Means for Homebuyers

We live in chaotic times, and now with foreclosures on the rise, this chaos has extended itself to the mortgage market. The impact of this has caused mortgage investors to lose confidence, which has reduced the amount of cash available for new loans. A recent news piece by the Associated Press reported that, “The shocks to the industry are siphoning lenders and cash away from the market, which reduces competition and restricts people’s access to home loans.”

With the loss of available cash for new loans, lenders have tightened their lending requirements, and some lenders have been forced to go out of business—filing for bankruptcy. According to an article by RISMEDIA entitled Mortgage Mayhem, the reason for the fiasco in the mortgage market, “…is largely based on the fact that market conditions in both the secondary mortgage market and the national real estate market have deteriorated to the point that many mortgage businesses are no longer viable or as profitable as before.”


So what does this mean for homebuyers?

It means that it is now more difficult for buyers with less-than-perfect credit to qualify for a mortgage. The Associated Press had quoted George Hanzimanolis, president of the National Association of Mortgage Brokers , “lenders have raised the minimum credit score that qualifies for financing. Most lenders now require bigger down payments, he said, and are eliminating exotic loans or making them more difficult to qualify for.” He mentioned, “The silver lining is that people with good credit who can document their income have the same access to home loans as they did a year ago.”

First time homebuyers will have a tougher time buying their first home, but hope is not completely lost. The condition in the mortgage market now requires first-timers to do a little more planning, and more saving for the future. Buying a home is not only one of the biggest financial investments of a person’s life, but it is also one of the biggest responsibilities. It is worth taking the extra time to plan and wait—making sure that all financial considerations are in order, saving enough money for a larger down payment—with some savings left over—and making sure that credit scores are brought up to justify a lower interest rate.

If a buyer's income is good, but for whatever reason, they cannot qualify for a mortgage, then there is the option of lease-to-own. This is a good way for buyers to be in a home, while improving their situation to qualify for a mortgage in the future. Considering the current condition in the mortgage market, more sellers might be willing to entertain such an arrangement if buyers can demonstrate that they have a steady job situation, and they can support the monthly lease payments.

Buyers will benefit in the long-run from the stability that results with making smart financial decisions. Timing is everything, and this principle certainly applies to buying real estate.

New Learning Tools for Consumers from Mortgage Brokers Association

The Mortgage Brokers Association recently announced a new resource for consumers to help them make informed decisions about mortgages, and to teach them how to compare mortage products, as well as, how to choose the best one for themselves. This comes in response to the recent mortgage crisis that occurred within the subprime market. MBA is taking a leadership position in creating the resources needed to empower consumers, so that this crisis is not repeated in the future.

To quote the MBA's message from the home page of their new web site:

HomeLoanLearningCenter.com

"The HomeLoanLearningCenter.com provides step-by-step information on how to become financially literate. Armed with the facts, your next move could be into your own home. Learn about credit reports and scores; the true cost of owning a home; and how to compare the costs of owning versus renting a home. The Web site provides in-depth, easy-to-read home loan product information in the All About Mortgages section, which includes information on how to qualify for a loan, what the documents mean, what's in the mortgage payment and mortgage calculators to help consumers plan their payments."