ATTENTION-INDYMAC BOROWERS!

Good News! If your loan is with Indymac Bank, the federal government has just announced that if you are 'seriously delinquent' or in default on your mortgage and it's from Indymac, you will be able to switch it to a fixed rate loan with an interest rate of about 6.5% per annum. So far, no one has defined exactly what is meant by 'seriously delinquent' or how it differs from default. However, just the fact that the FDIC, who is managing the failed bank, is willing to do this is definitely a big plus. Basically, it requires that you be able to accurately document your situation when you apply for the switch. The best way to get started is to go to your local Indymac location, and ask about this plan.

Housing & Economic Recovery Act--Details

Well, Pres. Bush finally signed this act a couple of weeks ago, providing some much needed help to suffering homeowners. Although best estimates are that it will benefit only 4-500,000 of those owners in danger of losing their homes to foreclosure, it goes a lot farther than any earlier "solutions" offered by the administration.

Highlights are as follows:
A.) The FHA will be permitted to insure up to $300 Billion in refinanced mortgaged mortgages. This will give lenders an incentive to refi many existing loans that may face default and foreclosure.
B.) Provide $3.9 Billion to local communities to buy and rehab foreclosed properties in especially hard hit areas. This will create a new source of affordable housing and help avoid some blight.
C.) Provide a wide range of new support from the Treasury to both Fannie Mae and Freddie Mac. This support will include purchase of some of their loan portfolios as well as buying stock in the firms. As these two organizations own or guarantee about half of all mortgages in the nation, this is a vital step in re-establishing confidence in the mortgage market while also increasing liquidity for home buyers seeking loans.
D.) Cap loans that Freddie & Fannie can buy, and that FHA can insure, at $625,000. This is higher than the old figure of $417,000, though below the $729,750 temporary limits for high cost regions.
E.) Provide $15 Billion in tax breaks, including a credit of up to $7500 for first time buyers buying between April 9, 2008 and July 1, 2009, as well as a deduction on 2008 property taxes for those taxpayers not itemizing.

New Hope for Californians

The state of California has announced a new program to help first time buyers buy and banks with REO's in certain areas sell those properties to the benefit of both groups. The California Housing Finance Agency has received a $200 Million allocation of bond funds for use in the Community Stabilization Home Loan Program. This will likely help between 800 and 1,000 Californians buy their first home.
It's only available for specific REO properties owned by one of the four following banks: Wells Fargo, HomeEq, CitiMortgage and Fannie Mae. All of these lenders have agreed to price the properties at 12% below market value.

The program also only applies to the following areas: the counties of Merced, San Joaquin, Riverside and Stanislaus. Also covered are certain specific Zip Codes in Alameda, Contra Costa, LA and San Bernardino counties. It will provide 30 year fixed rate loans at 5.5%, with no down payment. Borrowers must pay the expense of mortgage insurance. There are also certain income limits for borrowers. This can be found at links.sfgate.com/ZEGL .

The Fed Speaks!

For those of you who look at foreclosures as a possible investment, as well as anyone else looking to finance a real estate purchase, the Fed announced new regulations last week. Basically, the Fed is now requiring that banks perform full due diligence before making a real estate loan. This means that from now on, banks will be acting more responsibly in deciding who borrows and who is denied. Instead of taking a borrower's word for it on income, the lender will require proof of income. Stated income loans are, happily, a thing of the past (they never should have been allowed in the first place). Lenders will also have to be more careful in the appraisals they accept for a property.

What all of this means is that the lenders will be doing what they historically used to do before greed and stupidity took over much of the lending process.

Good News for Maryland

The state of Maryland has recently enacted some new legislation to help those facing foreclosure. In one case, homeowners will have extended periods of time to attempt to resolve their default situations before a foreclosure can be completed on their homes.
Separately, lawyers doing pro bono (free) work for homeowners facing default/foreclosure can assist in one of three ways: 1.) direct representation of the homeowner; 2.) brief assistance and advice to the owner; and 3.) Of Counsel representation. In the third case, they would act to assist regular counsel for groups offering assistance to homeowners. This initiative's importance was given added emphasis by an open letter sent to all attorneys in the state by the Chief Justice of Maryland's Court of Appeals, Justice Bell.

Finally, the State Bar has published a free booklet for homeowners on benefits under new foreclosure assistance laws in the state.

Governor Signs Bill in California!

Last week I mentioned that the California legislature had sent a bill to Governor Schwartzenegger providing for some preventive action, as well as tenant protection in a foreclosure.
Yesterday, July 8, the governor signed the bill, SB1137, into law. It forces lenders to contact defaulting homeowners sooner in the foreclosure process to attempt to work out some non-foreclosure resolution to the problem where possible. It also requires that once a property is foreclosed upon, the lender must provide the tenants 60 days notice to move instead of the previously mandated 30 days.

It also provides local communities the right to pass ordinances that would require the foreclosing lender to maintain the outside appearance of the property so as to avoid urban blight that often comes when a home remains vacant for a long period.

In California, Some New Help!

Yesterday, July 2, 2008, the California State Senate overwhelmingly passed and sent to Governor Schwartzenegger a bill providing some relief for homeowners facing foreclosure and for tenants in properties already foreclosed upon. The governor has indicated that he will sign the bill, which, if signed, would take effect immediately.

It would require lenders to contact homeowners by phone or in person at least 3o days before filing a Notice of Default, and also undertake discussions wit the homeowner about alternative options on repaying the loan.For tenants of foreclosed properties, the bill would increase the time before eviction of those tenants from the present 30 days to 60 days. This would give the affected tenants a bit more time to locate new quarters before having to move.

Separately, the bill also would allow local municipalities the authority to fine owners of vacant lots that are not being maintained. This is an attempt at slowing potential blight of an area that has been foreclosed upon.