Charlotte Real Estate, Foreclosures, Short Sales

How can the pending Housing Rescue Bill help you if you are facing foreclosure?    The House on Wednesday passed a 300 billion housing rescue bill.  President Bush withdrew his threat to veto the bill that can potentially help thousands of at-risk borrowers to refinance their old mortgages into a new low-cost fixed FHA loan.

There are an estimated 400,000 borrowers with $68 billion in loans that may benefit from the program. 

Who Qualifies for the Program?

To qualify, borrowers must:

Have lived in thier homes and have loans issued between January 2005 and June 2007.

Must be spending at least 40% of their gross monthly income on all household debt.

Prove they can't continue to pay for their existing mortgage.

Must retire any debt such as home equity loans or lines of credit on their home.

Total debt cannot exceed 95% of the home's appraised value.

A voluntary Program

This is a voluntary program, so lenders may be very cautious as to who will be given a rework.  The bill requires lenders to write down the value of the loan to 90%.  This is helpful in areas where prices have dropped in value.  If you originally had a $200,000 home, the refinanced loan will be based on $180,000 at a considerably lower rate.

What is Will Cost the Borrower?

Borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers will also share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Borrowers will agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

What if You Do Not Qualify?

If you feel you do not qualify for the program, still call your lender and inquire about the possibility of a rework on your loan.  If you are still having problems, contact us today and speak with me at (704) 559-5988 X 5.  As a licensed loan officer and contract loss mitigation specialist with lenders who fund loans in NC, I may be able to assist you with some options to help you if you are facing foreclosure in the Charlotte North Carolina area.

Federal Reserve Chairman Ben Bernanke has endorsed major changes to regulations in the financial system.  Bernanke believes that by giving the Fed more responsibility for guarding against financial crises, great power will be given to regulate the activities of key financial players.

In a speech at the Federal Deposit Insurance Corp, Bernanke says "Regulators must consider what can be done to make the U.S. financial system itself more stable without compromising the dynamism and innovation that has been its hallmark,"

Bernanke also partially endorsed a proposal, first made by Treasury Secretary Henry M. Paulson Jr., to give the Fed more explicit power to combat financial crises.  This would allow the Fed to come to the aid of any financial crisis that poses a risk to the system as a whole.

New Rules to Ban Misleading Lending Practices

New rules to ban deceptive lending practices are being vowed by the Fed.  "Besides offering broader protection for consumers, a uniform set of rules will level the playing field for lenders and increase competition in the mortgage market, to the ultimate benefit of borrowers," Bernanke said at an open Fed board meeting.

Bernanke wants a ban on prepayment penalties on such loans if the monthly payment can rise during the initial four years and non-verification of borrower's income and assets.  The new rules also require lenders to establish an escrow account for property taxes and insurance payments. No more no escrow loans.

Reaction to Bernanke

A team of ten state securities regulators drove to the St. Louis headquarters of Wachovia Securities  asking for documents  and conducting interviews about Wachovia's sales and marketing of auction rate securities.  The states represented are  Missouri, Illinois, New Jersey, Pennsylvania and other states, all of which are part of a task force led by Massachusetts.

What are Auction Rate Securities?

Auction rate securities are a debt instrument with a long-term nominal maturity.  The interest rate is reset through a dutch auction.   A Dutch auction is a type of auction where the auctioneer begins with a high asking price which is lowered until some participant is willing to accept the auctioneer's price, or a predetermined reserve price.

Due to the subprime mess, investors and other individuals, The $330 billion ARS market froze during the credit crunch.  Many were unable to access their money and sell their securities.  Some securities are tied-up in subprime mortgage paper and has lost much of it's value. 

Last month, Massachussetts sued units of investment bank UBS.  The suit alleges that UBS representatives told investors that the securities "were safe, liquid 'cash alternatives when UBS knew they were not". 

Behind on a Wachovia Mortgage?

If for any reason you are behind on an IndyMac or Wachovia mortgage,  please keep paying your mortgage.  Some consumers are taking money out of their accounts and are fearful of the worst.  Wachovia mortgages are still being funded.  Wachovia short sales are still being negotiated.  Charlotte real estate is still great to buy with a loan funded by Wachovia mortgage!

