Foreclosure-Answers.org

Are Loans Through Brokers More Costly?

Consumers who get their loans through brokers typically pay more than those who obtain them directly from the lender, claims a study prepared for the Department of Housing and Urban Development.  The study by Susan Woodward, a former chief economist for HUD, says total fees on $105,000 brokered loans were $4,000, compared with $3,150 for loans made directly by the lender.

As we have always indicated it makes sense to shop around for the best quote.  Our personal belief is the big "brand-name" lenders are not as competitive as the smaller, lesser-known-shops, which brokers have access to but you may not.  The key is to have a few brokers know that they are in competition for your business, which will likely drive down the "spread" they quote.  This is very similar to what you would do if you were buying a used car -- call several dealers, tell them what your interested, and ask for their best quote.

U.S. Senate Strikes Deal on Housing Rescue

Democrats and Republicans in the Senate have ended weeks of negotiations with a plan that would allow the federal government to insure up to $300 billion in refinanced loans for struggling home owners.

Advice for Anyone Facing Foreclosure

The NAR has posted seven tips for homeowners facing foreclosure.  These include:

* being proactice

* know the details of your mortgage

* contact a HUD-approved housing conselor

* priortize spending

*  sell other assets

Fannie Mae Loosens Lending Standards

In an effort to provide stability for the housing market, Fannie Mae has reversed the tightening standards put in place last year.  The sharp drop in housing prices last year prompted a sharp tightening of lending standards, which included putting down an extra 5% down payment in areas deemed "declining markets."  With the reversal, homeowners can again get loans up to 95% LTV -- even in markets where prices have been falling.

Overall, this is good news at the margin, as it should allow first-time homebuyers better access to loans, and also should allow more homeowners to qualify for refinancing.  Again, the Fed, government, and the agencies are all doing everything possible to stop the blood-letting in the housing market.  And their efforts have without question helped what would have otherwise been a much worse scenario.  Fannie Mae goes on to point out, however, that buyers still need to get Mortgage Insurance, which has become much more difficult in the current environment.

RealtyTrac: April Foreclosures up 4%, 65% y/y

RealtyTrac.com, the leading online marketplace for foreclosure properties, today released its April 2008 U.S. Foreclosure Market Report, which shows foreclosure filings -- default notices, auction sale notices and bank repossessions -- were reported on 243,353 properties, a 4 percent increase from the previous month and a nearly 65 percent increase from April 2007. The report also shows one in every 519 U.S. households received a foreclosure filing during the month.

"Although only about 2 percent of households nationwide are in foreclosure, these properties contribute to already bloated inventories of homes for sale, and put downward pressure on home values. Areas of California, Florida, Nevada and Arizona continue to be particularly hard-hit. Property tax bases are eroding, putting municipal budgets in peril. For example, the city council in Vallejo, California -- part of a metropolitan area with a foreclosure rate that ranked sixth highest in the nation in April -- last week voted to have the city file for bankruptcy."

NAR: 100 out of 149 MSA had Price Declines

The National Association of Realtors reported that 100 out of 149 metropolitan statistical areas had price declines in Q1.  The median existing single-family home prices was down 7.7% y/y.

This is stale data, but the trend is not expected to slow for at least another few quarters.  The key will be how the labor market holds up for the rest of the year.  The back-up in the unemployment rate has been well short of what is typically the case during recession.  Historically, job-loss is the biggest factor affecting local real estate markets.  While the reset of interest rates has dominated in the current correction, especially among more marginal buyers, if the economy can continue to post respectable growth it will provide an important pillar of support for the housing industry.

BankRate.com: Be Patient on Workouts

Bankrate.com has an article today highlighting the need to be patient in seeking a workout.  Loan servicers are overwhelmed by the number of problem loans.  Homeowners in trouble should plan for lengthy delays, numerous requests for paperwork, and be persistent. 

Connecticut Passes Sweeping Mortgage Aid Bill

While housing-related legislation remains stalled and hotly debated on Capitol Hill, Connecticut’s House of Representatives on Monday joined a growing list of states enacting their own more local legislation targeting the ongoing housing mess, passing a wide-ranging bill that lawmakers in the state say will help struggling homeowners.

Under the bill’s various terms, the CFHA will receive $70 million for refinancing troubled mortgages, and would see the statutory limit on uninsured mortgages that CHFA can hold raised from $1.0 billion to $1.5 billion. The bill also creates a right for borrowers to appeal to the Banking Commissioner for a six-month moratorium on foreclosures, and establishes a program that allows the CHFA to buy foreclosed property and use it for affordable housing.

For homeowners having trouble making payments, we urge you to search your state for any regulatory changes that could help.

Zillow: Half 2006 Mortgages Underwater

Real estate information website Zillow.com reported that home prices had their worst quarterly performance in a decade and half the homes purchased in 2006 now have a mortgage more than they are worth.  This is more bad news for banks and homeowners.

Congress Approves $300 bln Mortgage Bill

U.S. House Committee approved $300 bln distressed mortgage bill earlier which would help assist over 2 mln homeowners facing foreclosure risk. Not only will the funds be provided, but the FHA will be given new authority to back the loans, according to the House Financial Services Committee that has been carefully sculpting the legislation. The bill will go for a full House vote next week, as the Senate version is drafted.