By Jon Prior

Even if the promising mortgage refinancing plan that President Obama announced Tuesday night passes Congress, critics say it will fall short of solving the deepest housing problems.

The White House did not release great amounts of detail, but the plan would help homeowners current on their mortgage to refinance down to a lower rate and save an average $3,000 a year on payments. The plan widens the Home Affordable Refinance Program to include mortgages not guaranteed by Fannie Mae and Freddie Mac and would tax banks to raise funding.

Analysts said Wednesday morning that the program could cost as much as $10 billion and could reach between 2 million to 3 million borrowers.

Read the full story on HousingWire.

Also see:
Bernanke: Fed Should Help Turn Foreclosures Into Rentals
Principal Reduction Better Than Short Sales, Report Says

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
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Source: http://realestate.aol.com/blog/2012/01/25/obama-state-of-the-union-plan-inadequate-for-housing/

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Empty houses — those either awaiting foreclosure or where the owners have moved out for other reasons — might as well have a “kick me” sign on them. Actually, make that “vandalize me” sign. They are frequently the targets of squatters who move in illegally, scammers who claim they own them and rent them out to unsuspecting tenants, or just plain old garden variety thieves who break in and steal the valuables right down to the copper plumbing and refrigerator.

Or, in the case of one Suffolk County house, all three. According to a story on ABCLocal News, the Bay Shore home of Richard and Lisa Scott slipped into foreclosure in 2009. The Scotts said they gave their lender, Bank of America, three short sale offers that went nowhere fast, with the bank citing incomplete paperwork that the Scotts and their agent insist was delivered. The Scotts, meanwhile, moved out to rebuild their lives in the South.

Shortly thereafter, Scott’s brother reported driving by and seeing a squatter living in the house, with the air conditioner running and lights blazing. Once the squatter was removed, someone ran a scam ad on Craigslist and leased out the house, collecting $4,000 from the unsuspecting tenant. And then, to add insult to injury, with the squatter and tenant gone, vandals broke into the house and stripped it bare, leaving holes punched in the walls and stealing the copper plumbing, the appliances, even the kitchen sink.

According to the report, BofA is now trying to hasten the foreclosure process.

As for those who may be forced to leave a home vacant, here are some tips to make sure this doesn’t happen to you.

1. Try not to move out.
Vacant homes have increasingly been targeted by squatters. The bank can’t force you out of your home until they foreclose. Until then, you own it — no matter how many missed payments you have. If you must leave, consider renting it out. Let the tenant know you are pursuing a short sale and that the home may be foreclosed on, but that you are giving them a discount in the fair market rent in exchange for maintaining the property.

2. Notify the local police and utilities that the home is going to be vacant.
Utility companies make it possible for squatters to set up shop. By presenting a doctored up lease agreement and some sort of “proof” of ID, anyone can get an account established and the electricity turned on in your home. By calling and putting it in writing that the house is going to be vacant, you are at least alerting the utilities — which likely won’t make a whit of difference.

3) Let your neighbors know.
Nobody feels good about saying they are losing their home. But with it happening to so many, no one will be surprised. If the neighbors know that the house will be empty, they can keep an eye on it and report any suspicious activity to you and the police. In exchange, maybe you want to hire their kid to keep the grass cut and the yard tidy.

4) Stop thinking this isn’t really your problem.
Yes, you fully expect that the bank is going to foreclose on you and are saying to yourself, “Why should I care?” Look at the Scotts’ example. They were sickened to return to their house — which they still own and are still responsible for — and find the damage.

Also see:
Realtors’ Latest Challenge: A Surge of Squatters
Woman Faces Foreclosure on Home She Bought for $1
Protesters ‘Liberate’ Foreclosed Homes

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

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Source: http://realestate.aol.com/blog/2011/11/11/foreclosed-house-targeted-by-squatters-scammers-and-thieves/

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NEW YORK (CNNMoney) — The world will only have to wait a few more weeks to find out whether Fannie Mae and Freddie Mac will allow principal reductions on mortgages they back.

The Federal Housing Finance Agency will decide this month whether Fannie and Freddie should allow write downs on the balances of borrowers who owe more than their homes are worth, said Ed DeMarco, acting director for the agency.

Fannie and Freddie have been at the center of a tug-of-war over fixing the housing market. They have long resisted calls to write down the balances on the loans in their portfolio, saying it would be too costly for taxpayers.

But the pressure has been building, especially in the wake of the $26 billion mortgage settlement that will reduce principal for 1 million borrowers whose loans aren’t backed by Fannie and Freddie.

