Recent Mortgage & Foreclosure News

Surveys indicate that 11% of all mortgages are either behind on payments or in the foreclosure process. 6.9% of prime loans, 36% of sub-prime and 16% of Federal Housing Administration insured loans.
Recently many lenders have imposed a voluntary tempirary halt on foreclosures as they waited out the holiday period and then waited to see what the new administration would propose to help reduce foreclosures.
The federal government is looking at several provisions to help stuggling homeowners.

1st Plan:

• For homeowners who can prove they are in danger of losing their homes,
• Interest rates lowered to as low as 2%
• Up to $5K reduction to principal balance
• Lengthen the length of the payback term of the mortgage
• All in an effort to reduce payments to 31% of their income (a magic affordability number in the industry)

2nd Plan:

• Enable refinancing of mortgages for people who owe more than their home's worth (up to 105%)
• Only applies to loans guaranteed by Freddie and Fannie

Lastly, a plan proposed by the Obama administration, called "cram-down" would enable bankruptcy judges to modify mortgage contract terms of interest rate or principal balance for people going through bankruptcy. This has banks and others very nervous as it could raise the costs and the risks for making mortgage loans. With banks, risk = interest rate.

This plan concerns me as I believe it would make it harder for people who should be able to get a mortgage to get a mortgage and also would raise interest rates at a time when we are trying to make homes more affordable.

Stay tuned, more to come!