Thank you for following us ( Facebook @ Hope for HomeOwners group ) with all information about President Obama’s Homeowner Affordability and Stability Plan.

• One important detail to remember is that not all borrowers are eligible for a loan modification (also called a “restructure”) or refinance offered by the plan.

• Today, most of the Lenders are not ready to accept applications for the loan restructure/modification or refinance opportunities explained in the plan.

• Because most of the lenders have not yet had time to develop a formal process, I ask that you please check with YOUR LENDER for updated information.

The Homeowner Affordability and Stability Plan is designed to help eligible borrowers with a restructure/modification or a refinance:

• Home Affordable Modification: Borrowers with high debt-to-income (DTI) ratios or who are at risk of foreclosure may be eligible to restructure their current loan through the Home Affordable Modification Program.

• Home Affordable Refinance: Borrowers with a Fannie Mae or Freddie Mac-secured loan WHO ARE CURRENT ON their monthly mortgage payments may be eligible to refinance into a new Agency secured loan if the current loan to value of their home is less than or equal to 105%.

EVERYTHING ABOUT THIS PROGRAM IS WRITTEN IN DETAIL – YOU CAN LEARN ALL ABOUT THESE PROGRAMS AT :

http://www.financialstability.gov/

Yesterday,  the Federal Reserve did another of their surprising moves announcing that they would purchase up to $300 billion of long-term U.S. Treasury securities and up to $750 billion of mortgage-backed securities in the next few months  as an additional  measure to resuscitate the sagging economy.

Certainly, the markets reacted as expected and the rate on a 30-year fixed-rate mortgage for credit-worthy borrowers fell to about 4.75%. However, other two interesting reactions took place as well. Wall Street soared after the Fed showed it isn’t yet out of ammunition to fight the recession, but the value of the dollar sank, a emphasized the reminder of the risk the Fed is running by printing money to give the economy another push.

Apparently, FED still counts on the foreign appetite but the overseas markets have subliminally stated to the FED all about inflation risks further down the road.

Consequently, the savings of every American will be affected as the dollar races towards rapid devaluation and the money printing exercise will cause massive inflation when the economy picks up.

The Fed is living up to its commitment to do everything in its power to deal with the crisis ( in my opinion better than doing nothing ), but when the crisis is over, a new concern called Inflation will show up.

If you got this far reading my article, then you should be asking yourself “ SO !!! what do I do now to protect my wealth “ .

The answer is very simple, and it has always been the same answer. REAL ESTATE has been, is and will be the best investment that in the long term to keep the value of your new worth.

As we might experience an unacknowledged deflation about to end, we will be able to purchase real estate at the lowest prices of this decade with the historical lowest  interest rates that will certainly be missed for a good time when inflation will hit.

What are you waiting for …. Sales and Close Outs are no longer only at the Malls.

Today, March 5 2009,  every single news source announced or commented on Obama’s housing-rescue plan that would help as many as one in nine struggling homeowners to avoid foreclosure specially for those who owe more than their homes are worth.

This new program introduces a consistent set of rules that mortgage services can voluntarily use to more easily modify loans for at-risk customers in whatever combination needed to make their mortgage loans affordable.

To qualify for the program, homeowners must sign affidavits attesting to their financial hardships and servicers with the government help may lower their mortgage payments by exploring a combination of measures to achieve a 31% debt-to-income (DTI) ratio.

Debt-to-Income Ratio is simply calculated by adding all the minimum monthly payments of your current debt ( including mortgage, taxes and insurance ) and divide it by your monthly gross income.

In order to help you ( Homeowner )  to understand how your Lender will calculate you  percentage of income that will indicate if you qualify or not for this helping hand, please click here to download your FREE LOAN MODIFICATION CALCULATOR ( if this link doesn’t work, please input this address in your browser : http://arielsegall.com/loanmodificationcalculator.xls )

This is an Excel spreadsheet ( about Microsoft Excel ) that will allow you to calculate your current Debt to Income ratio and will allow you to understand how much you should lower to mortgage payment to accomplish 31%

Questions and Suggestions are welcome by commenting on this Blog.

