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Another Life Raft is Thrown to Homeowners
July 29th, 2008 categories: Foreclosure, Mortgage, Real Estate News
Bank owned, foreclosure, short sale. These are words that run down the streets of Sacramento, Elk Grove, Natomas, Folsom, Roseville, Granite Bay and more cities.
We may not like to admit it but there are more bank owned homes on the real estate market than you can imagine throughout the U.S.
After returning home from a Real Estate conference, several of the offers my home buyers had made were accepted by the bank which means we begin our discovery period or disclosure period. Yes, short sales are being accepted and of course REO’s. But, it’s important to have the mind set that the banks are selling the property as-is and if you can’t handle that…then short sales and foreclosures are not for you.
Banks accept no liability and sell the property as-is, they reduce the commissions to the agents and want to keep as much of the proceeds as possible. Do any of us like it? NO! However, the sooner we get through all these short sales and foreclosures, the sooner we will have a steady real estate market. So, I’m all for getting this over with!
The Housing Rescue Bill may help some homeowners avoid foreclosure by rewriting their loans. This is not for investment property, so investors…if you are upside down, sorry there are no programs for bail out. This bill is for those living in their homes and will begin October 2008.
CNN Money has an excellent article that further explains the housing rescue bill.
If you live in your home, have loans that were issued between January 2005 and June 2007 and spend 40% or more of your income on your household debt, then you may qualify for this new relief.
In order to apply for Housing Rescue you can contact your current mortgage servicer or talk to an FHA-approved lender. You can find approved FHA lenders on the Internet at www.hud.gov/ll/code/llsicrit.cfm
It’s important to remember that this is a voluntary program so lenders holding the original mortgage may or may not agree to rework your loan. The bill requires lenders to make major concessions, meaning to write down the value of the loan to 90% of the home’s current value.
Obviously, there is a considerable loss by having the mortgage Lender write down the mortgage to 90% of the home’s current value. Here in lies the dilemma…is that amount less or more than the cost of foreclosing on the house? This is exactly what the mortgage service providers will be looking at when determining if they have a buy in on this program with FHA.
Do you think this will solve the foreclosure problem in the U.S.? How many mortgage service providers do you think will chose to write off original loans to 90% of the market value? And since the FHA portion of this bill won’t go into effect until October, how many troubled homeowners do you think will apply for this program?
Is this a little too late or will this be the illusive panacea that troubled homeowners unable to meet their mortgage obligation with lower home values have been anticipating?
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Other Articles of Interest:
Search Foreclosure Homes For Sale For Free
The Lights Have Gone Out For Many in Foreclosure
Short Sale and Foreclosure Real Estate Tax News
Sacramento Real Estate Writes Letter to All Banks