There are currently 55 homes listed in our Charlotte MLS for sale by short sale process. The home locations include 16 homes in Northeast or Northwest Mecklenburg county. The list prices range from $54,900 to $919,000. The $919,000 home is a listing decrease from $1,346,000 to $919,000. BusinessWeek magazine is calling short sale "the new exit strategy" for homeowners. Basically, if you are upside down on your mortgage and can no longer make the payments, a homeowner can "apply" to have their lender accept a short sale on their home. I use the word "apply" because the homeowner will need to show that they actually can't make payments instead of a homeowner who just wants to walk away and avoid a foreclosure on their credit report for up to ten years.

Short Sales Increase as Homewowners Bail Out

CBS News Correspondent Anthony Mason interviewed a homeowner unable to make payments on her $227,000 mortgage. View the video:

A Good Short Sale Broker for Buying and Selling

A good broker experienced in short sales and working with a lender is needed whether you are buying or selling your home as a short sale. Today's Real Estate & Auction has years of experience negotiating short sales for buyers and sellers. It's not an easy thing to do. Working with lenders who are overwhelmed with pending foreclosures and an overran real estate owned department can leave many buyers and sellers not receiving return phone calls on pending transactions. Charlotte area real estate short sales are not at the correct numbers that they should be in comparison to the number of foreclosures. Many Realtors are against short sales, citing that they never work and take up too much time. If they are done correctly, they work. We have a high record of sucessful negotiations and closed short sales transactions. Charlotte short sales are an excellent way to save your home from foreclosure and an excellent way for buyers to make a high equity investing purchase during a down market.

Some Lenders are Doing Their Part

According to SmartMoney.com, Lenders responded to the growing number of foreclosures with an increase in efforts to help struggling borrowers. The study, which covered 11.4 million first-lien mortgages worth about $2.3 trillion, found that there were about 22,300 loss mitigation actions by the industry in March, up from roughly 12,500 new modifications and payment plans in January.

On a 63-5 vote, Senate passed a mortgage rescue.  Banks that agreed to take substantial losses on those distressed loans  could avoid costly foreclosures and be assured of recovering at least some money.  Aimed to help hundreds of thousands of homeowners struggling to pay their mortgage and avoid foreclosure.  Under the plan, homeowners who can't make their mortgage payments can get a more affordable mortgage backed by the Federal Housing Administration.  The plan calls for as much as $300 billion in new mortgages insured by the FHA.  This would help an estimated 400,000 homeowners.  Challenges lie ahead with the House of Representatives planning to rewrite some key details of the plan and the White House threatening a veto.

Why a Veto by the White House?

The White House cites 3.9 million in the measure for buying and rehabilitating foreclosed properties it said would help lenders, not homeowners.  The measure also includes a modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac.

Trouble for Fannie Mae and Freddie Mac?

Housing finance giants, Fannie Mae and Freddie Mac will be getting a larger credit line by the U.S. Treasury.  This measure will prevent them from liquidity problems.  The goal is for Fanne and Freddie to respond to their shareholders and keep financing real estate, not be taken over by the Government.  According to  White House Press Secretary Dana  Perino "It is crucial that Congress quickly works to enact this legislation as a complete package along with the strong oversight reform legislation recently passed in the Senate.

IndyMac Opens Monday 'Strong and Safe' says New Boss

According to IndyMac's new boss John Bovenzi, "Come Monday morning, it will be business as usual for all insured customers".  The bank has 265,000 customers with insured accounts.  The Federal Deposit Insurance Corp. guarantees traditional bank accounts up to $100,000 and individual retirement accounts up to $250,000.  IndyMac lost $184.2 million in the first quarter of 2008, on top of $614 million last year, and announced last week it was expecting a wider loss for the second quarter.

No word yet on the status of the sale of IndyMac's assets.  The FDIC is hoping to find a buyer for the bank within three months. Homeowner's PLEASE keep paying your mortgage!!!