Fannie Mae announced it is suspending foreclosure sales on occupied properties as well as extending the eviction halt through March 6 while awaiting implementation of the Administration’s national foreclosure prevention and loan modification program
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Homeowner Affordability Stability Plan (or Initiative) **specific details of the plan will be released March 4th when the program officially begins.
Of 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth.
plan aims to keep between 7 million and 9 million people from foreclosure.
plan encourages refinancing by allowing four to five million “responsible” homeowners whose loans were owned or guaranteed by Fannie Mae or Freddie Mac to refinance their mortgages.
the allocation of $75 billion to provide encouragement for homeowners on the verge of default to modify their loans. Lenders will be encouraged to lower interest rates for up to five years.
the Treasury Department will match the difference between the original rate and the adjusted interest rate. Lenders also have the option of reducing the principal balance on the mortgage loan, with Treasury sharing in the cost to the lender.
The Administration will also take steps to reform bankruptcy laws so that judges reduce home mortgages on primary residences to their fair market value -- as long as borrowers pay their debts under a court-ordered plan.
Treasury will give incentives of $1,000 to loan servicers for each mortgage eligible for modification and will pay up to $1,000 annually for each year the borrower stays current on the loan. Incentive payments of $1,500 would be paid to borrowers holding at-risk loans if they are able to restructure their loans prior to falling behind on loan payments and an additional $500 would be paid to servicers assisting those borrowers.
Federal Deposit Insurance Corp. to create an insurance fund of up to $10 billion to discourage lenders from foreclosing on mortgages that could have been modified. Mortgage holders could be paid an additional insurance payment for each modified loan they hold, if the home price index declines.
Per HUD, the accrued mortgage late charges should be waived by the lender at the time of the loan workout.
the plan will increase Treasury’s funding commitment to Fannie Mae and Freddie Mac and the Federal Reserve will continue to purchase long-term mortgage securities to maintain stability in the mortgage market.
will broaden the scope of the government rescue by focusing on homeowners who are still current in their payments but at risk of default.
puts billions of federal funds into enticing servicers to modify the loans of those who've already stopped paying.
The program would not only give servicers $1,000 for each modification, but would give them another $1,000 a year for three years if the borrower stays current. It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.
Uniform modification guidelines: the administration intends to generate uniform guidelines for loan modifications. The guidelines, would be in place in two weeks, used by Fannie and Freddie, and the administration will work to get them implemented throughout the mortgage industry. In addition, all financial institutions receiving bailout cash from the government going forward will be required to use them as well.
would provide a set of incentives to mortgage lenders to convince them to help up to 4 million borrowers on the verge of foreclosure. The goal: cut monthly mortgage payments to no more than 31 percent of a homeowners income.
under water — dwellings whose market value have sunk below the principal still owed on the mortgages. program will help 4 million to 5 million families — if their mortgages are owned or guaranteed by Fannie Mae or Freddie Mac.
homeowners don't need to be delinquent in order to get help.
relief would be almost instantaneous, basically as soon as rules are published March 4.
The biggest players in the mortgage industry already had halted foreclosures pending Obama's announcement.
The plan would help borrowers who owe more than 80% of their home's value to refinance and reduce their monthly payments.
But only those who are current on their payments and whose loans are held or guaranteed by Fannie Mae and Freddie Mac are eligible.
The new mortgage, including refinancing costs, can't exceed 105% of the current market value of the property, excluding many of the hardest hit.
allows borrowers to refinance into 15-year or 30-year fixed-rate mortgages at the current market rate, which hovers around 5%.
The effort would help borrowers -- both those current and delinquent -- who live in their homes lower their monthly payments for five years. The servicer would reduce interest rates so that the monthly obligation is no more than 38% of a borrower's income and then the government would kick in money to bring payments down to 31% of the homeowner's income.
Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.
Those with total debt -- including credit cards and auto loans -- equal to 55% of their monthly income must enter a debt counseling program to qualify for a modification.