The agency, which regulates the government-controlled companies, had decided against allowing principal reduction after internal studies showed that alternatives such as adjusting monthly payments or forbearing principal were more cost effective.

DeMarco has said his agency is charged with protecting taxpayers’ interests, and principal reduction would amount to an expensive taxpayer bailout of troubled homeowners.

Since then, however, the Obama administration has sweetened the pot. It tripled the incentives it will pay to Fannie and Freddie for reducing principal under the Home Affordable Mortgage Program, or HAMP. This has prompted the agency and the companies to redo their analysis.

But will it even matter if Fannie and Freddie start allowing principal reduction?

Together, Fannie and Freddie have about 3 million loans that are seriously underwater, according to company filings. But three-quarters of these homeowners are current on their payments and may not qualify.

“These borrowers are demonstrating a continued willingness to meet their mortgage obligations,” said DeMarco in a recent speech. “This should be recognized and encouraged, not dampened with incentives for people to not continue paying.”

In the end, the number of eligible underwater Fannie and Freddie loans could range from a few hundred thousand up to 750,000, according to estimates. That’s not that much considering there are 11 million underwater borrowers in the U.S., just over a quarter of whom are behind in their payments.

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There’s a surprising new finding that says women get lousier mortgage rates than men, but not because of gender discrimination. It’s because instead of shopping around for cheaper loans, they rely on the recommendations of friends.

To recap: When it comes to mortgages, women don’t shop enough.

The report published in the Journal of Real Estate Finance and Economics set out to explain why women were 32 percent more likely to get a subprime mortgage than men in a 2006 study. According to a team of researchers led by Florida Atlantic University’s Ping Cheng, the answer wasn’t discrimination because of gender or even income disparities.

Women pay higher rates because they are more likely to listen to friends’ recommendations, whereas men are more likely to shop around for the best deal.

“Our empirical test confirms that search effort is rewarded in marketplace, and suggests that gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills,” the report summarizes.

It makes sense to Daily Finance columnist Laura Rowley. “It’s not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision,” says Rowley. “But this is one area where you don’t want to get by with a little help from your friends.”

Instead, she advises, call two mortgage brokers and a direct lender, preferably a local small or mid-size bank, and try the following script: “Hi, my name is ____ and I’m in the market to buy a $____ house, and I’m going to put down ____ percent. I’m getting three written estimates, and then I’m going to choose. Can you email me a cost-estimate worksheet stating all the fees and the interest rate?”

Be sure to get the estimates on the same day, as rates can change quickly. Also, don’t ask for rates and fees by phone; unscrupulous brokers will simply low-ball their estimate to get you in the door, says Rowley.

For more tips on shopping for a mortgage, see these AOL Real Estate guides:

How Much Can You Afford [Video]
How to Get a Low Mortgage Rate
Mortgage Jargon in Simple Terms

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.

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Source: http://realestate.aol.com/blog/2011/11/18/when-it-comes-to-mortgages-women-dont-shop-enough/

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Not long ago, homes worked like giant credit cards. Home Equity Lines of Credit (HELOCs) helped borrowers cash in on the equity in the homes. You can still get a HELOC today, though the business is much smaller, with home prices down about 40 percent from their peak and banks tightening their lending standards. The volume of new HELOCs created in November was just $4.9 billion. That’s less a quarter of the HELOCs created two

Not long ago, homes worked like giant credit cards. Home Equity Lines of Credit (HELOCs) helped borrowers cash in on the equity in the homes.

You can still get a HELOC today, though the business is much smaller, with home prices down about 40 percent from their peak and banks tightening their lending standards.

The volume of new HELOCs created in November was just $4.9 billion. That’s less a quarter of the HELOCs created two years before, in November 2007, according to a recent report from credit tracker Equifax.

So banks are still creating billions of dollars in new HELOCs every month for borrowers who use them for purposes from an alternative to automobile financing to a credit line for small business.

HELOC interest rates now hover around 5 percent. That’s down from over 7 percent two years ago and is much better than the rates offered by many credit cards, according to Bankrate.com.

The new HELOCs are also smaller, averaging $80,724 in November 2009. That’s down from $80,724 two year before, according to Equifax. Banks also require strong credit to get a HELOC. Only borrowers with credit scores 820 and higher qualified for HELOCs over $100,000 in 2009. A credit score over 800 was needed to get a line over $80,000, compared to just 700 back in 2007.

The places where borrowers use HELOCs has also changed with falling property values. Borrowers Pennsylvania made up 8 percent of the market for new HELOCs in 2009, putting a state largely ignored by housing boom on par with the real estate gold rush state of Florida, which also had 8 percent of the HELOC market in 2009, and ahead of California, which had 7 percent.

