Actively seeking some success stories about the loan modification, they are few and far between.  Instead we read about how one part of a mortgage company is uninformed about what the other is doing.  Take for example the Franklin family of Airville, Pennsylvania.  They applied for and faithfully adhered to the loan modification program guidelines.  However, the day after Christmas they received a letter stating that foreclosure proceedings had begun.  This after their credit was ruined and they ended up owing more than their original amount after months of paperwork and red tape.

The Red Tape Chronicles of MSNBC reveals that the company said a mistake had been made, but the Franklin family does not believe it,

On a single day in early January, she [Debbie Franklin] says, one Chase representative told her that the loan modification plan had been denied, another said it was approved and a third told her the foreclosure had been “suspended.”

“I check my county auctions every Monday to make sure my house isn’t on there,” she said. “I don’t believe anything they say anymore.”

My advice to the Obama Administration is to focus on real mortgage relief rather than just rescuing the housing market.  There are people able to pay for mortgages but unable to refinance because homes are not worth as much as their mortgages. With a simple loan modification like reducing the interest rate, that $200 or $300 could be the difference between someone keeping or losing their home.

The flip rule requiring sellers to own a property for 90-days before selling to buyers obtaining FHA loans remains suspended for another six months.  The Department of Housing and Urban Development is waiving the rule to combat the effects of vacant and abandoned homes.

According to the HUD web site,

To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

The relaxed rule may be having some impact, but the benefits are more likely being enjoyed on a case-by-case basis.

Following the mortgage meltdown in 2007, lenders came under federal scrutiny for their loose financing standards which helped start the housing free-fall.  As a result, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (or SAFE Act) was passed by Congress.  On October 1st, the final rules will take effect, including a mandatory registration for mortgage brokers.

According to MSNBC, fingerprinting and background checks will be a part of the registration along with mandatory education,

Industry sources say that thousands of brokers have gone through mandatory education, credit checks and state and federal testing in order to retain the right to handle mortgage originations.

The process has thinned the ranks of brokers, who may be even fewer soon given talk of a 30 percent fail rate on testing, said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.

While it may be bad news for many brokers, overall the consumer will gain from a more informed and educated lender.  If everyone else in the housing industry is accountable for their work, so too should be lenders.

At the height of the new vampire craze in popular culture, why not talk about the fangs that Fannie Mae is growing when it comes to collecting deficiency judgments!

With Fannie Mae on board during the TARP bail-out and with their tacit approval of sub-prime mortgages via their purchase of the same, you’d think they would be more forgiving to home-owners who default on their mortgages.  Instead, Fannie Mae is getting ready to sink their teeth into former real estate owners who walk away from their homes in a strategic default.

For another article about Fannie Mae’s lead in showing banks how to go for deficiency judgments, click here.

Of course, the case can be made for personal responsibility - that the homeowners knew when the made the purchase that the future value of the property could not be guaranteed - so they need to stand by their fiduciary promise to pay the note.  However, it’s just not fair to ordinary folks when the fat cats get away with the same thing and all is forgiven, according to Virginia Broker Lenn Harley,

IF THE AMERICAN HOME OWNER IS IN A POSITION OF NEGATIVE EQUITY, WHY CANNOT THEY CLAIM A FINANCIAL LOSS FOR TAX PURPOSES AND “WRITE IT OFF” as a corporation can do when they lose money on investments or P&L???? Why is the American home owner the entity that many would FORCE to have to HOLD THE PROPERTY WITH NO MARKET VALUE, LIVE IN IT AND CONTINUE TO PAY FOR IT WHEN IT NO LONGER MAKES ANY FINANCIAL SENSE.

The corporation USES THE TAX LAWS TO MITIGATE THEIR LOSSES.

Only the American home owner is forced to live in and continue to pay for their financial loss even when they didn’t make the decisions that caused the loss.

While I disagree with her political finger-pointing because both sides of the aisle deserve equal blame, her points are valid.  Would you ever do a strategic default?

Members of Congress let it tick down to the wire, but on June 30th they passed an extension for the closing date that will impact about 200,000 home buyers.

Read all about it here, but in a snapshot,

Previously, buyers had to be under contract by April 30th (that’s still true), but had until June 30th to close in order to qualify for the $8000 first-time home buyer tax credit (or $6500 for buyers who have owned five consecutive of the last eight years).  The measure extends the closing date to September 30, 2010.

