Mortgage borrowers are now seeing home loans at not much more than 4 percent for 30-year, fixed-rate mortgages. And, reports HSH.com, 15-year loans are already below 4 percent.

The lower rates result in substantially reduced monthly payments. For instance, imagine that you borrow $100,000 over 30 years and the fixed rate is 3.9 percent. Your monthly cost for principal and interest will be $471.67. The same loan at 5 percent would have a cost of $536.82 and at 6 percent the expense would rise to $599.55.

Of course, to get these terrific mortgage rates you need an income, a problem for the 16 million or so people who are unemployed or “marginally attached” to the workforce. And, certainly, no lender will give you a loan if you’ve recently been foreclosed, even if the cause of your financial distress was the lender’s “affordability” loan product that lead to your demise.

Federal Reserve

Since 2008 the government has done everything possible to save a tottering and tettering financial system, meaning big banks and brokerages on Wall Street. Part of this effort has been to knock down interest rates to levels unseen by any living human being.

For instance, the Federal Reserve has just decided to spend $400 billion to swap three-year Treasury securities for securities with a longer term, from six to 30 years. This maneuver shuffles the financial deck while not creating a single new job.

This has been great for the financial sector, which gleefully charges 29.9 percent for credit card debt while it borrows money through the Fed at near zero percent.

Taxes

There is now a serious proposal in Washington which would raise taxes on those who have benefited most from society. Some, however, oppose the idea because they feel it’s a form of “class warfare”.

“There’s class warfare, all right,” Warren Buffett told the New York Times, “but it’s my class, the rich class, that’s making war, and we’re winning.”

“This is not class warfare,” says President Obama. “It’s math.”

Meanwhile, major US corporations continue to generate massive profits — and pay little or no taxes.

GE, says the New York Times, “reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.”

US corporations now have some $1.5 trillion in overseas profits sitting outside our borders. This money could be used to modernize American factories and create millions of jobs but patriotic American companies will not bring the money back to the United States unless their overseas profits are taxed at just 5.25 percent.

Pensions

There is also much debate regarding the Social Security system, but little has been said about how the Fed’s efforts to help the financial sector have destroyed pensions.

Imagine that you had $2 million in retirement cash and invested it today in five-year CDs. Your likely interest rate would be roughly 1.75 percent or $2,915 a month.

But ask yourself: How many people have $2 million in retirement cash? Or $1 million? $100,000? In fact, the median amount set aside for retirement is just $45,000.

Truth is we all want interest rates that are higher than what we have today. Higher rates suggest the economy has begun to return, capital is more in demand, jobs are being created, homes are selling and savings are producing decent returns — things that help everyone, even folks not on Wall Street.

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Much has changed since the terrorist destruction of the Twin Towers, an awful event which has produced awful consequences.

If the attack was designed to reduce the US presence in Muslim states it surely back-fired. A decade later the US continues to have massive military forces in Iraq and Afghanistan. Osama Bin Laden is dead, as are many of his followers.

The commentary below was written after 9/11. See how much has changed since these words were first published.

——————————————-

We all remember such days. We remember where we were when we first heard of the deaths of John Kennedy, Robert Kennedy, and Martin Luther King. We remember when we heard of the Oklahoma City bombing and those who are older surely remember Pearl Harbor.

And now, until the end of our lives, we will remember September 11th.

In the U.S., at least, such terrible days are not frequent. We are insulated from genocide, civil war, and famine. Suicide bombers are a rarity rather than a daily event. We do not have hostile nations at our borders. Considering the full term of human history and looking around the globe, we live remarkably well.

Unlike any number of countries, we have a government which does not torture its citizens. We voice political opinions without fear. Our government does not tell us where to live, what job to hold, or which religion to prefer. As someone once expressed very well, no one cares what book you read, what day you pray, or if you pray at all.

As a nation we have our arguments and disputes. We have racism. We have faults.

And yet we understand that whatever our differences, we do better together than apart. We realize that debate and friction are necessary, and we act together as a nation not because we agree on everything, but because we have learned to channel disagreements without destroying the fabric of our society. Few nations, as an example, could have endured the close presidential contest we saw last year — a matter settled without the need to call up a single soldier.

The Nature of Terrorism

Blowing up civilian planes and buildings is terrible, barbaric and horrifying. The victims are wholly innocent.

