Help From Home Foreclosure is Finally Here

imagesWith President Obama’s foreclosure prevention program in place, home owners may now start to begin the process of saving their homes. This is especially good news for homeowners in the San Fernando Valley, where my real estate appraisers in Valley Village as well as real estate appraisers in North Hollywood have seen the price of homes drop dramatically over the past year. Keep in mind that one of the biggest components to a home appraisal is finding what the comparable prices of surrounding homes are selling for, and when you see foreclosure signs peppered throughout a neighborhood, everybody’s home value goes down. This is one of the reasons so many people are now seeing their homes underwater, which means they owe more than what the house is worth and this makes it very difficult to get a loan modification.

With the help of President Obama’s foreclosure prevention program, many homeowners may get a chance to apply for a loan modification, which will better suit their current economic condition. The plan, which is a multipronged fix, calls for companies to help as many 4 million struggling borrowers by modifying loans so monthly housing payments are no more than 31% of monthly gross income. Separately, homeowners who haven’t missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners. This will help stop the foreclosures that are steamrolling through cities and towns like the San Fernando Valley, and that in turn will help raise the value on a home appraisal.

The $75 billion foreclosure prevention plan will allow for loan modifications that will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications, even if your home is underwater. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments. More than likely this will mean that you will need to reappraise your home to find out what it is currently worth, and for real estate appraisers in Valley Village as well as real estate appraisers in North Hollywood, this is most welcome news as their cities have been two of the hardest hit in the housing market crash.

“This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans,” said Housing Secretary Shaun Donovan. This is more than just great news for homeowners, it’s great news for everybody because, as Mr. Donovan states, declining home prices have played a huge roll in the recession we find ourselves in. A rise in home appraisals is one of the signs that things are beginning to improve for everybody, not just people in jeopardy of losing their home, which is why President Obama’s foreclosure prevention plan is a huge part of the stimulus package and good for us all. This will also help raise the value of homes underwater, and bring prices to a reasonable level.

As of today, borrowers can start contacting their servicers to see whether they are eligible for assistance, and they may want to begin to look around for a professional to do their home appraisal so they know what their home is currently worth when they begin the loan modification process. Federal officials will promote the program at homeownership events nationwide, and real estate appraisers are getting up to speed on the new loan modification guidelines. I know, for example, that many real estate appraisers in Valley Village along with their counterparts, real estate appraisers in North Hollywood, are in constant contact with lenders so that they are all on the same page when their customers are ready to begin the process.

There are, however, eligibility criteria you need to meet. For example, the loan modification plan focuses on people who are behind in their payments or are at risk of default, which Federal officials clarified as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default. But if you fit into these categories, the foreclosure prevention plan may be the Godsend you need.

If you or anybody you know is thinking about applying for a loan modification and need help finding out what your home is worth, please visit our real estate appraisers in Valley Village and our real estate appraisers in North Hollywood at www.iappraiseforyou.com and we can help you get the fair market value of your home. You may also want to check out www.hud.gov for more information on who qualifies for President Obama’s foreclosure prevention plan.

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Is the Drop in Home Prices Your Chance to Get in?

Good news for people that are looking to purchase a new house; home appraisals show that prices declined at a record pace around the nation in the final three months of 2008, according to an industry report released Tuesday. This is based, in part, on residential appraisals done by professionals in the field. In fact, many real estate appraisers in Valley Village, CA as well as real estate appraisers in North Hollywood, CA know this first hand. While this is bad news for our economy, it may be the one bright spot for people that have waited many years to get into the housing market. Even better is the fact that if these people can get a loan with the new plan for TARP funds, the economy will start to perk up. But, before your pour your hard-earned money into that new house, make sure you employ the services of a reputable real estate appraiser, because with thorough real estate appraisals, you can make sure you are buying a house for the fair market value.

 

I say this is good news because residential appraisals had been showing over-inflated prices for so long that potential home buyers were left out in the cold. If you look at what many home appraisals were going for over the past five years or so, you would wonder how anybody could afford to buy. Then again, we all know by now that most of those home owners couldn’t really afford those homes at all, and got into them through unfair lending practices and sheer greed. In fact, many of the real estate appraisers in Valley Village, CA as well as real estate appraisers in North Hollywood, CA were shocked to see comparables of surrounding homes go up and up while the condition of many of them were seriously lacking. That’s why having a professional real estate appraiser is so important, because they can tell you exactly what the range of prices are in any given market through real estate appraisals.

 

Now depending on how you look at it, the fact that real estate appraisals show that the decline in home prices does not seem to be slowing down it’s either a good thing or a bad thing. It’s a bad thing if you are trying to sell, because residential appraisals reflect the decline; however, it’s a good thing if you are looking to buy because you now may finally be able to afford a home of your own. One of the reasons for the falling home prices is that rising foreclosure activity is putting pressure on prices, as lenders are increasingly pursuing a ‘take what we can get’ selling strategy. Again, this is good news for people looking at home appraisals and seeing the real price of the homes they are trying to purchase.

 

Many experts predict that prices are going to continue to fall; they have to reflect economic reality. But that doesn’t mean you should hedge your bet and wait for the bottom. Sadly, many real estate appraisers in Valley Village along with some real estate appraisers in North Hollywood have seen many of their clients miss out because of this and lose their dream house to the next guy. Hiring a real estate appraiser to help you determine the fair price for a house is a first step. If you find that the house you want appraises for a price within your budget, you should grab it as fast as you can.  

