Home Loan Focus

Archive for July, 2009

Stimulus will kick in this year – Obama

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Source: Stimulus will kick in this year – Obama

Banks could shortchange taxpayers

The Treasury Department is at risk of short-changing taxpayers by not collecting enough from banks trying to get out from under the government’s thumb, according to a panel that watches over the federal bailout program.

Source: Banks could shortchange taxpayers

Trade gap narrows to smallest in a decade

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Source: Trade gap narrows to smallest in a decade

HUD urges families receiving disaster housing assistance
to apply for rental vouchers

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) is urging families still receiving Katrina/Rita transitional housing assistance to contact HUD to ensure that they are considered for rental vouchers, which are not time limited. A toll-free number, 1-800-955-2232, has been set up to make the process as easy as possible.

Source: http://www.hud.gov/news/release.cfm?content=pr09-115.cfm

Secretary Donovan awards over a billion dollars in Recovery Act Funding to prevent homelessness across the country

WASHINGTON – U.S. Housing and Urban Development Secretary Shaun Donovan today awarded $1.2 billion to over 400 communities across the nation to rapidly re-house families who fall into homelessness, or prevent them from becoming homeless in the first place. The funding is provided through the American Recovery and Reinvestment Act of 2009 to help persons and families facing a sudden financial crisis that could lead to homelessness. To view the list of grantees receiving funding under this round of grants, visit HUD’s Recovery Act website.

Source: http://www.hud.gov/news/release.cfm?content=pr09-113.cfm

HUD issues 2008 Annual Homeless Assessment Report to Congress

WASHINGTON – The U.S. Department of Housing and Urban Development today issued its 2008 Annual Homeless Assessment Report to Congress, a national study that explores changes in homelessness nationwide. HUD’s assessment concludes that while overall homelessness in America held fairly steady from 2007 to 2008, the number of homeless families, particularly those living in suburban and rural areas, increased.

Source: http://www.hud.gov/news/release.cfm?content=pr09-108.cfm

Secretary Donovan approves Cincinnati’s Recovery Act Plan to revitalize neighborhoods and create jobs

WASHINGTON – U.S. Housing and Urban Development Secretary Shaun Donovan today approved the City of Cincinnati’s plan to use a $3.5 million federal grant to help stabilize and revive local neighborhoods, rehabilitate affordable housing, and improve key public facilities. Funded through American Recovery and Reinvestment Act of 2009, HUD’s Community Development Block Grant (CDBG) Program will support state and local community development while stimulating employment.

Source: http://www.hud.gov/news/release.cfm?content=pr09-111.cfm

HUD to host neighborhood networks workshop in Philadelphia

WASHINGTON – The U.S. Department of Housing and Urban Development will hold a
Neighborhood Networks Regional Technical Assistance Workshop in Philadelphia on July 15 – 17.
The event themed Neighborhood Networks: A Community Asset will feature Carol Galante, the new Deputy Assistant Secretary for the Office of Multifamily Housing Programs at HUD who will speak during the opening ceremony.

Source: http://www.hud.gov/news/release.cfm?content=pr09-110.cfm

The Mortgage Week in Review

The average rate on a 30-year fixed rate loan dipped to a six-week low of 5.20 percent, down from 5.32 percent the previous week.

• Freddie Mac  chief economist Frank Nothaft: “Interest rates for 30-year fixed-rate mortgages fell for the second week in a row to the lowest level in six weeks amid market concerns over a weakening labor market.”

More people are applying for government-insured mortgage loans now than they have for almost the past 20 years. In June, the government loans like FHA and VA loans made up 35.9 percent of all mortgage applications.

• Orawin Velz, Mortgage Bankers Association, associate vice president of economic forecasting: “A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans. In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”

The FBI reported that mortgage fraud activity increased 36 percent in 2008, with the hardest hit states being California, Florida, Georgia, Illinois, and Michigan.

• FBI statement: “Several of these schemes have the potential to spread if the current economic downward trend, as expected, continues into 2009 and beyond” and “While the amount of mortgage fraud cannot be precisely determined, industry experts agree that there is a direct correlation between fraud and distressed real estate markets.”

A new report says foreclosures were down 11 percent in the second quarter of 2009, while pre-foreclosures or delinquencies were down 10 percent.

• Alexis McGee, president of ForeclosureS.com : “These huge drops—double-digit in many parts of the nation—are a sigh of relief for the economy and housing markets as they bump along toward recovery. Despite higher unemployment rates, industry and government stimuli are making a difference. It’s not just depressed properties that are selling anymore.”

Source: The Mortgage Week in Review

Underwater Loans, Not Poor Credit, At the Heart of Foreclosure Crisis

A recent article on the Wall Street Journal blog makes a bold claim: predatory lenders and liar loans are not the main cause of the current foreclosure crisis – the prevalence of underwater mortgages is the biggest contributing factor. Stan Liebowitz, the author, asserts that even subprime mortgages, now almost a dirty word, were not the main problem.  He says:

“The focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not subprime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures. (These percentages are based on the period since the steep ascent in foreclosures began — the third quarter of 2006 — during which more than 4.3 million homes went into foreclosure.)”

So, foreclosures are not on the rise because of low credit scores, upwardly adjusting mortgage rates, or all the loans made to people without documentation of their income. Why is simply owing more than your house is worth such a big problem?

“The important factor is whether or not the homeowner currently has or ever had an important financial stake in the house. Yet merely because an individual has a home with negative equity does not imply that he or she cannot make mortgage payments so much as it implies that the borrower is more willing to walk away from the loan.”

I don’ t think Mr. Liebowitz’ explanation is very complete. Borrowers are certainly more willing to walk away from their mortgages, but that doesn’t mean they will in the absence of other factors. So doesn’t it make sense that the other factors are important? If someone whose house is now worth half of the mortgage loan and they lose their job or their payments jump up, aren’t those really the things that caused the foreclosures? Being underwater just makes it easier for these borrowers to toss in the towel.

Source: Underwater Loans, Not Poor Credit, At the Heart of Foreclosure Crisis