Terrorists know this. The whole point of terror is that it’s illogical, unpredictable, unfair, and inhuman. It’s an effort by the few to cow the many.

What terrorists don’t understand is that a bombing, no matter how horrific, will not end our common purpose. The U.S. will be hardened by the events now taking place in New York and Washington, and no one will forget what has happened. Not since World War II has there been a greater sense of national unity.

Pearl Harbor is the immediate parallel which comes to mind when considering the events of the past week. The surprise Japanese attack on December 7, 1941 resulted in the murder of thousands of individuals and massive destruction.

But as Japanese Admiral Isoroku Yamamoto said after the attack, “We have awakened a sleeping giant and have instilled in him a terrible resolve.”

By June, 1942 — just seven months after Pearl Harbor — the U.S. Navy won the Battle of Midway, an event which largely ended Japan’s ability to control the seas. Never again would Japan pose a threat to the U.S. mainland.

Perspective

As bad, as awful, as frightening as the events of the past week have been, as terrible as the personal losses experienced by so many, we remain the world’s most-powerful nation. Our farms and factories are productive. Ninety-five percent of our people are employed. Homes are being bought and sold, and loans are being made. Grocery stores are filled, electricity flows, TV and radio stations are on the air, schools are open, government offices are busy, newspapers are being published, and the nation’s business is being done.

Now as before, we are a great and powerful nation, and we are a democracy.

A Caution

News reports and online postings are filled with descriptions of the perpetrators of last week’s attacks as “Arabs” and “Moslems.” But in this matter let us be careful not to generalize, not to condemn people on the basis of their group identity. Our fight — the fight that has been brought to us — is only with those individuals, groups, and governments that seek our destruction.

Our Strength

What is to come will not be easy and it will not end quickly. We are at war, but rather than fighting for land, oil, or power, the issue is culture — the existence or destruction of the modern society we represent and the values that terrorists despise.

The good news is that we have much on our side, we are not defenseless. Each day people worldwide can see the benefits of a society where education, medicine, science, security, entrepreneurship, and technology are valued.

Our most potent weapon in this battle is the ongoing spread of modern culture and the political democracy and pluralism it requires. But while it’s hard to imagine, huge numbers of people do not have access to information and ideas simply because basic technology is unavailable to them.

“There are 1 billion telephones in the world and the 48 least developed countries have some 1.5 million of them,” says the United Nations.

“More than 50 per cent of the world’s people have never made a phone call,” according to the U.N.

Think of it this way: If our world population includes six billion people, then three billion have never placed a phone call. Is a diversity of ideas possible, is progress plausible, in an environment where free access to information does not exist?

As more and more people are connected to one another via television, satellite, telephone, and the Internet, it will become increasingly difficult for even the most remote populations to ignore the benefits of modern civilization. It’s an appeal no terrorist can contain, and a threat to repressive governments everywhere.

—————————————–

(Published originally on September 18, 2001 by Realty Times and republished with permission. Photo copyright 2000 Peter G. Miller, all rights reserved.)

9/11 — How We’ve Changed In A Decade is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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For November 2011 the aation saw 224,394 foreclosure filings according to RealtyTrac.com — default notices, scheduled auctions and bank repossessions.

For all the news about foreclosures, foreclosure prevention and loan modification programs, a basic reality is that when people lose their jobs their foreclosure alternatives narrow and in too many cases drop to zero.

As an example, look at the latest foreclosure modification plan. The Obama program is vastly better than what we have seen before, but to get help you have to qualify and one benchmark concerns income. Under the plan, says the Treasury Department, “the lender will have to first reduce interest rates on mortgages to a specified affordability level.” What is that level? The borrower’s monthly mortgage payment should be no greater than 38% of his or her income. Government help can then lower monthly payments to 31 percent of an individual’s gross monthly income.

The 38 percent and 31 percent standards will potentially help many people, but it won’t help those without work. The standard assumes that homeowners are employed or self-employed, that they have a stream of income.

But for growing numbers of Americans that’s not the case.

The Bureau of Labor Statistics reports that as of November 2011 we had 13.3 million people who were officially unemployed. In addition, we had 8.5 million “involuntary part-time” workers, folks who couldn’t get full-time work and another 2.6 million were “marginally attached to the labor force” — these are individuals who wanted work and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 1.1 “discouraged workers,” people not currently looking for work because they believe no jobs are available for them.

