The foreclosure rescue bill is poised to take off. By it both borrowers facing foreclosures and banks riddled with foreclosure related losses would benefit. Both the parties are supporting the bill for the general welfare. If all goes well than the bill will sail through the Senate on Friday 25th July. There are bumps ahead with some alterations required. The White House has been threatening to veto if certain major changes are not rewritten. But it seems that the preliminary hurdles have been crossed and the package is running on the proper tracks. The Senate has broadly supported it. This shows the general interest of the lawmakers belonging to both parties. Uppermost on their minds has been the welfare of the foreclosure victims. It must not be overlooked however that this is the election year and the economic weather right across the country is grim.
The main point of the bill will allow the Federal Housing Administration to support up to $300 billion of new loans that will be made to borrowers at risk from foreclosures. The new loans will have easier more affordable terms. The rate will be fixed for longer period. The lenders on their part will have to waive large chunks of the principal and thus avoid costly foreclosures.
Barney Frank (Democrat) chairperson of Financial Services Committee is one of the main architects of the bills. He commented that a number of leaders of the House are seeking some important revisions. These differences will be ironed out within the week. The week will be one of intense parleying at Capitol Hill against the background of Bush agreeing to sign the bill or not.
The FHA will be modernized and given a shake up. This has been a long-standing demand. A new regulator will be set up and there will be more strict control on Fannie Mae and Freddie Mac. The latter two are government-sponsored giants. The bill will also sanction $14.5 billion in relief from housing taxes. New buyers who would be purchasing properties for the first time will be getting a credit for $8,000.
The Democrats in the Congress are disunited over some important points of the package relating to limits on loans to be supported by FHA, amongst other things. Difference of opinion surrounds Freddie Mac and Fannie Mae also. The Senate wants to limit them to $625,000 but some, including the Speaker Nancy Pelosi want to cap it at $730,000. via
Sub-primes are no longer the main reasons for foreclosures. Today the main culprit is the rapid decline in real estate prices.
The foreclosure epidemic of North County is rapidly spreading not because of sub-prime so much as because of many other factors that have led to a fall in the real estate market.
Oceanside and east Escondido were two of the worst affected regions. During the past three months the numbers have gone down. But foreclosures have marched into the adjacent areas of San Marcos and Carlsbad where the numbers are growing. Experts say that today the problem is not so much the risk factor as the decline in property prices that is triggering off foreclosures. It has become a vicious circle – price decline is leading to more foreclosures and more foreclosures are leading to further price decline. Sean O’Toole of ForeclosureRadar that tracks foreclosures commented’ “It’s like a toilet bowl effect.”
According to the findings of a study conducted by the Boston Federal Reserve, house owners who lost over 20% of the value of their houses are 14 times more susceptible to be cursed by foreclosure, than a typical borrower. In sharp contract sub-prime borrowers are six times more likely to succumb to foreclosures than prime borrowers.
According to ForeclosureRadar north Oceanside saw a drop in foreclosures during the last three months, but San Marcos foreclosures increased by 28% during the same three months. The problem is also growing in Vista and Carlsbad affecting the higher priced houses.
Ward Hanigan of Innovest, an investment firm of San Diego opines that this trend will continue till 2010. His company is biding its time for the foreclosure weather to change. The signal will be when banks will be selling properties in a wholesale manner with two or three being sold at one go. As yet that liquidation mind set has not begun, he commented.
New default numbers are declining. The default notice is the first step in the judicial process of foreclosure. In North County foreclosure proceedings have been finalized on 30% of the foreclosed units. Bank owned properties make up above 40% of the foreclosed units. It indicates that sub-prime lenders have been successfully been able to work out many loans satisfactorily without going into foreclosure. Another pointer to the domination of price being the main factor in foreclosures is the negative equity of the properties in question.
The Federal Bank of Boston and The New England Patriots Charitable Foundation will be hosting a foreclosure prevention workshop at Gillette Stadium. No fees will be charged. It will be held on Tuesday 12th August. Starting from 1 pm it will continue till 8 pm. The workshop will be a great opportunity for foreclosure victims [...]
Reports coming in from Ohio show that the tenants are the silent victims of the foreclosure crisis. Their voices remain unheard. The income of the ordinary people is also going down because of the foreclosure tornado.
With more and more people being evicted from their houses the demand for rented accommodation has gone up. A recent [...]
Statistical evidence shows that over half of all Black borrowers who refinance in 2006 were made to swallow sub-prime mortgages. Latino borrowers faced a similar situation. Together they will suffer a loss ranging from $164 billion to $213 billion in the surging tide of foreclosures that have been wrecking havoc since that time.
Each family [...]
The surging foreclosures have deeply concerned the Federal Reserve Bank. Its San Francisco president, Janet Yellen has taken grave note of the impact on the foreclosures on families and localities. She was speaking at a conference in Los Angeles regarding community stabilization problems following the foreclosure crisis.
She said the swift pace of rising foreclosures has [...]
In the Tri-Cities foreclosures are increasing and this is leading to a rise in the activities of rental agents. In 2007 there were 1,098 foreclosure postings in Saginaw marking a jump of 23%. In Bay County there were 403 evictions showing an increase of 9%. In Midland the tally of foreclosures was 207 – 6% [...]
All the indications are there of the worsening of economic gloom as foreclosures continue to increase unabated. The crisis gripping Fannie Mae and Freddie Mac, the two pillars of the mortgage industry, spells disaster. It means that getting a loan to buy a house is going to be more difficult than what it already is. [...]