Common sense should also limit the size of a credit line.

“Since many economists believe home prices have further to fall, don’t borrow the maximum you can,” said Amanda Gengler, writer for Money Magazine in a PBS interview.

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Source: http://realestate.aol.com/blog/2010/12/09/you-can-still-get-a-home-equity-line-of-credit/

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Victims of the foreclosure mess and housing crisis are taking to the streets — literally. Street demonstrations are being planned in 10 cities, and in the crowd at the first one you are going to see Dixie Mitchell, a 74-year-old cancer survivor who refinanced her paid-off home to help one of the foster kids in her care — and is now losing it in a foreclosure.

Mitchell (pictured at left), who along with her 76-year-old husband raised eight biological children and 50 foster children in this house, says that she intends to make her voice heard loud and clear as she marches in front of bank offices in Seattle on Sept. 21. The march is the first in a 10-city rollout of protests organized by The New Bottom Line, a coalition of community groups that challenges big banks’ role in the housing crisis.

Mitchell’s story is particularly heart-wrenching: She and her husband were doing just fine living in the house they’ve owned for 44 years until he suffered a stroke that left him paralyzed and cost him his job. The house was fully paid off in the mid-1980s, but they borrowed against it to make roof and kitchen repairs. The straw that broke the camel’s back came in 2005, when Mitchell needed to hire a lawyer, at a cost of $20,000, in an effort to keep a 3-year-old boy who had been in her care since he was an infant.

She was advised by the bank to refinance her house to get the cash. She took out an adjustable rate loan that would reset in two years, at which point, Mitchell says, the lender told her that she would be able to refinance into another 30-year-fixed rate loan. But the original loan was bundled and sold multiple times to different lenders. It reset to a higher rate right around the time her husband suffered a massive stroke, and she quickly fell behind in her payments. Without his earnings, her monthly income is just $2,200 in Social Security and her monthly mortgage is $2,568.

Mitchell filed for bankruptcy, tried getting assistance from every social service agency she could think of, spent two years trying to get a loan modification and even offered to rent out rooms to boarders if the bank would just let her keep her house.

“My husband wants to die at home, at our home,” she says. Her home is set to be auctioned on Oct. 28 and she has no place to go.

Why is she going to participate in the demonstration?

“I need them [the bank] to look me in the eye and tell me why they think it’s better to put people out in the street,” she said. “They haven’t done their share to help. They don’t even give you a chance … all they do is lose your paperwork and make you send it over and over again. Each time you talk to somebody, you get a different answer.”

Those are sentiments shared by many.

LeeAnn Hall, executive director of Alliance for a Just Society and one of the organizational members of The New Bottom Line, said the Seattle area protests will be staged both in downtown Seattle and at the annual policy summit meeting of the Association of Washington Business, a statewide chamber of commerce. The meeting is being held in Suncadia, a mountain resort near Cle Elum, Wash. The governor is expected to attend the meeting and Hall said that the group hopes to engage her.

Subsequent demonstrations are planned across the country in Boston, Chicago, Denver, Los Angeles, New York City, San Francisco and other locations.

The New Bottom Line said that it is targeting “big banks that bankrupted the country and drained wealth from American families.” The direct actions primarily target JPMorgan Chase, Bank of America and Wells Fargo, and include taking over bank buildings, meetings of corporate officials, civil disobedience, prayer vigils and mass mobilizations.

“We are struggling with less and less, while the big banks profit more and more,” said George Goehl, executive director of National People’s Action, another organizational member of The New Bottom Line. “The big banks have done nothing but dodge taxes, throw people out of their homes and choke small business, all the while draining our wealth to pad their bottom line. It’s time for JPMorgan Chase, Bank of America and Wells Fargo to pay us back.”

According to a press statement, the group’s goals are that banks:

o. Pay their fair share of taxes — their statutorily required 35 percent corporate income tax and not “game” the system through off-shore tax shelters and loopholes.

o. Stabilize the housing market and revitalize the economy by reducing principal for all underwater homeowners to current-market value. “This would end the foreclosure crisis, reset the housing market, pump billions of dollars back into the economy and create one million jobs a year,” the group says.

o. Invest in American jobs by using their trillions of dollars in cash reserves to invest in small businesses — the main source of jobs in the U.S. — and other job-generating investments.

Also see:
Viewpoint: What’s Behind Banks’ Big Foreclosure Push?
101-Year-Old Foreclosure Victim to Get Home Back
Woman Faces Foreclosure on Home She Bought for $1

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/09/19/foreclosure-victims-plan-protests-across-u-s/

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Foreclosure via Facebook? With roughly 4 million foreclosures in the pipeline in this country, some legal experts say it’s just a matter of time until lenders win the right to serve foreclosure documents through the giant social network.