I do have one buyer who is quite relieved.  Although he and his wife had a “clear to close” we learned that HUD hadn’t recorded their name to the deed upon foreclosure so the closing has been delayed until the title company refiles and the county records the name.  Their closing has been delayed until mid- to late-July.

I was happy to make that $8000 phone call to him!

Thank you, Congress.

Photo by Digital Planet Design.

ne of my first-time homebuyers will not get the $8000 tax credit this week.  They were under contract to buy an amazing HUD house, but when the loan went to closing - lo and behold - HUD hadn’t filed the warranty title deed correctly, so now we have to wait about two weeks for it to be cleaned up.

Which means closing won’t happen until mid July.  Which means the deadline of June 30th to close to get the tax credit will have expired.  Which means my buyers lose out on the $8000.

The feds mess up a federal program.

I do not bang the anti-government drum by any means - in fact I think most government programs that help boost the economy and help people are good.  However in this case I find it ironic that it’s a federal agency that is costing my buyers from benefiting from another federal program.

There have been efforts to extend the closing date for the nearly 200,000 buyers who will otherwise miss the deadline, but the Senate killed the measure last week.  While the Wall Street Journal reports there may still be a chance of the closing deadline being extended, there is no guarantee that the House and Senate, Republicans and Democrats, can get along long enough to make it happen.

But I’m keeping my fingers crossed on behalf of my first-time homebuyers.

Here’s more about the failed effort to extend the deadline.

While it might be in good jest for certain red haired comediennes to be on the D-list, Fannie Mae and Freddie Mac’s impending delisting on the New York Stock Exchange caused shares to plunge yesterday.  According to CNN Money.com,

FHFA said in a statement that the planned delisting is due to the weak stock price for both firms, and not due to any determination about a change in condition at the firms or decisions about their futures.

“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said FHFA’s acting director Edward DeMarco in the statement announcing the move.

The main worry is investor confidence.  Investors are willing to risk more on government backed securities than on privately owned, so we could see an investor meltdown.

June 28, 2010 is the D-Day for D-Listing.

I wrote over at Shak & Jill that tomorrow is a HUGE closing day across the country because home buyers taking advantage of the federal tax credit for first-time home-buyers don’t want to delay closing until the last minute so it’s this week and next week that title companies are extremely busy.

To qualify for the tax credit, purchase and sales contracts needed to be binding by April 30th and the mortgage loan must close no later than June 30th.  However according to MSNBC, Senate Majority Leader Harry Reid is proposing an extension,

Senate Majority Leader Harry Reid, D-Nev., said Thursday he wants to give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

From the real estate perspective, the National Association of Realtors is pushing for agents to contact members of Congress to grant the extension.  The extension would be partnered with extending jobless benefits until the end of November.

What do you think?  It’s not a new tax credit, just an extension of the one whose deadline is looming.  20 days and counting.

Photo from 3 Chic Chicks and Chicken Scoop for the Soul.

Mortgage rates have been creeping up slowly, but are still fairly steady so far this year.  Right now the average mortgage interest rate is 5.07 percent for a conventional 30-year fixed rate loan.  Buyers are getting FHA interest rates at about 5.35 percent, with at least 3.5 percent expected for down payment.

Meanwhile stocks are on the uptick for home builders as we’ve seen a surge in new home sales int he last month.  From a personal level, my view is that we’ll see April as the best month we’ve seen in real estate in two years with home under contract.  Buyers are rushing to beat the deadline of April 30th to be under contract so they can receive the $8000 first-time home buyer tax credit.

In this past week alone, I’ve written three contracts and I’m not a mega seller like other agents.  However, once the deadline passes, it’s fair to say that lenders and real estate agents alike are very concerned about where the market will go next.

Wall Street major league player Goldman Sachs was charged today by the Securities and Exchange Commission with subprime loan fraud - a charge that the firm vehemently denies.  According to MSNBC.com,

In its lawsuit, the SEC alleged that Goldman structured and marketed ABACUS, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities.

It alleged that Goldman did not tell investors “vital information” about ABACUS, including that Paulson & Co was involved in choosing which securities would be part of the portfolio.

The charges come as the government is looking to expand regulatory efforts that would hold companies and their manager accountable for the nation’s financial crises.  The charges were so severe that the stock market tumbled today by 125.91 points.