So rather than 13.3 million people looking for work the real number is much bigger, say about 24.4 million. In a country with 153,950 million people in the labor force we’re talking about a very large percentage of the population which is either unemployed or underemployed.

What do job losses this mean in terms of foreclosures, local home values, tax collections and related issues? Think of unemployment numbers as a “leading indicator,” a hint of things to come unless we put more people back to work.

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To start, the White House explains that “because of the irresponsibility of the past decade, the President inherited a $1.3 trillion projected deficit upon taking office and an economic crisis that threatened to put the nation into a second Great Depression. He moved quickly to get the economy moving again. Now, the economy is growing, and we have gained private sector jobs for the past 10 months.”

This is nonsense for two reasons: First, one needs to look at the bigger picture, the Bush Administration racked up a deficit of $4.35 trillion over eight years according to official Treasury Department figures. This was after four years of surpluses originated under the Clinton Administration and talk of actually paying off the entire deficit by now.

Second, the problem is not just the Bush deficit. The problem is the unwillingness of the current Congress to raise taxes on higher income households, specifically those making $250,000 and more.

Buffett & Taxes

Warren Buffett, one of the richest people in the world, explained the situation on ABC News very simply: “If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further. But I think that people at the high end — people like myself — should be paying a lot more in taxes. We have it better than we’ve ever had it.”

Just how good does Buffett have it?

The current top tax rate is 35 percent. According to Stanford University, the top federal tax rate in 1950 was 84.357%. That’s not all: The top rate was 91% in 1960, 71.75% in 1970 and 70 percent in 1980.

In other words, today we’re arguing over 35 percent versus 39.6 percent when the real argument should be 35 percent versus 50 percent or 60 percent or more. Even the minimal 39.6 percent rate would increase federal revenues by $700 billion annually yet impact only 2 percent of our households — money that could be used to reduce the federal deficit and right the economy, goals that seem to be widely supported.

Foreclosures

The Obama pay plan will freeze the wages of civilian federal employees but not those in the military. Unfortunately, the impact of such a freeze is not limited to government workers.

Federal employees are people who live near you. They buy things. The more things they buy the more they inherently help local economies. Alternatively, the estimated $2 billion that will be “saved” this year and the $28 billion that will be “saved” in the next five years is money that’s being removed from local businesses. States will also have less income to tax, which means services will be further limited.

My arguments is that as a result of less employment you can be certain that some people will lose their jobs and others will lose hours. Less money in tough times translates into less employment and less employment means less buying power, more foreclosures and continuing pressure to hold down home values — including the value of your house.

The argument on the other side is that if the rich can keep their money than benefits will trickle down to the rest of the public. This argument has been made for years and it doesn’t work. If it did work then no doubt with today’s 35-percent rate we would have a booming economy, more employment and a smaller deficit.

The Right Argument

There shouldn’t be an “Obama Plan” to freeze federal wages. Instead, the President, the White House and its assorted surrogates, spokesmen and allies ought to get their argument straight: If we do not fairly tax the rich we must then freeze the wages of lower and middle-class workers — if we allow them to keep their jobs at all.

That’s the right equation — and that’s the connection the White House isn’t making.

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The reality is that the Obama loan modification program has saved roughly 100 times as many homes from foreclosure as the programs started under President Bush. That doesn’t mean the Obama plan is perfect or wonderful, but it’s surely better than many commentators suggest.

For it’s part the Bush Administration had two important foreclosure programs.

Hope For Homeowners

First, there was the Hope for Homeowners plan, a program which set aside $300 billion to refinance toxic loans made no later than January 1, 2008.

No doubt $300 billion is a lot of money but just how many loans were refinanced under H4H? Let’s see, there were 0 in fiscal 2008, 23 in fiscal 2009 and 48 so far in fiscal 2010. That’s a total of 71 loans. Over three years. A little more than one per state.

Why did Hope for Homeowners fail? Lender participation was voluntary, new loans were limited to 90 percent of appraised value and appraised values had gone down so lenders were being asked to take a loss for every loan refinanced under the program.

FHASecure

Second, there was the FHASecure program.

“In the coming days,” said President Bush in 2007, “the FHA will launch a new program called FHA-Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes. In other words, we’re going to start reaching out and making sure people know that this option is available to them so they can stay in their homes.”

Sounds great. So what happened?