“What are mortgage interest rates based on?”

The ONLY correct answer is Mortgage Backed Securities or Mortgage Bonds, NO longer  the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.

“What is the next Economic Report or event that could cause interest rate movement?”

A professional lender will have this at their fingertips. At BuyandClose.com for example, we carefully review all the weekly economic reports and events that may cause rates to fluctuate.

“When Federal Reserve Chairman and the Fed change rates, what does this mean… and what impact does this have on mortgage interest rates?”

The answer may surprise you. When the Fed makes a move, they can change a rate called the “Fed Funds Rate” or “Discount Rate”. These are both very short-term rates that impact credit cards, home equity credit lines, auto loans and the like. On the day of the Fed move, mortgage rates most often will actually move in the opposite direction as the fed change. This is due to the dynamics within the financial markets in response to inflation.

However, during the last FED rate reduction on Dec 08, we all were surprised to see how mortgage rates went actually down as well due to the recent reports on non durable goods and fears of a deflation.

Hence, no longer make any assumptions on rate movements based on rules of thumb. Give us a call … we keep our fingers on the pulse of the markets by being subscribed to many monitoring systems as well as to various top notch advisory blogs. Let us watch the rates for you….

“Do you have access to live, real time, mortgage bond quotes?”

YES … YOU WE DO !!! By working with us you will be notified on how Mortgage Bonds and interest rates are moving in real time and warn you in advance of a costly intra-day price change. DO not talk with someone who is still reading yesterday’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.

Would you work with a stockbroker who is only able to grab yesterday’s paper to tell you how a stock traded, but had no idea what the movement looks like at the present time and what market conditions could cause changes in the near future? No way!

Be smart… Ask questions… Get answers!

More than likely, this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your entire life, but we do this every single day. It’s your home and your future. It’s our profession and our passion.

www.BuyandClose.com ]]> http://blog.ewm.com/2009/01/15/%e2%80%9cwhat-are-mortgage-interest-rates-based-on%e2%80%9d/feed/ 0 http://blog.ewm.com/2008/11/21/new-hope-initiatives-aimed-to-help-homeowners/ http://blog.ewm.com/2008/11/21/new-hope-initiatives-aimed-to-help-homeowners/#comments Fri, 21 Nov 2008 13:11:46 +0000 Ariel Segall http://blog.ewm.com/?p=13155

FHA and many other institutions have posted great information on their web sites about requisites and guidelines to qualify for this program, however I have not yet met the first Homeowner that has successfully refinanced his mortgage with this great program.

Hence, I’m offering a $50 Starbucks card to be drawn among those homeowners (*) whom genuinely can prove they have benefited from this program and can share with us their whole experience. It’s easy: Just leave a comment telling us your story ( we will contact you to verify facts ) and your best advice. I’ll choose a winner at random (US only, please) on Sunday, November 30 at 5:00 PM. EST.

Good luck, and for everybody’s sake please forward this sweepstake invitation to as many friends, relatives and clients as you can. By having all of us understanding that this program is for real and empowering ourselves to execute our rights for the same, then not only will all of us have a third alternative to foreclosures or short sales, but also our property values will at least keep a higher value in the long term .

(*) We need at least 10 Homeowners as of Nov 30th. to be a valid offer.

To register please join the group “Hope for Homeowners” in Facebook.

If the Homeowner  qualifies, and if the current lenders agree, the customer may be eligible for a partial write-down of their mortgage debt and a new fixed-rate FHA insured loan for up to 87% of the current appraised value. (90% minus 3% Origination Fee)

HOPE for Homeowners has a requirement for Equity Sharing that will affect the customer when/if the property is sold or is refinanced. It also has Shared Appreciation which will be owed to FHA when the property is sold. Therefore, we believe other workout options may be in the best interest of the customer long-term.