That day has already come for one couple in Australia. When they defaulted on a six-figure loan and couldn’t be found via a physical address or email, the lender’s enterprising lawyers located them on Facebook. The lawyers were able to verify the couple’s identities by matching up their names and birthdates — and, of course, the fact that they had “friended” each other.

Australian courts upheld the lender’s right to send foreclose notices via Facebook, citing the fact that the couple didn’t enable privacy protections on their Facebook accounts and were frequent enough visitors to the site that they would “reasonably receive notice as a result.”

While Marc Rotenberg, president of the Electronic Privacy Information Center in Washington, says he is unaware of Facebook being used in the U.S. to deliver legal notifications, but “it’s bound to happen,” he said. “The real concern the courts have is whether it’s a fair notice that the person actually receives.” According to Bloomberg BusinessWeek, courts in New Zealand, Canada and the U.K. already have adopted the Australian example to avoid having cases stall when people can’t be located and served in person.

“There are people who exist only online,” Joseph DeMarco, co-chair of the American Bar Association’s criminal justice cyber crime committee, told the publication. The ability to serve documents by social-media networks would be useful, he said.

Facebook has taken heat before about its policies protecting the personal data of its 694 million users worldwide. Following the case in Australia, which happened in 2008, company spokesman Barry Schnitt said the company was pleased to see the Australian court validate Facebook as a reliable, secure and private communication medium. (Facebook did not respond to messages left by AOL.)

Is it appropriate to use social networks to find people and deliver legal papers to them via the network?

“No one likes to receive a legal service,” said Rotenberg. Legal service, after all, usually isn’t good news: Someone wants you for something. And yes, he adds, “There are going to be privacy concerns, but in some respects they’re almost inescapable.”

Email, by contrast, is generally not considered by courts to be a safe or reliable way to deliver legal notices. We get too much email, much of it winds up in spam and we don’t always open everything in our in-boxes. Legal notices delivered this way can easily be discounted with a simple “I didn’t see the email.”

But Facebook, said Rotenberg, is different. If you don’t have thousands of friends and you regularly post status updates indicating that you are active on the site, you lose the excuse that you likely overlooked the notice. Of course not everyone with a Facebook page visits the site regularly, but save it for the judge whether you’re one of them.

Bottom line: It’s probably going to be determined to be legal, just not likely to be popular. And should use of Facebook as an electronic process-server escalate as a norm, you can expect it would have some adverse impact on the site’s participation levels. In the meantime, if you don’t want the banks to find you, the best defense is enabling your privacy settings on Facebook and be mindful of the personal data you post.

For more on mortgages and related topics see these AOL Real Estate guides:

• How to Buy Foreclosures
• Spot Foreclosure Scammers Before They Spot You
• Foreclosure: What it Means for Renters
• Foreclosure Help: What a Housing Counselor Can Do

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

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Source: http://realestate.aol.com/blog/2011/06/17/your-facebook-status-foreclosed/

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WASHINGTON — The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.

Freddie Mac said Thursday that the rate on the 30-year loan dropped from 4.10 percent last week. Four weeks ago, it dropped to 3.94 percent — the lowest rate ever, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage fell to 3.31 percent from 3.38 percent. Four weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note. They yield fell this week after investors shifted money out of stocks and into the safety of Treasurys on fears that Europe’s debt crisis could worsen.

The Federal Reserve is also shifting more money into longer-term Treasurys to try to force mortgage rates lower. Treasury yields fall when buying activity increases.

Less Home Buying Than Expected

Federal Reserve Chairman Ben Bernanke said Wednesday that low rates have failed to spur the increase in home buying or mortgage refinancing that government officials had expected.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

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The number of Americans who bought previously occupied homes fell in September and is on pace to match last year’s dismal figures — the worst in 13 years.

Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices. And it followed a peak buying season that was the worst on records going back nearly 50 years.

A Run on Refinancing

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rate on the five-year adjustable loan fell to 2.96 percent from 3.08 percent. That matches a record low hit four weeks ago.

The average rate on the one-year adjustable loan declined to 2.88 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage fell from 0.8 to 0.7. The average fee on the 15-year fixed loan was unchanged at 0.7. The average fees on the five-year adjustable loan one-year adjustable loan were also unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Mortgage Giant Asks Taxpayers for Another $6 Billion

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find rentals in your area.

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Source: http://realestate.aol.com/blog/2011/11/04/mortgage-rates-stay-low-but-buyers-arent-budging/

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