To follow the program you have to look at the number of delinquent conventional loans refinanced with FHA-insured mortgages. There were no such loans in fiscal 2007, 3,794 such loans in fiscal 2008 and 316 mortgages in fiscal 2009. That’s a total of 4,110.

But according to then-HUD Secretary Alphonso Jackson the story was different.

“FHASecure,” he said, “has helped more than 100,000 families stay in their homes. Homeowners are cutting their monthly mortgage payments by an average of $400 a month compared to their exotic subprime loans. They no longer have anxiety about finding foreclosure notices in their mailboxes, thanks to the safe mortgage alternative that FHASecure offers.”

So did the program help 4,100 delinquent conventional borrowers or more than 100,000?

The original purpose of the FHASecure program was to help delinquent conventional borrowers get FHA financing. Jackson himself had testified before Congress in 2007 that the FHASecure program was for “borrowers who are otherwise creditworthy, but have recently become delinquent on their mortgages as their teaser rates reset.”

But since the program wasn’t working the solution was to redefine the program.

HUD did this by simply changing its FHASecure Frequently Asked Questions page to say “these FAQs have been modified to reflect that the term FHASecure applies to all conventional to FHA refinance transactions. The previous edition of FAQs indicated that only those borrowers who were delinquent due to reset of their non-FHA ARMs were eligible for FHASecure, causing confusion.”

And just like that the FHASecure program was a “success” — unless you were one of the millions of borrowers with a toxic loan that needed to be refinanced.

Making Home Affordable

In March 2009, a few weeks after entering office, the Obama Administration started the Making Home Affordable program. In basic terms, the program today has four elements:

1. The Home Affordable Refinancing is for those making payments who want to refinance but lack equity.
2. The Home Affordable Modification is for borrowers who face foreclosure as a result of higher mortgage payments, reduced income or hardship (think medical bills).
3. The Second Lien Modification Program (2MP) is for borrowers with second liens of more than $5,000. May result in lower interest rate or an extended loan term.
4. The Home Affordable Foreclosure Alternatives Program (HAFA) is for borrowers who have been unable to get help under Making Home Affordable. It provides as much as $3,000 to borrowers who participate in a short sale or deed-in-lieu of foreclosure.

So how is the program doing?

The July 2010 results look like this:

• The government has identified 1,623,584 delinquent borrowers who qualify for program help.

• Some 1,528,563 have been asked to participate in the program. Amazingly, 245,651 refused, meaning that 1,282,912 borrowers started loan modification trials.
• Of those who started loan modifications, 520,814 could not complete the three-month trial period and will likely lose their homes. In addition, 8,823 who passed the trial modification period and obtained a “permanent” loan modification actually re-defaulted. In total, 529,637 borrowers have washed out of the program to date.
• Roughly 364,077 borrowers are still in trials.
• There have been 389,198 permanent modifications to this point. These are people who otherwise would have lost their homes.

The bottom line: The Obama program has so far saved 389,000 borrowers from foreclosure, a number which will increase in the coming months and a number which is now nearly 100 times greater than the foreclosure prevention results under the Bush Administration.

Is it good that more than nearly 530,000 borrowers have so far dropped out of the program? Of course not, it’s a terrible thing to face foreclosure. But ask yourself: How come we suddenly have so many distressed buyers in the first place? When did the foreclosure mess begin? Why weren’t distressed borrowers helped before, when the foreclosure crisis first began to unfold? How much help and enthusiasm have lenders given the Administration? What better alternative has anyone been able to offer the 530,000 borrowers who did not succeed with Making Home Affordable?

Blaming the Obama program for failing to save more distressed homeowners is like a guy in a life raft who drills a hole in the bottom and then complains that everyone else isn’t bailing fast enough. It just isn’t right.

———————————

Published originally on the Huffington Post.

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“Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

“Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales — accounting for the bulk of transactions — are at the lowest level since May of 1995.”

If there’s an iota of good news from NAR — and there isn’t much more than an iota — it concerns home prices. Nationally they seem to have leveled out, though individual markets can present an entirely different story:

“The median existing single-family home price was $183,400 in July, which is 0.9 percent above a year ago.

“Single-family median existing-home prices were higher in 11 out of 19 metropolitan statistical areas reported in July in comparison with July 2009 (the price in one of 20 tracked markets was not available). However, existing single-family home sales fell in all 20 areas from a year ago.”