The customer must share with FHA the initial equity at the start of the new mortgage. Initial equity is defined by FHA as “the difference between the appraised value of the home at the time of the new FHA loan and the original balance on the FHA mortgage.” The newly created equity will be shared with FHA (if the home is sold or refinanced) as follows:

• During year 1 = 100% of initial equity to FHA/HUD
• During year 2 = 90% of initial equity to FHA/HUD and 10% to customer
• During year 3 = 80% of initial equity to FHA/HUD and 20% to customer
• During year 4 = 70% of initial equity to FHA/HUD and 30% to customer
• During year 5 = 60% of initial equity to FHA/HUD and 40% to customer
• After year 5 = 50% of initial equity to FHA/HUD and 50% to customer.

The equity sharing is used to reimburse the Treasury for the HOPE for Homeowners program costs on a declining basis. This is a one-time payment at time of sale or refinance.

What do you think ??? PLEASE COMMENT !!!!

Who is responsible for the current mortgage/real estate crisis?

A couple wishes to buy a home. Their income is approximately $125,000 per year.

Average home prices in their area are about $605,000. After their down payment they end up with a loan of $550,000. The lender will approve them for a loan but the payment is a tight squeeze. Technically they can “afford” the mortgage but they will need to be on a very tight budget to be able to pay their other bills and won’t have much discretionary income. They fall in love with a house and think it is a great buy as there are similar homes in the area listed for more. The couple goes ahead and makes the purchase.

Fast forward a year or two and home prices have dropped significantly and the couple now finds that they really can’t afford their mortgage after all. They are falling behind on the payments and face foreclosure. Who do we blame?

a) The Real Estate Agent. She knew that the home was probably a little more than the couple could comfortably afford and should have steered them toward lower priced homes or recommended they wait until prices come down a bit or have a larger down payment.

b) The Mortgage Broker. He is the expert in the home financing field and should have discouraged the couple from this much of a loan.

c) The Lender. They are the ones who set the guidelines and ultimately approve loans for people with high debt ratios and offer the creative financing options that allow people to qualify for loans that they can’t really afford.

d) The Couple. They should have been more responsible and not rushed into homeownership because ultimately they are the ones who will lose their home and ruin their credit.

e) All of the above

f) None of the above

“We are still falling !!! “

Yes indeed, this housing downturn will likely last longer than expected to rebound. Certainly, today’s economic scenario is unique and nothing from the past could 100% apply and rule out predictions for the future. We might well be experimenting the beginning of a world wide inflation or even worse stagnation. But lets go back to Florida.

This housing slump will last longer, at least in Florida, because of the high volume of foreclosures and the specific constraint in the credit markets for this particular area. So most likely, any buyer would ask himself: “Is this the right moment to buy or shall I wait a few more months for the prices to drop even further?”

As a Buyer, you might probably be nodding and scratching your head as you read this article, but beware to the actual figures of falling prices on an environment of tightening credit, and please read very carefully this Real Life scenario.

Please click here to download the Real Life Scenario.

After reading this scenario, you could conclude that even though prices are still failing, if credit guidelines tighten or interest rates increase, the bottom line result is that the your  monthly payment cash flow will remain unchanged.

Before a lender will discuss a short sale with a mortgage holder, typically,they must first miss at least one payment. Additionally, in most cases the lender will require the home owner to show proof of financial hardship that makes them unable to make the mortgage payments. Be aware that most lenders will literally look into every nook and cranny of your financial status before approving a short sale. However, some banks are starting to change and loosen some of their policies on a case by case basis due to current market conditions.

Bottom line, if the mortgage holder is never late on a payment, rarely will a bank accept a short sale. If a short sale is done, the mortgage holder would have been in default and thus late payments would appear on their credit score. In addition, the short sale would also have a negative affect on the mortgage holder, but not as much as a foreclosure on their record (from a credit score standpoint).

One thing is clear: banks don’t want to foreclose- they don’t want to own your house; they are in the business of lending, not real estate.

So the question is. What banks do look more favorably : short sales or foreclosures ?

Do lenders look at a short sale as a foreclosure when the borrower tries to buy another home ?

Your comments will be really appreciated, and a follow up Blog is on its way …