We’re really reviewing the past two weeks, seeing as how I was out sick. Not a very newsworthy week for housing and financial matters, but we did manage to gather some stories for you.
First Up: Government Struggles with Permanent Modifications
The Washington Post had two great stories this past week discussing the difficulty that servicers were having providing help to struggling homeowners. As mentioned plenty of times on the show, we’ve seen this as a challenge on the horizon for quite some time. Over 1 million homeowners have had their payments lowered under the Making Home Affordable Program launched by the Obama Administration last year. Out of those 1 million, 500,000 have passed the required three-month term of their temporary modifications without receiving permanent help. The article in the post also points out that about 90,000 distressed borrowers have already lost their temporary mortgage aid and will now be forced to foreclose or short sale their homes. We took a “glass half full” approach to evaluating the program in a previous post, but there are still many challenges that lie ahead. We’ll see what happens as the government rolls out new Short Sale guidelines in April.
New Guidelines Released for the New Short Sale Program
Continuing with the discussion on Short Sales, the Washington Post [Post is a great source!] released some information on what we can look forward to with the Home Affordable Foreclosure Alternative update that’s due out from the government in April. According to the article, here are the major points:
- To qualify sellers must be UNQUALIFIED for a loan modification under HAMP
- Banks will determine property values
- Lenders must approve or deny purchase within 10 business days
- Upon acceptance seller may stop paying mortgage payments and the debt will be forgiven
- Mortgage payments will not be shown as lates on the credit report upon acceptance of short sale offer
- Seller will be entitled to $1,500 from Uncle Sam to help cover relocation expenses
There are some great highlights on that list! The response time will be a great improvement from the 6 to 12 month turnaround time we’re seeing in today’s market. The relocation stipend also will be a great help for struggling families. We’ll update you when the program is officially released…it’s due out in April.
Is It Time To Get Off of the Sidelines for New Homebuyers and Investors?
The Journal had a story in this past week’s paper about the varying theories on the direction of interest rates. For those arguing for the rates to increase, they cite the termination of the Federal Reserve’s program that focused on purchasing mortgage backed bonds to the tune of $1.25 trillion. Others looked at the struggling economy and the continued role of Fannie Mae, Freddie Mac and FHA in supporting our housing market by providing capital. I can tell you from what I’ve heard personally that investors are getting more and more comfortable with jumping back in. The biggest question for mortgage investors will be where the solid bottom will be in home prices. In certain markets (not named California, Arizona, Nevada or Florida) they’ve already started to loosen lending guidelines. This article gives you a few different perspectives on where we go from here and whether rates will inch toward 6% by year end or stay in the 5% range they’re in now. The other big thing to keep in mind is that the Homebuyer Tax Credit ($8,000 for new homebuyers and $6,500 for step up buyers) will be expiring for those that don’t get into contract by April 30th. It may be time to get serious about buying soon.
Tweet Match: Kiyosak vs. Orman
Lastly, financial personalities Robert Kiyosaki and Suze Orman raised some eyebrows when they had a brief back-and-forth on Twitter. We’ve seen celebrities use this forum for everything from personal confessions to frustrations with management or the media. This was a little unique because it spoke to the philosophical differences between two people who have grabbed the spotlight on financial matters for the past few years. I’m not going to go through and write out the “fighting words” that were tweeted online, but I will say that some interesting points were made. We used this story as the subject of our Blackboard session for our upcoming weekend show. Tune in or check out the show recap to hear more.
My apologies for readers for not making our recap available….I’ll try very hard not to get sick the rest of the year.