Home Loan US

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By Stephanie Armour and Paul Wiseman, USA TODAY

A federal program that has cut mortgage payments for more than 500,000 homeowners since spring is falling well short of what’s needed to fix the nation’s foreclosure crisis, warns a congressional panel’s report out Friday.”We’re concerned that not enough foreclosures will be prevented,” said Elizabeth Warren, who chairs the Congressional Oversight Panel for the $700 billion financial bailout program approved last year.

The panel’s report says the government’s mortgage modification program has three key problems:

•The kinds of mortgages that will make up growing numbers of foreclosures exceed the program’s eligibility requirements.

•With a goal of modifying only 25,000 to 30,000 loans a week, fewer than half of the predicted foreclosures would be avoided. One in eight homes are currently in foreclosure or default and 250,000 additional foreclosures are initiated monthly.

•Many modifications so far are still in a three-month trial period. As of Sept. 1, only 1,711 homeowners had received permanent modifications under the federal program. And after five years, many will see higher payments.

“The result for many homeowners could be that foreclosure is delayed, not avoided,” the report says.

Warren noted that the foreclosure problem has moved beyond subprime mortgages and that rising unemployment will cause more foreclosures.

The government’s program “appears to be targeted at the housing crisis as it existed six months ago rather than as it exists today,” she says.

Her panel’s cautionary report follows a more positive assessment Thursday by administration officials.

Under the federal program, the pace of trial modifications now exceeds the weekly pace of completed foreclosures, said Housing and Urban Development Secretary Shaun Donovan.

That means there are more families getting modifications through the federal program each month than families losing their homes to foreclosure, officials say.

“The fact we now have a pace of trial modifications that exceeds the pace of weekly foreclosures is a very important milestone,” Donovan said. “We believe we’ve reached an important turning point.”

Administration officials acknowledge that the start of a housing turnaround could still sour.

“We’re still living with the risk that housing is going to be a source of weakness in the economy,” says Treasury Secretary Timothy Geithner.

WASHINGTON DC — Fannie Mae (FNM/NYSE) today began making two new initiatives — Home Affordable Refinance and Home Affordable Modification — available to its servicers and borrowers as part of the Obama Administration’s Making Home Affordable program. The two initiatives are designed to significantly expand the numbers of borrowers who can refinance or modify their mortgages to a payment that is affordable now and into the future.

“Making Home Affordable provides crucial tools to mortgage lenders and homeowners coping with financial hardship and declining home prices,” said Herb Allison, president and chief executive officer. “Potentially millions of homeowners could qualify for and benefit from these initiatives. The people of Fannie Mae will do all they can to make the program a success for homeowners across America and to advance the nation’s housing recovery.”

Home Affordable Refinance

Home Affordable Refinance includes new refinancing flexibilities for homeowners whose loans are owned by Fannie Mae. Key features include:

• Additional Flexibilities: Most borrowers refinancing an existing Fannie Mae loan will not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home’s value. Any existing mortgage insurance may be carried forward to the new loan. In addition, Fannie Mae can refinance loans up to 105 percent of a home’s value with this new flexibility, so even borrowers who are “underwater” — who owe more than their home is worth — may be able to refinance. This will expand the number of borrowers able to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
• Streamlined Processing: Beginning in April, all 1,600 lenders and 29,000 mortgage brokers using Fannie Mae’s Desktop Underwriter® platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.

Home Affordable Modification

Through the Home Affordable Modification, Fannie Mae will work with loan servicers across the country to help distressed borrowers modify their current loan into a mortgage that is more affordable and sustainable. Loan servicers participating in the program may reduce interest rates, lengthen the payment time frame or take other steps, such as principal forbearance, to bring the monthly payments down to as low as 31 percent of the borrower’s gross (pre-tax) income.

To ensure borrowers currently at risk of a foreclosure have the opportunity to apply for a Home Affordable Modification, Fannie Mae servicers have been directed not to proceed with a foreclosure until a borrower has been evaluated for the program.

Finding Out if a Loan is Owned by Fannie Mae

Borrowers can find out if their loan is owned by Fannie Mae in one of two ways:

• Call your current mortgage lender or servicer. The phone number should be on your monthly mortgage statement or monthly coupon book.

• Contact Fannie Mae. Call 1-800-7FANNIE (8 a.m. – 8 p.m. EST) or visit http://www.fanniemae.com/homeaffordable.

Fannie Mae also intends to make an online tool available later this month so borrowers can look up their loan and determine if it is owned by the company.

Brokers today received a brief email with the following announcement from David M. Vach, President of USA Home Loans, Inc.:

“The unprecedented liquidity problems that continue to plague the mortgage industry have caused USA Home Loans to indefinitely suspend its’ Wholesale Operations. Without the ability to obtain required funds in a timely manner from our secondary partners, we cannot commit to the level of service that we expect and the customer deserves in a mortgage transaction. We regret that this comes abruptly in the midst of a surge in refinance business, but we hope that it is understood that we have made any and all attempts to remedy this situation before making this unfortunate decision. We apologize for any inconvenience that this may cause to any of our brokers who have recently submitted new business. USAHL will not be closing any more wholesale loans as of January 30, 2009. Any loans that have been closed up to that date will be funded in a timely manner subject to the availability of those funds from our warehouse lenders.”

Said one AE to their clients, “This news has come as a shock to me as much as you…”

With its headquarters in Towson, MD, USA Home Loans was doing business in 34 states. The Wholesale sales team was comprised of eight account executives. Overall volume for 2007 averaged just above $28 million per month, about 75% of which was attributable to wholesale according to a source we spoke with.

Retail remains in operation, we were told, with “over 150 loan specialists” per the division’s web site. There are also two branch offices in Fallston, MD and Langhorne, PA.

WASHINGTON – The National Association of Realtors reports that sales of vacation homes and investment properties slid 30 percent last year as tough economic conditions and tight lending requirements shut out buyers.

The Realtors group also said Monday that median sales prices of vacation and investment homes dropped 23 percent to $150,000 as problems in housing market stretched to the second home segment.

Home sales were down across the board in 2008. The Realtors group said sales of primary homes declined 13 percent to 3.77 million last year.

Conducted in March, the 2008 Investment and Vacation Home Buyers Survey includes 1,924 responses.

US President Barack Obama has pledged 220 billion euros to stem the wave of home foreclosures that sparked financial meltdown in the US.

Unveiling the latest phase of his effort to lift the country out of recession he said: “Through this plan we will help between seven and nine million families restructure, or refinance their mortgages so they can avoid foreclosure.”

He was quick to stress he was not coming to the aid of dishonest lenders.

“But I also want to make it clear about what this plan will not do,” he said. “It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.”

The announcement follows the signing of a landmark 620 billion euro economic stimulus package.

US Treasury Secretary Timothy Geithner said he expects the plan to quickly help the housing market and that it would “bolster the drive to restore the financial systen to good health”.

Sixty billion euros will subsidise homeowners struggling to pay their mortgages.

Mortgage companies like Fannie Mae and Freddie Mac can now invest eighty billion euros to mop up more home loans and spur fresh lending. And Washington will be able to inject a further 80 billion into each of the mortgage giants protecting them against losses as they expand their massive reach into the housing market.