U.S. Loan Program May Have Made Things Worse

Experts: $75 billion effort to fight foreclosures has hurt some homeowners

by: Peter S. Goodman
New York Times
Jan. 1, 2010

The Obama administration's $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program "Making Home Affordable", has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in an often-futile efforts to keep their homes, which come see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Read the rest of the article

Employer Assisted Housing (EAH) The Smart Right Thing to Do

Later today members of ACAR's Home From Work Task Force will be presenting our version of Home From Work (called Welcome Home Idaho) to the Boise Metro Chamber. Not to a monthly membership meeting, but to the staff management as an HR benefit for Chamber employees.

What's "Welcome Home Idaho"? ...Thanks for asking....Welcome Home Idaho is one of our critical initiatives for 2010.

"Welcome Home Idaho" is a sure fire way to make our Valley more attractive to employers considering expansion or relocation. Its a guaranteed way to increase responsible home ownership among an employee base. Its a proven way to connect HUD partner agencies (like NHS or IHFA) to people needing home ownership assistance.

Based on the successful HOPE Foundation program in Las Vegas, Welcome Home Idaho prepares REALTORS to help people who are interested in purchasing their first home, but don’t know how to get started or who to trust.

Over the course of two training sessions, HOPE Foundation founder Dawn Lane has trained nearly 50 Valley REALTORS in the Home From Work Essentials.

Last week, during the Bringing Workers Home Housing Summit, NAR Regional VP Jim Johnston addressed the conference on how/what and why this program is so important for Idaho. Here is an excerpt...

"As you know, American homeowners and homebuyers are facing some tough challenges today. According to the Harvard Joint Center for Housing Studies’ 2009 State of the Nation’s Housing Report, at last count, nearly 18 million Americans were severely cost burdened (paying more than 50% of their income on housing). But I’ve learned over the years that great challenges also present great opportunities—opportunities for innovation and creative solutions.

Employer-Assisted Housing, usually referred to as EAH, is one of those solutions; it can help address the housing issues of today’s workforce through a broad range of creative models. By implementing even the most basic EAH benefit, employers can have a positive impact on both their employees and their community.

For employees an EAH benefit can mean: the opportunity to own a home of their own for the first time; more time to spend with their family if they buy a home close to their jobs; and safety and security for their family over the long-term. Despite the challenges, homeownership continues to be one of the best long-term financial investments a person can make. In fact, it is the primary way most families build wealth.

And, there are other more immediate benefits to both homeowners and the community. Studies show that children of homeowners do better in school, and homeowners are more active in their communities.

And let’s remember, Housing Education, a core element of an EAH benefit program, is key to ensuring that prospective buyers are well-informed about the process and understand the financial commitment and responsibility of buying a home."

Read the rest of the Jim's remarks.

Overe the next months we will be bringing you more information about this and other REALTOR programs that will continue our Valley's economic recovery.

NY Times Says What we've All Been thinking

Lucrative Fees May Deter Efforts To Alter Loans
Many mortgage companies are reluctant to help strapped homeowners

By Peter S. Goodman
updated 3:30 a.m. MT, Thurs., July 30, 2009

This week, the Obama administration summoned mortgage company executives to Washington to demand they move faster to lower payments for homeowners sliding toward foreclosure. Treasury officials called on the companies to hire and train more people quickly to field applications for relief.

But industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans.

Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.

Read the rest of the story at MSNBC.

Making Home Affordable Program

What Should You Do If You Think a Servicer Isn’t Following the Making Home Affordable Program Guidelines

Members have called NAR asking what to do if they think that servicers are not following the guidelines for the Obama Administration’s Making Home Affordable Program for modifying eligible mortgages and refinancing Fannie Mae and Freddie Mac mortgages. Here are the recommended steps to take:

1) First, go to http://www.makinghomeaffordable.gov/, the official Treasury website for the Making Home Affordable Program. At the site, determine whether the loan is owned or guaranteed by Fannie Mae or Freddie Mac by clicking “Loan Look Up” on the ribbon on the top of the home page. Only the holder of the loan is allowed to perform this , so do in the presence of your client or after obtaining their written permission.

If the loan is a Fannie Mae or Freddie Mac loan, call (1) 1-800-7Fannie or (1) 1-800-Freddie, as appropriate, describing the specific inconsistency. Do this whether the issue relates to the refinancing or the loan modification program.

2) Next, if the loan is not owned or guaranteed by Fannie Mae or Freddie Mac you can determine if the servicer is participating in the Home Affordable Modification Program (HAMP) by going to the website and clicking “Contact Your Mortgage Servicer” on the top ribbon. To date, 16 servicers are participating, covering more than 80% of all mortgages.
If the servicer is participating, the first step is to contact the servicer using the phone number or email address listed on the site so you can appeal the issue to a supervisor. Be sure to identify the specific provision of the guidance that you believe is not being followed. If the supervisor cannot or will not correct the problem, call 1-800-7Fannie to report the disagreement. Fannie is administering the program for the Treasury Department and will work to resolve the issue.
Making Home Affordable Program Website (consumer friendly)http://www.makinghomeaffordable.gov/
Site for Detailed Information on Making Home Affordable and Other Government Programshttp://www.financialstability.gov/

First Time Home Buyer Tax credit Loan

Sorry to all of the A2A fans this am. We thought that this morning was going to be the "big announcement". Sadly, the glitch we learned about on Monday is still being resolved...but it will be resolved soon.

In a nutshell, FHA lawyers are concerned their customers might be able to accept the "tax credit loan" and be consistent with FHA rules.

We pointed out to them that their legal opinion was based on the rules for the '07 Tax Credit (in which you had to pay it back) and the '08 Tax credit (that you don't).

There's a conference call later today to clear up this point.

BTW - NAR has said that our grant request looks good.