None of the news from NAR is especially surprising. The end of the first-time buyer tax credit in April inevitably meant that sales would drop, the only question was by how much. Now we have an answer.

What’s not understood, I don’t think, is the importance of the first-time buyer market.

It’s usually said that first-time buyers make up 40 percent of all existing home purchasers. That’s a fairly-impressive number, but as the expression goes that ain’t all folks.

You have to think through the logic of the first-time buying process because there’s a multiplier effect at work.

When a first-time buyer purchases a home they buy either a newly-constructed home or an existing property. When they buy an existing property what happens to the owners? They have to live somewhere and probably prefer an indoor location. So they take the money from their sales and traditionally move-up to a better property or move-over to a new location in another community. Some, of course, rent but largely that is not the case.

So now our seller — the party who sold that existing home to a first-time buyer — becomes a buyer and in most cases turns around and purchases from someone else. This second transaction would not be possible without the first-timer in the marketplace. You can see the process repeated to create a third transaction and perhaps a fourth.

The opposition to the first-time tax credit was largely based on the idea that it cost the government money and a philosophical objection to the government getting involved in the private sector.

But if you think about it the government does nothing but spend money. That’s how the streets get paved, crimes are stopped and medical research is funded. Given the hideous condition of the economy, it surely makes sense to spend government money to maintain the job base and help local communities. Nothing is more local than real estate and so the first-time tax credit was an intelligent, targeted, rational response to a very difficult problem, certainly no less worthwhile than giving money to Wall Street banks and brokerages.

Note to Washington: Bring back the first-time homebuyer tax credit. Now. And make it permanent so there’s certainty in the marketplace.

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Technorati Tags: 40 percent, Bush, first-time, home buyers, Obama, tax credit

The Detroit Free Press — The Freep — reports at the group’s arraignment that:

During the ongoing detention hearing, which began around 1:15 p.m., for eight alleged members of the group, Waterstreet played an audiotape of Stone saying, “Now is the time to strike and take our nation back. ? This war will come whether we are ready or not. We will fight alongside anyone that calls the new world order their enemy.” (See: Undercover agent helped in probe of Hutaree, March 31, 2010)

The government alleges that the group was first planning to kill a local police officer. Then, when lots of police gathered for the funeral, the event would be bombed to produce massive casualties among the police and their family members. This, in turn, would set off a national uprising against the government.

There are several points that ought to be raised.

First, in terms of real estate if you want to destroy a lifetime of work an insurrection is the way to do it. Think about it this way: there’s now a civil war in the Sudan. Would you lend money for a mortgage there at any rate? Would you build a retirement home there?

Second, the police aren’t anyone’s enemy. They have a difficult and dangerous job. The dull reality of civilized life is that societies need a police force. The thought that the country would be elated by lots of dead police is insane. Just look at what happened to the ranks of right-wing extremists after Timothy McVey bombed the federal building in Oklahoma City and killed 168 people — including 19 babies and children.

Third, there’s no country to “take back.”

In the last election Sen. Obama got 69,456,897 votes (52.9 percent) and Sen. McCain received 59,934,814 (45.7 percent). Once the results were in, Sen. McCain then offered one of the most gracious concession speeches of modern times.

“I urge all Americans who supported me,” said Sen. McCain in part, “to join me in not just congratulating him, but offering our next president our good will and earnest effort to find ways to come together to find the necessary compromises to bridge our differences and help restore our prosperity, defend our security in a dangerous world, and leave our children and grandchildren a stronger, better country than we inherited.”

“I wish godspeed to the man who was my former opponent and will be my president,” Sen. McCain added.

The judicial system will decide if those accused of seditious conspiracy are guilty or not. But what should be overwhelmingly obvious is the universal agreement among the American public that a better society will not be built by blowing up the one we have. You can bet your house on it.

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“President Obama’s mortgage modification program, known as the Home Affordable Modification Program or HAMP, was supposed to be the fulfillment of Obama’s promise to take care of Main Street more than Wall Street. Yet, just over a year into his presidency, Wall Street is on the rise and Main Street — or at least the homes that line it — remains on the decline. Not only has Obama’s $75 billion program failed to secure permanent mortgage modifation for more than 116,000 homeowners (while 3 million went into foreclosure) and not only does the Administration now say it won’t help more than 1.5 to 2 million homeowners overall, there’s actually more bad news: it seems to actively discourages lenders from loan forgiveness.” (See: Yet Another Failure for the Mortgage Modification Program, March 24, 2010)

Really? Is this news in context, national or otherwise?

