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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Obama Administration Expands Housing Aid Plan

The Obama administration said Tuesday it is expanding its plan to stem the housing crisis by offering mortgage lenders incentives to lower borrowers' bills on second mortgages.

Obama administration launches effort to aid troubled borrowers with second mortgages.

While home prices soared, such mortgages were even extended to borrowers with poor credit scores and people who didn't provide proof of their incomes or assets. That's because borrowers who are trying to get their primary mortgage modified at a lower monthly payment need the permission of the company holding the second mortgage.

The new incentives are estimated to help up to 1.5 million borrowers with second mortgages, Housing Secretary Shaun Donovan said.

As an incentive to modify second loans at lower interest rates, mortgage companies would get $500 upfront for each modified loan, plus $250 a year for three years as long as the borrower doesn't default.

Lenders would also be given the ability to remove second mortgages entirely in exchange for larger government payouts. The administration also plans to give mortgage companies $2,500 payments to entice them to participate in the "Hope for Homeowners" program.

Sources:
By ALAN ZIBEL AP Real Estate Writer
WASHINGTON April 28, 2009 (AP)
ABCNews

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