Your Property Path Real Estate News Brief

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com /

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Snap News updates real estate markets and all things of interest to property owners and real estate professionals

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January 14, 2009

Is it a Bail Out or Is It Bail

Its easy to hate the financial system that broke itself and most of the world, especially when they need even more or our money. They simply are not lending and the danger is an ever deeper world economic crises.

Advice for Obama:

"The incoming administration and the Congress are currently discussing a substantial fiscal package that, if enacted, could provide a significant boost to economic activity," Bernanke said. "A modern economy cannot grow if its financial system is not operating effectively," Bernanke said during a speech at the London School of Economics. (via marketwatch.com)

Basically he is saying that the banks are central to the crises and if you dont fix them now this crises will get worse. Bush has already released the last half of TARP, about 350 billion and Obama has every intention of using at part of this for foreclosure relief.

Its clear that we are not sure how to spend this money. I like the Obama direction of simply investing in America and bringing its infrastructure into the 21st century, but that is long term and we are hurting in the short term.

Bernanke, Obama And The FDIC

Obama and the FDIC
Obama has assured Congress that a good deal of the new money from TARP Program would be used to help homeowners refi and escape foreclosure. The FDIC's Blair also has a plan to reduce mortgages and increase workouts so that they are performing according to expectations. Today, the mortgage workouts are redefaulting at an alarming rate of 50% within the first six months of the work out.

Bush, Bernranke and Paulson
The outgoing administration has refused to use TARP money for foreclosures, insisting that its key to shore up the banks, so that they will lend and companies facing a shortage of cash will be able to stay in business and people will pay bills.

Earnings are out for the banks and they are losing a lot of money because more and more are defaulting on credit and car loans as well as mortgages. Citigroup is now below $5.....sad that six months ago it was the largest bank in the world.

But Bernanke is warning Obama that most of the remaining $350 billion - and possibly more - has to go to shoring up banks if they are to resume lending at anything approaching normal levels. Whats not clear to me is, even if you continue to shore up the banking system, that they will loan. The money already given to banks has not really been used to keep the economy's wheels in motion, but for mergers and bonus's. Quite a pickle.....

Thanks for Reading

Howard Bell

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com /

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Snap News updates real estate markets and all things of interest to property owners and real estate professionals

super deals on agent open house tools We hand picked Amazon for the tools you need

January 10, 2009

Loan Modification: A Primer

Loan Modification: What is it

A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Quite frequently they involve an interest rate reduction for a specified period of time so the homeowner can continue to make payments and stay in the home. Loans can also be modified so they have a longer amortization term, a 40 year instead of 30 year loan. Principal writedowns are rare, but they do indeed happen.

A simple Q&A on loan modification- What you need to know

(sourced from the HUD site)

Can the mortgagee include all fees and corporate advances?

Yes, when the lender looks to modifying your loan, they can include all fees and advances as part of the principal balance

May a mortgagee perform an interior inspection of the property?

Yes. The lender can do a home inspection to determine damages to the property which may impact the lenders decision.

Can a mortgagee include late charges in the Loan Modification?

No. Late charges should be waived at the time of the loan modification

Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?

Yes. The new basis interest rate is 200 points above the monthly average yield on the 10 year U.S. Treasury.

Are mortgagees required to perform an escrow analysis when completing a Loan Modification?

Yes. Mortgagors are required to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

According to a study done by the OCC, defaulting mortgages are re-defaulting at an alarming rate. After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent,” the Comptroller of the Office of Thrift..

The FDIC has a plan:

1. Housing payments for delinquent borrowers two months or more late would be reduced to 31% of gross monthly income.

2. Mortgage rates could be set as low as 3% for five years, before increasing at an annual rate of 1 percentage point until they hit the prevailing market rate.

3. Loan terms could be extended to as long as 40 years.

4.The government would share up to 50% of the losses if a borrower who had been helped ended up in default anyway. The risk of re-default would be shared with the lender.

