Believe it or not, FHFA is just now coming out and saying they’ll do principal reductions on underwater properties. Kind of funny don’t you think?
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Just another useless move on the government policy to help homeowners. I said it back in 2008 that the banks/lenders should have cut the interest rate and extended the length of existing mortgages for those suffering from the economy. A 6 percent rate could have been slashed to 3-4 percent and a 30 yr mortgage could have been extended to 40-60 years. The owners could have remained in the home and the lender would have been getting something. Families would not have to be displaced, properties would have been maintained AND property taxes would have been paid. Instead the lenders "forced" (and still do with short sales) the borrower to go through insane "hoops" to approve the short sale process; all the while paying property taxes on the home to avoid any tax liens. Then the government comes in and says you can't force a homeowner out of the house for at least 5 years AND allows the cancellation of debt income for the difference of what is "owed". It just doesn't make sense…..but then it IS the government.
Marty nailed it…this is closing the barn door after ALL the horses have left the barn.
If you have a fannie, freddie, FHA or VA loan there have been options to do something for many years. Pity the rest who did not have one of those loans. They have been out in the cold. They cannot refinance to a lower rate. Their only choice has been to keep paying, short sale or foreclosure. There has been no effort to help them. The video says approximately 4 million homeowners are still under water. How many are conventional and government vs. the "others"? Rob Chrisman's blog says that this effort might help 50,000 homeowners. Don't make me laugh!
I think a vast majority of these so called eligible homes are condos. Since Lending on the Condo Community is a fickle animal, it's a pointless program. Unless FHFA and FHA can adopt a better procedure for Lending and/or Approving Complexes so they can lend in, Condos will remain harder to Lend on versus a Manufactured Home. And part of that process is an Education Process that needs to happen. These Condo Communities have no idea the guidelines or the importance of the guidelines, and this stems from the Property Management Company all the way to the HOA Board. Loan Officer's shy away from them because they don’t fully understand the process, ie Limited Review versus Full Review. Realtors, most of them, have no idea what they are listing and advertise the property is eligible for FHA, VA, and Conv Financing, when in fact it's not. The Realtors also do not understand the process of Condos and the extra DOCS that are needed upfront which creates a longer time to process, more fees, more unknown factors, and the Listing Agent typically doesn't explain to the Seller the unique process that happens with a Condo that is being Financed and most Buyer's Agents also have no idea. When I get a Contract on my desk for a Condo Purchase for an out of State Buyer with a 27 day Close of Escrow period and the Condo Cert has a 2 week turn time, there is no way you are meeting the COE time. Then, we waited for 2 weeks for Condo Certs to send us the wrong Condo Cert, on a different Complex. They admitted their error, but would not give us the correct one for no charge. They made us pay for a 2nd one. TG this is a limited review deal. Argh…… sorry, I know I just went off on a tangent about condos.
Eric Kinneman: Please don't assume that all Realtors have no idea about the process of certifying a condo. We are learning, so maybe you can help us. How about a "free" seminar for Realtors, Community Management Companies and HOA Boards about what's involved in this? I am a Realtor. Just to give you an idea how counter-intuitive this process is, in my last condo deal, the lender asked for a certification from the community management company (well known in this area), and to determine what was "owner occupied" vs. "tenant occupied," they used the expedient of where they mailed the bill, even if it were a PO Box. Condos are often owned by seniors who may have their bills sent to their children or others, but that does not constitute "tenant occupied." I was able to look at the Assessor's website, and determine fairly easily whether it was a Qualified Primary Residence of Qualified Rental. The Assessor has a vested interest in reporting this data accurately, because we have something of a split role tax system that allows an 8% per year increase in taxes for rentals but only 3% per year for primary residence. The property met the 50% +1 requirement, but that did not change the community manager's procedure. Too bad!
I'm sorry if my post alluded to all Realtors not understanding the process, because that was not my intention. It is an uphill battle. I think seminars/classes on the topic is a great idea. THere are so many items that we could engage on, regarding the topic, as Investor infiltration is only 1 item out of say 30 on the typical questionnaire.
Yep – that’s the good ole govt. for you – thanks again~! (for nothing)
I was in a meeting 2 days ago here in San Diego with some head honchos for the real estate dept. there were also bank managers and I live in San Diego upper crust North County. Cardiff, Encinitas, Carlsbad, La Costa, Rancho Santa Fe, Del Mar and Solana Beach area….Besides the houses underwater there are a lot still I am afraid to tell you. Many home owners at the height of the refinance market maxed out their houses with HELOC’s and even 3rd’s. The banks that own the notes on these foreclosed properties are sitting on them because even now, they are going to take a loss. I will not name names but 2 bank foreclosures specialist said the banks are still sitting on a ton of inventory that they are ever so slowly releasing back into the public. Those with cash that walk into the bank are still getting sweet heart deals. One proeprty in Fairbanks Ranch was worth 5 million and these cash investors only paid 2.5 million. The bank ate over 1.6 million in a loss just on that one property….Sorry but there are still way way over encumbered properties in prime locations out there.
I could have saved two properties had they done this back in 2008-2009
In one county in our area, condo & home values are lower than they were in the 1980s. Just think of it, these home-owners have been paying for their homes for 30 years, and now the homes are worth just 50% of what they paid. Hopefully, this will help some of these people.