Here’s some context.

Hope for Homeowners

The Bush Administration had two programs to help mortgage borrowers.

The Hope for Homeowners program resulted in 12 mortgages for distressed borrowers in fiscal 2010 and 23 loans in fiscal 2009. It says here that’s a total of 35 loans under the H4H effort.

FHASecure

Then, of course, there was the FHASecure program.

“The FHA will launch a new program called FHA-Secure, said President Bush in August 2007. “This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes. In other words, we’re going to start reaching out and making sure people know that this option is available to them so they can stay in their homes.”

And how many delinquent conventional borrowers got new FHA mortgages under the FHASecure program? There were 3,794 conversions in fiscal 2008 and 316 in fiscal 2009 — that’s a total of 4,110 borrowers who were helped.

Meanwhile, the Treasury Department says that as of the end of February 2010, “more than one million borrowers were receiving a median savings of $500 each month – a 36 percent median monthly payment decrease. Permanent modifications have been granted to 170,000 homeowners and an additional 91,800 permanent modifications have been approved by servicers and are pending only borrower acceptance.”

The truth is that no federal program will save all homeowners. But even the Washington Independent should be able to see the difference between fewer than 5,000 homeowners saved with the Bush programs over several years and more than 170,000 permanent loan modifications in less than a year.

Blaming the Obama administration for the inability to help more mortgage borrowers is like complaining about ambulances because they’re loud. It makes no sense.

The mortgage crisis did not start on January 22, 2009. It started when the federal government stopped regulating and allowed lenders to make toxic loans.

The Federal Reserve, under the Home Ownership Equity Protection Act (HOEPA), could literally have banned option ARMs, mortgage applications with no documentation and other “nontraditional” lending programs by defining them as “unfair and deceptive acts or practices.” Rather than use the authority it has had since 1994, the Fed did nothing to protect borrowers or mortgage investors.

And that’s a huge part of how we got here. Truth is, there would be no mortgage crisis today if the Federal Reserve had used its lawful authority. But then profits on Wall Street would have been smaller, bonuses would have been reduced and stock values would not have soared.

Photo Credit: FBI

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Critics of the program — and there are many and they are loud — will quickly overlook several issues:

First, not all borrowers are being helped. It’s true. But helping all distressed borrowers is not possible and has never been possible.

Second, the results are small compared to the problem. It’s true. But the problem of toxic loans did not start in 2009 when the Making Home Affordable program began, it started under the Bush Administration when lenders were allowed to ignore traditional underwriting guidelines and regulators did nothing to protect the public.

Third, no one will compare the Obama results to date with the results of the Bush Administration. But we will:

Hope For Homeowners under Bush resulted in 934 loan applications and 23 mortgage conversions.

The FHASecure Program was announced by President Bush in August 2007. At the time he said that “In the coming days, the FHA will launch a new program called FHA-Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes. In other words, we

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The problem? HARP has both a refinancing plan for those facing foreclosure and a separate modification plan for those who want to refinance but lack equity. Under HARP, you can refinance even if you’re home is worth less than your debt, but only a little less. HUD gives this example:

“Currently, only those borrowers whose first mortgage does not exceed 105 percent of the current market value of the property are eligible for the Obama Administration’s Home Affordable Refinance Program. For example if the property is worth $200,000, the borrower must owe $210,000 or less.”

125 Percent Plan

Now, however, the 105 percent limit has been raised to 125 percent. This means if the home is worth $200,000 a borrower can refinance as much as $250,000 in debt.

The HARP expansion is great news for homeowners in hard-hit areas such as California, Nevada, Arizona, Florida, Michigan, Illinois, Ohio and Pennsylvania. It means a very much larger number of borrowers will now be able to switch into cheaper and safer loans.

Caution

Prudent underwriting standards require that borrowers have equity. The Obama program allows people to refinance with no equity, not a penny. This is a risky proposition and goes far beyond traditional, and reasonable, lending standards. That said, the mess inherited by the Obama Administration requires unusual risks to prevent a worse financial situation from emerging.

Administration Increases Help For Distressed Borrowers is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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