Previously the government was running a program to try and help homeowners who were caught “upside down” (who owe more than their home is worth) in the market. Despite their best intentions, this program was a failure. It was reported that 9 out of 10 people whom the program was intended for did not get help! As a result, they introduced the HAFA program.
HAFA stands for “Home Affordable Foreclosure Alternative” program. It opens the door to a lot of people who need help. It makes it easier to qualify for help (one of the biggest problems previously). For those who still do not qualify, or who choose to short sell their home, it provides $1,500 at closing to help them get started at their next residence (most likely a rental). This was intended to both help get the homeowner established and to motivate them to short sell their home because there is time and effort involved.
If you are struggling, please ask your lender about the HAFA program and find out if you qualify. It can help you save your home or help you get started at your next home. If you are looking to short sell your home, contact one of the agents at Tiered Real Estate who will be happy to help you.
In a previous post we discussed how you should approach you bank for help whether or not you are behind in your payments and start working with them right away. Many people have followed our advice and it has been difficult for everyone. A recent article discussed just how bad it is.
There are 2.7 million borrowers who are currently 2 months or more behind in their payments (according to the Treasury Department), yet offers have only been extended to 400,000 of those borrowers. That is a terribly low 14.8%. Only 235,000 of those have entered into some sort of agreement with their lender. This works out to less than 9% of the homeowners who need help are actually receiving it!
Before you start packing your boxes and swearing off your lender, we have some good news for you. We have been working with several homeowners who are part of the 2.7 million who are behind (not to mention several who are in trouble but not behind). One family in particular talked to their lender, filled out stacks of paperwork, talked on the phone and were rejected. While most would wash their hands and say “I’m done”, they persisted. They reapplied. They made more phone calls. They filled out more paperwork. They succeeded and received a loan modification!
The old adage appears to be true in the modern era. If at first the bank rejects you, don’t give up. Apply again! Truthfully, the banks don’t want to own your home and if all 2.5 million homes that are in trouble (and not receiving help) end up going through foreclosure, the banks will keep the market in the doldrums for years to come. In addition, the government is trying to help the economy and get the banks to use the programs they have implemented. Keep trying! You never know when a modification will be available for you.
If you need help figuring out your home’s value or if you want to sell your home, contact one of the great agents at Tiered Real Estate and we will be happy to help you!
The Fed is releasing details on their plan to keep 9 million borrowers in their homes. They have set up a website at www.FinancialStability.gov which will answer some common questions and help home owners determine if they are eligible.
If you want to sell your home contact a real estate professional at Tiered Real Estate and we will be happy to help you.
Recently there has been a lot of talk about ways to save the economy by giving money directly to Americans. It is a very intriguing discussion that has many possibilities. By giving money directly to Americans it removes the control that the government would have over the money or business who receive the money. It could be used for fixing a home’s financial situation. It could be used for investing. It could be gambled away at a casino or spent on drugs. There is no way that the government can know how it will be used. Most of the time, it will impact where needed and it most definitely will get money flowing in our economy.
If most homeowners used it to pay down debt, creditors would have a huge influx of cash. Mortgage companies could see billions of dollars hit their books while finding mortgages brought back into good standing. In addition, this flow of capital will make banks and other creditors more willing to offer loans again. First time home buyers will have down payment money. Economically stable families will have investment and vacation money. Spending will increase. Hiring will increase to fill the demand placed on our increasing consumption. Some potential retirees will get enough money to leave the workforce and create jobs for younger workers. The economy will start moving and it should start moving in a very short period of time.
What about the down side? The US government says that there are about 116 million households in the U.S. If every household was given $25,000 it would cost almost $3 trillion. Wow! A staggering cost. In addition, what happens with inflation and the value of our currency if the government passed out $3 trillion? It would be rough.
There are ways to reduce the cost. Offer the money to those who file income taxes and limit it to U.S. citizens. Only offer the money if your household income is under $250,000.
Another option is to offer the money to individuals instead of households. If the amount was $10,000 it could still cost $3 trillion if everyone received their money. However it would give more money to families who are larger and need more money and less to those who are smaller and need less money. Again, limiting to U.S. citizens and tax payers would reduce the overall cost.
A third option is to restructure the housing market and let the trickle-down work from there. Under one option, all loans would be reset to 4.5%. This would reward those who do pay their loans and save from foreclosure those who don’t while still putting money in the pockets of banks and largely eliminating the number of foreclosures. An alternate plan involves putting together local teams of real estate agents and appraisers who make independent valuations on homes. Then they work with the assessor and the banks to correct the amount of the loan and the taxes. The shortfall could then be made up by the federal government in one of their ‘bailout’ packages.
What do you think? This is an important topic that affects every one of us and will shape our economy for the foreseeable future. Post your opinions, ideas, suggestions and comments.
The first bailout has been voted down by the House of Representatives and now we are faced with what to do next. In all of the discussions, I found an interesting article from the Los Angeles Times that offers two points and at least one possible avenue of proceeding.
Something is likely to happen and it is likely to happen soon because no one wants to face the political fallout of doing nothing while the economy collapses (or playing fiddle while Rome burns). Regardless of how we got here, we are here and something has to happen (and if it is really to be the most effective and helpful, politics and greed will have to be cast aside).
We welcome all of your thoughts on the current financial crisis. Feel free to leave comments or e-mail directly to Webmaster@TieredRealEstate.com