Senate Approves Measure to Reduce Home Foreclosures

The Senate on Wednesday approved a bill that would expand federal efforts to prevent mortgage foreclosures, shield mortgage service companies from lawsuits if they participate in federal loan modification programs, and give renters of foreclosed properties at least 90 days’ notice before eviction.

The bill’s other provisions would make it easier to modify loans and give renters at least 90 days’ notice before being evicted.

The Senate bill, however, did not include Democrats’ most ambitious proposal to aid troubled homeowners: a provision that would have allowed bankruptcy judges to modify the terms of primary mortgages.

The new Senate bill does not include additional money to aid mortgage borrowers, but it does draw $2.3 billion from the Treasury’s $700 billion financial bailout fund for various provisions. The bill also would increase the borrowing authority for the Federal Deposit Insurance Corporation to $100 billion from $30 billion, a move that will save banks billions of dollars by reducing the extra premiums that they would have had to pay to shore up the deposit insurance fund.

“The bill does other things, but certainly, a major target is to deal with peoples’ housing issues and try to stem the tide.” Senator Jack Reed, Democrat of Rhode Island, a main proponent of the bill, had a strong role in the homeless prevention provisions and others that would give the Treasury secretary more latitude in deciding when to use taxpayer money to buy stock in financial institutions receiving bailout assistance.

The Senate bill would provide $2.2 billion for homelessness assistance and up to $440 million for prevention.

 

Sources

By DAVID M. HERSZENHORN
NYT

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Home Mortgage Applications Drop to Lowest Since Mid-March

U.S. home loan applications fell last week to the lowest level since mid-March, driven by a big drop in refinancing demand even as mortgage rates clung to record lows, according to the Mortgage Bankers Association on Wednesday. Refinance applications fell 21.9 percent in the week ended April 24, overwhelming the 0.6 percent dip in home purchase loan requests to drag the trade group's total loan index down 18.1 percent.The drop in total mortgage applications brought that index to 960.6, its lowest since 876.9 in the March 13 week.

The rate nearly matched the all-time low of 4.61 percent set in the week ended March 27 and was well below 6.01 percent a year ago.

Still, it remained well above 2,722.7 in early February, when the average 30-year mortgage rate was more than 1/2 percentage point higher. Refinancings represented about 75 percent of all mortgage applications last week, down from a nearly 80 percent share the prior week.

"A combination of the lowest rates in generations and a pretty healthy decline in property values in most parts of the country strikes me as something that certainly is positive for the housing market, although it's hard to predict certainly where the bottom in pricing will be," said Scott Happ, chief executive at Mortgagebot, a mortgage origination software company in Mequon, Wisconsin.

Sources:

Reuters

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Home Prices Drop 18.6 Percent in Feb.

In another sign the housing crisis could be reaching the bottom, home prices dropped sharply in February but for the first time in 25 months the decline was not a record. The Standard & Poor's/Case-Shiller index released Tuesday showed home prices in 20 major cities tumbled by 18.6 percent from February 2008.

Index shows housing prices falling by 18.6 percent in February, but didn't set annual record.

All 20 cities in the report showed monthly and annual price declines, but half recorded annual records. In fact, Phoenix home prices have lost more than half their value since peaking in July 2006.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David M. Blitzer, chairman of the S&P index committee.

Existing home sales fell just 3 percent from February to March, and new home sales seemed to have hit bottom. Consumers overall are becoming more optimistic about the economy.

By J.W. ELPHINSTONE AP Real Estate Writer
NEW YORK April 28, 2009 (AP)

Sources:
ABCNews

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Federal Loan Or Private Student Loans

Congratulations. You got into college and start in the fall. Now comes a bitter dose of reality. Perhaps the value of your parents' college savings has tanked and maybe the home equity loan they'd been counting on to cover tuition didn't go through and the summer job you thought was in the bag didn't materialize after all.

"Federal loans are cheaper, they have fixed [interest] rates as opposed to variable rates and they're more easily available" than private student loans, says Mark Kantrowitz, publisher of FinAid, a Web site that tracks the college financial aid industry.

Whatever the reason, millions of students rely on student loans to pay for some or all of college. In total, two out of three leave college with student debt. The average: A sobering $22,700 per graduate. (At least they have a degree to show for it; half the students who enter college never graduate, though many are still on the hook for student debt.)

Often, it takes these newly minted graduates one to three decades to pay it off. Given how much, and how long, the commitment is, it pays to know what you're getting--and whether it's the best deal going--before you sign any loan papers.

There are important distinctions between federal and private student loans, but they have one thing in common: neither is likely to be forgiven if you have to file for bankruptcy, making them lasting financial commitments. Unless, of course, you pay them off.

Before you take out a loan, throw aside the cliché that "college always pays" and ask yourself some tough questions. Will salaries in your desired field of study allow you repay the loan?

Put away the rose-colored glasses too. While every law student dreams of making $175,000 as a first-year associate, the reality is that very few earn those eye-popping salaries. Let a large salary be a pleasant surprise, rather than a requirement to pay off debt.

Research the average pay of the field you've chosen by going to the Bureau of Labor Statistics, a federal office that publishes the Occupational Outlook Handbook. Here, you'll find information on projected earnings, expected growth rates and typical work environments for most occupations.

Next, ask potential lenders for monthly loan repayment estimates in writing. It makes little sense to take out $100,000 in student loans to go into a field where you will be making $20,000 a year.

To make sure that you're not getting in over your head, limit the total amount of student debt you take on to the salary that you expect to make the first year out of college. That way, your monthly payments will likely be less than 10% of your take-home salary.

The right choices can save you thousands of dollars from the loans.

What to do if the numbers don't add up? See if there are other ways to finance some or all of your education. The first, and best, way is to limit what you pay in the first place. That means searching for scholarships and grants that may reduce the costs of college. The federal government lists grants (which do not have to be repaid) at studentaid.ed.gov. Private Web sites, such as FinAid, FastWeb and NextStudent, list scholarships.

Once you've minimized how much you'll have to borrow, it's important to keep in mind that there are two main types of student loans: those backed by the federal government and those issued by banks and other private lenders. In almost all cases, federal loans are the better deal for student borrowers.

One key difference between federal and student loans is how they charge interest. All federal loans written after July of 2006 have a fixed-interest rate, which means that the rate that you are quoted will not change for the lifetime of the loan. Private loans, in contrast, typically carry variable interest rates, meaning that they often reset every quarter based upon the interest rates that banks pay each other. Lenders will then add a percentage on top of this baseline rate to your monthly payment. There is no legal limit to the interest rate that private lenders can charge you.

The average private loan currently carries an interest rate of 12%, which is about double what federal loans charge, Kantrowitz says. Though both federal and private loans accrue interest while you are in school, you generally won't have to begin making payments until six months after you graduate.

The best bet? Don't let your enthusiasm for college overwhelm you. Instead, be methodical and have your parent or trusted adviser read over everything and render a second opinion. read more...

Sources:
David K. Randall from Forbes.com More on this article...