 

The Obama Administration Announces New Plan for TARP Funds

The Obama Administration rolled out its much awaited foreclosure-prevention plan they will use the second half of the TARP funds for on Wednesday, saying it could help as many as 7 million to 9 million homeowners meet their mortgage payments. Some of the Key components include modifying the terms of delinquent loans, refinancing underwater mortgages and putting more money into the federal housing agencies in order to keep mortgage rates low. But will it work?

The fact of the matter is that while the housing market may have started the devastating decline of our economy, we now have a record number of people out of work, and even more on the horizon. However, this plan may be a good start as it is a series of targeted interventions designed to help specific groups of borrowers and by doing that, it’s hoped, limit the damage caused by foreclosures both to neighborhoods and to the overall economy.

The idea in this new plan is to use TARP funds to restructure the loans of homeowners who are behind on their mortgages or, and here is where the plan may do some real good, those who are an imminent danger of falling behind. The Obama Administration is keenly aware that up until now, only homeowners that were already behind on their payments qualified for government assistance, which only made the problem bigger. Now, those of you that have been struggling to keep up and have somehow managed to scrape by have a chance of reducing your mortgage as well. Up to now, homeowners had to wait to default before they could even get a return phone call from their bank. However, some people are saying that this new plan won’t do a lot of good because it gives much of the power to make the decision on who gets help and who doesn’t to the lenders.

The Obama Administration accounted for this though and added incentives to lenders that cut the interest rate on loans to help reduce homeowners’ monthly payments. The plan is to pay lenders $1,000 every time they do this, but they have to reduce the borrowers’ payment down to 38% of their gross income, which is quit a bit. But the $1,000 will be paid out for three and five years for keeping the loan current. This doesn’t sound like much of an incentive, but given the economic pressure banks and lenders are under, every little bit helps.

Another criticism of this plan for the second half of the TARP funds is the fact that the Obama Administration didn’t make it mandatory for lenders to make these deals, and with the lack of help many homeowners are getting, the fear is banks won’t spend a lot of their time on these restructured mortgages. But given the fact that policymakers had to walk a fine line between helping borrowers who have been caught off guard by tricky mortgage products and falling house prices and those who simply made imprudent decisions and genuinely can’t afford their homes, it is at least a step in the right direction. In order to avoid propping up the second group, Treasury won’t subsidize loan modifications that reduce the interest rate below 2%. If you can’t afford a 2% mortgage, in the eyes of the government, you can’t afford your house. The plan also doesn’t apply to investors or people with jumbo mortgages — those, historically, larger than $417,000. Loans for homes that would be more valuable to lenders if repossessed won’t get modified.

As to how much the Obama Administration’s new plan will help, that remains to be seen. However, we all know how dismal the results were for the first half of the TARP funds, so we should at least be better off than we are now. Mortgage lenders will have to really get on the ball in order for it to work, because deciding who gets the reduced interest is in their hands. How about you homeowners? Do you think this plan will help you out? How about the lenders out there; do you think it’s too much pressure on you? I really want to know what the rest of you think about this plan, and if you believe there was any better alternative. Please leave your comments, questions and suggestions, and let’s keep the conversation going.

The Foreclosure Process; Can it be Stopped?

The foreclosure process is still steamrolling through America. While President Obama has promised to put the second half of TARP funds to better use than the first half, it still may take a while before the real estate industry and homeowners see any relief from what has become a long, arduous journey. Until things begin to improve, here are a few things you need to know, to stall or prevent going into foreclosure.

Mortgage lenders naturally want to recover as much money as they can from the loans they provided homeowners. While a foreclosure isn’t ideal and won’t get them even half the money they originally put out, something is better than nothing…at least that’s the way they look at it. So in order to save your home from the foreclosure process, you have to show them the money. But before you do that, keep in mind what Mike Himes, a housing counselor for the nonprofit group NeighborWorks Homeownership Center in California has to say; “troubled homeowners need to be realistic about their ability to pay. He says that there have been many borrowers who have swiped their cards for $20,000 on their credit cards only to be forced out of their homes later on.” Trying to appease the mortgage lenders this way can end up costing you more than you can ever repay, in the end.

If you don’t have the money to give to your mortgage lender to save your home from foreclosure, the best move is for you to call them weeks before your next amortization is due. The reason for this is that you will be considered delinquent the day after the due date if it is not paid, so you want to take control of the situation before you become part of the nasty real estate statistics that are out there right now. That being said, homeowners usually have grace periods of up to 15 days to pay what’s due.

When the call comes from your mortgage lender regarding delinquency depends on your payment history with them. I know as a homeowner that this is not the call any of us wants to get, especially when it comes to something as sacred as our personal real estate. But, if they do, here’s what you can expect according to Wells Fargo Home Mortgage executive Joe Ohayon, “if you frequently pay in the middle of the grace period, you will not be called before that point. If you have been a good payor, the calls will just be reminders and not direct collection calls.” So there does appear to be some consideration for the type of customer you have been.

If the worst does happen, and a homeowner receives a notice of default of foreclosure, they still have 90 days to negotiate with the lender to save their real estate. For example; you could still negotiate a loan modification, a short sale or a temporary moratorium. While these are some of the things you can expect when your home is under threat of foreclosure, every situation is different and every mortgage lender is different. Ultimately, until we begin to see some results from the second half of the TARP money, homeowners are going to continue to lose their homes, and banks are going to continue to lose money, which is the vicious cycle that got us into this mess in the first place. What about all of you, what have you done or heard of other people doing to save themselves from foreclosure? Is there any real help out there, or is it just a bunch of smoke and mirrors? Please share your experiences with the rest of us and post any comments, questions or suggestions you may have.

If you are in jeopardy of losing your home, visit www.hud.gov for guidance on what you can do.