AVOIDING FORECLOSURE

In order for a homeowner to qualify for assistance under the housing bill signed into law by President Bush last Wednesday, the individual or couple must be spending at least 31% of their monthly income on their mortgage payment and they must be living in the home. By refinancing their existing mortgage into a 30-year fixed rate loan backed by the government, the borrower agrees to share any future profit from the sale of the home with the government (source: The Library of Congress).

FORECLOSURE ASSISTANCE

The President signed the Housing and Economic Recovery Act of 2008 Into Law. Some of the key provisions include assistance to those facing foreclosure and communities devestated by foreclosure.

The HOPE for Homeowners Act: Creates an initiative within the Federal Housing Administration (FHA) to prevent foreclosures for hundreds of thousands of families at no estimated cost to American taxpayers.

Assistance for Communities Devastated by Foreclosures: To ensure that communities can mitigate the harmful effects of foreclosures, $3.92 billion in supplemental Community Development Block Grant Funds will be provided to communities hardest hit by foreclosures and delinquencies.

Foreclosure Counseling for Families in Need: To help families avoid foreclosure, the bill provides $180 million in additional funding for housing counseling and legal services for distressed borrowers.

WHAT HAPPENED?

Two books published of late are: Chain of Blame By Paul Muolo and Mathew Padilla (Wiley, 338 pages, $27.95) and Financial Shock By Mark Zandi (FT Press, 243 pages, $24.99). Both books discuss what happened to the housing market and our country's financial status. There's a great article in the the Wall Street Journal that gives insight to the situation.

ANOTHER MORTGAGE HURDLE

While the jumbo loan minimum has made it easier to get a loan, the mortgage insurance industry is making it difficult once again. First time home buyers can finally afford to purchase but now, if they don't have 20% down or perfect credit, they may not qualify because they cannot get mortgage insurance.

Read the full story at Wall Street Journal

TRUTH IN LENDING PROVISIONS

The final rule amending the Home Mortgage Provisions of Regulation Z, Truth in Lending, establishes a new category of "higher-priced mortgages" that includes virtually all closed-end subprime loans secured by a consumer's principal dwelling. The new rule, in part, prohibits lenders from loaning money without regards to borrowers ability to repay the loan.
The rule's definition of "higher-priced mortgage loans" will capture virtually all loans in the subprime market, but generally exclude loans in the prime market.

RATES ARE CREAPING UP

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 6.45 percent with an average 0.6 point for the week ending June 26, 2008, up from last week when it averaged 6.42 percent. Last year at this time, the 30-year FRM averaged 6.67 percent.

The 15-year FRM this week averaged 6.04 percent with an average 0.6 point, up from last week when it averaged 6.02 percent. A year ago at this time, the 15-year FRM averaged 6.34 percent.

Read the full story

OVER 1 MILLION HOMES IN FORECLOSURE

The seasonally adjusted total delinquency rate is the highest recorded in the MBA survey since 1979, however the non-seasonally adjusted delinquency rate is not. Delinquency rates normally peak at the end of the year and drop to their lowest point for the year at the end of the first quarter.

The non-seasonally adjusted rate is down 67 basis points from the fourth quarter but up 131 basis points from the first quarter of last year. The increase in the overall delinquency rate was driven by increases in the number of loans 60 and 90 or more days past due, primarily in California and Florida. The 30 day delinquency percentage is still below levels seen as recently as 2002.

Read the entire story at National Realty News.

Bernanke says rate “well positioned,” watching dollar

Federal Reserve Chairman Ben Bernanke Tuesday signaled he is finished cutting interest rates for now and has turned his attention to concerns about inflation in the world’s foreign exchange markets in the wake of the U.S. dollar’s 16 percent decline against the Euro over the past year. Speaking to the International Monetary Conference, Bernanke stated that, “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate.”

Observers called Bernanke’s statement a “strong defense of the dollar” and a sign that the Fed believes a weaker U.S. dollar would be detrimental. Declines over the past year against the Euro and more recent oil price surges have increased fears of inflation. These fears are one reason the Fed is not expected to pare interest rates further at least through October.

Bernanke called financial market conditions “strained” and reiterated that U.S. consumers face challenges from declining home prices and stricter mortgage and other lending standards, a weaker job market and higher energy costs. He added that economic growth will remain limited until home prices and the housing market show clearer signs of stabilization.