Banks are not using the loan modification tools available and people who are desperate to stay in their homes are agreeing to loan mods they know they cant manage. Clearly, we need the Obama administration to require a mandatory loan modification program with enforceable guide lines that benefits main street and effectively keeps people in their homes.

Thanks for Reading

Howard Bell

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com /

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Snap News updates real estate markets and all things of interest to property owners and real estate professionals

super deals on agent open house tools We hand picked Amazon for the tools you need

January 8, 2009

The Future of Freddie Mac

There is a lot of discussion about how to fix Freddie Mac. These entities are now practically nationalized, but that is just the short term. The Govt is looking into how to restructure them and return them to some kind of independence in the marketplace. The U.S. is not in the mortgage business.

Some of the ideas being kicked around for the "new" Freddie Mac" are:

Fully Privatize Freddie; One criticism of Freddie was that it became to big and stopped becoming fiscally responsible. One answer to this problem would be to break up Freddie into much smaller regional entities. This way, if one of the Freddies became so fiscally irresponsible it couldnt cause a national disaster. This is one way to minimize risk. Outgoing Secty of the Treasury thinks that this model would create as many inefficiencies as the existing model.

Paulsson would rather see a kind of Govt mortgage credit guarantor. He thinks that Congress should create private entities that would buy up mortgages guaranteed by the Federal Government. The entities would be regulated with a rate setting commission that would also review and approve mortgage products.

If rates were controlled and mortgage products reviewd, we may find the kind of teaser rates that seduced many into taking on too much risk and signing off on predatory mortgages eliminated. That would allow the Capitalist system to function and yet create strong Governmental oversight to keep the industry from ever making such drastic mistakes again.

The FDIC also has a progrqam to buy mortgages which is gaining ground. These kinds of actions can directly lower mortgage rates and other types of consumer debt. In effect, the Fed is stepping up in big way with the explicit goal of driving down these interest rates. If it is prepared to buy enough debt, it can drive these rates down.

I would also like to see the Fed buy up the 10 Treasury bond that so many variables are tied to. This would in effect, allow the Govt to buy its own debt and lower rates in the process.

Thanks for Reading

Howard Bell

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com /

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Snap News updates real estate markets and all things of interest to property owners and real estate professionals

super deals on agent open house tools We hand picked Amazon for the tools you need

January 1, 2009

Long Term Rates Fall For Ninth Week

Another New Low

30-year fixed-rate mortgage: Averaged 5.10 percent with an average 0.7 point for the week ending December 31, 2008, down from last week when it averaged 5.14 percent. Last year at this time, the 30-year FRM averaged 6.07 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.

The 15-year fixed-rate mortgage: Averaged 4.83 percent with an average 0.7 point, down from last week when it averaged 4.91 percent. A year ago at this time, the 15-year FRM averaged 5.68 percent. The 15-year FRM has not been lower since March 25, 2004, when it averaged 4.70 percent।
Five-year Treasury indexed adjustable-rate mortgages ARMs: Averaged 5.57 percent this week, with an average 0.7 point, up from last week when it averaged 5.49 percent. A year ago, the 5-year ARM averaged 5.78 percent.

One-year Treasury-indexed ARMs: Averaged 4.85 percent this week with an average 0.5 point, down from last week when it averaged 4.95 percent. At this time last year, the 1-year ARM averaged 5.47 percent.

COMMENTARY

Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac's survey began in April 1971, said Frank Nothaft, Freddie Mac vice president and chief economist. "Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan. As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on October 31st and December 26th.

Lower rates and falling house prices are also making homeownership more affordable to potential homebuyers. For instance, house prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller® 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak set in July 2006, the composite index is down 23.4 percent.

Thanks for Reading

Howard Bell

A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF

http://yourpropertypath.blogspot.com /

Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

Snap News updates real estate markets and all things of interest to property owners and real estate professionals