New Housing Bill
December 7th, 2008
Categories:Real Estate News
The government has been standing toe to toe with the Mortgage Industry for years now waiting to see who will back down first and start the recovery process for the housing industry… And it looks like the Mortgage industry won the first battle.
With the government bailing out one major lending institution after another, they have now decided to throw billions of dollars at the foreclosure industry. But the government isn’t going down without throwing a few punches…
The new housing bill will allow homeowners to refinance with a fixed rate FHA loan for 90% of the home value. But the lender has to agree to write down the value of the home to the market level. Which in some cases means writing off 20% of the value of the home. and what does that mean??? drum roll please…. it means the lenders aren’t going to agree to writing down the loans because it means they have to “accept” a loss. They would rather throw their hands in the air and tell their shareholders “we were forced to foreclose and lose all that money”.
Its been an unbelievable sight watching lenders refuse to work with home owners (and builders) for years. It is without a doubt, that allowing a homeowner to do a short sale or refinance would save the bank thousands and thousands of dollars on every upside down mortgage they have. But instead of working with the home owners, the banks choose to ignore their calls, wait for them to default on their loan and then foreclose on them two years later… back to the new bill…
ok, so this new bill that Congress passed and our President signed off on… here are some more tidbits on it
- It only applies to those who got closed on their loan from Jan ’05 to Jun of ’07… i don’t understand this logic… ’05 was the last of the high prices and crazy rates… ’06 and ’07 prices were much lower than ’03, ’04 and ’05. Right there, i’m concerned we hit the wrong target market for this bill
- While this bill says it will help 400,000 borrowers…. that is only 15% of the homeowners out there facing foreclosure… and it is up to the banks if they will help any of those homeowners out.
- If you’ve lost your job and your payments are unrealistic, but you have retirement savings, the banks will require you to burn through your savings before they consider you a candidate. While I don’t think we should be throwing money at everything, it seems kind of counter productive to help out the poor, and let the people who have savings but made the same bad move as the poor get penalized.
We’ll keep you updated as this bill is put to use in October.
Related posts:
- Housing Bailout?
- Banks Get Wise?
- Government Workout Programs
- Bill Introduced for 18-month HVCC Moratorium
- What Banks Have Loan Workout Programs?