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Home construction drops far more than expected, Conditions in the market for new homes have not been this bad since the 1930s
Construction of new homes and applications for future projects both plunged to record lows in January as all parts of the country showed big declines in building activity.
analysts said they still do not expect a turnaround in housing until late this year at the earliest.
construction of new homes and apartments dropped 16.8 percent last month to a seasonally adjusted annual rate of 466,000 units. That's well below the 530,000 units economists expected, and was the slowest pace on records dating back a half-century.
Applications for building permits, considered a good barometer of future activity, also dropped to a record low, falling 4.8 percent to a rate of 521,000 units, slightly below economists' expectations.
reduction in new projects should aid the housing market in the long run as fewer properties for sale help increase competition and stabilize prices for those left on the market.
housing construction will continue to decline in the months ahead.
we will see a bottom in 2009 and by the end of this year we will start to see the beginning of a recovery. But it will be a slow recovery because of the significant overhang of empty houses for sale.
More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years.
Construction dropped 42.9 percent in the Northeast to a record low of 36,000 units at an annual rate. Building fell 29.3 percent in the Midwest to a record low of 53,000 units, while it dropped 12.8 percent in the South to a new record low of 246,000 units. Construction activity fell 6.4 percent in the West to an annual rate of 131,000 units, the slowest pace since October 1966.
For all of last year, the number of housing units builders broke ground on totaled 906,200, also a record low. That was down from 1.36 million housing units started in 2007.
Tighter lending standards, rising defaults and fear about the housing market's future have sidelined buyers.
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The Federal Reserve said the economy will actually shrink and unemployment will rise higher.
the unemployment rate will rise to between 8.5 and 8.8 percent this year.
the economy will contract this year between 0.5 and 1.3 percent.
negative forces have plunged the nation into a recession, now in its second year.
unemployment — now at 7.6 percent, the highest in more than 16 years — will keep climbing and stay elevated for quite some time.
unemployment would remain "substantially" higher than normal at the end of 2011 "even absent further economic shocks."
The Fed forecast calls for the jobless rate to dip to between 8 and 8.3 percent next year, and to between 7.5 and 6.7 percent in 2011.
the economy should grow between 2.5 and 3.3 percent next year.
the pace of recovery in 2010 would be damped," according to the Fed documents.
the economy would pick up speed in 2011, growing by as much as 5 percent.
it could take five or six years for the economy and employment to get back into a sustainable mode of health.
On the inflation front, companies will keep a lid on price increases this year.
The Fed expects prices to rise between 0.3 and 1 percent this year.
America's last serious case of deflation was during the Great Depression in the 1930s.
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State Rankings 2007
For the fourth consecutive year, New Hampshire was named the nation’s Most Livable State by Morgan Quitno Press
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First-time buyers
First-time homebuyers have exactly 285 days to buy a home if they want to pocket $8,000 tax-free.
can claim a credit worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
will bring an additional 300,000 new homebuyers into the market
the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount.
Three scenarios:
1: final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since
you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
2: final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this
scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
3: final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009.
Buyers may not have owned a home for the past three years to qualify as "first time" buyer.
They must also live in the house for at least three years, or they will be obligated to pay back the credit.
income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.)
Applying for the credit will be easy - Just claim it on your return.
domino effect, because each first-time homebuyer sale will lead to maybe two more trade-up transactions down the line. many homeowners would be trading-up but they have had no buyers for their own homes.
Who won't benefit, first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one.
Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
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The mortgage meltdown has prompted a steep decline in prices. Nationwide, prices have fallen 17.5%, back to the level they were at in fall 2004.
FORECLOSURE Tactic
Some homeowners are stalling foreclosure by asking their lender to produce the original mortgage paperwork.
HOUSING STARTS
Construction of new homes and apartments dropped 16.8 percent in January to a seasonally adjusted annual rate of 466,000 units and was the slowest pace on
record, according to the U.S. Commerce Department.
ECONOMIC BAILOUT
The 20 largest banks that received U.S. government rescue funds slightly reduced their lending to consumers and businesses in the last three months of 2008.
The National Association of Home Builders (NAHB) has launched a consumer Web site with detailed information and an extensive list of frequently-asked
questions. found at: http://www.federalhousingtaxcredit.com/
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