Allowing Bankruptcy Judges To Modify Mortgages

The Mortgage Modification Bill that was recently passed by the House of Representatives and is still waiting approval by the Senate is a controversial topic that is constantly discussed . The bill would let judges reduce the value of a loan, extend the terms of the loan, lower the interest rate, delay the effective date of an adjustable rate increase and make other similar changes to a mortgage in order to save a persons home from foreclosure. This bill certainly alleviates a substantial amount of stress on the foreclosure market, but unfortunately this incentive is not available to any homeowners that can afford to repay their mortgages. Do you think it's fair to deny homeowners that ensure their mortgages are paid on time the opportunity to benefit from a modified mortgage that would help make their payments more affordable? This is definitely food for thought and is something I hear come up in conversation very often. What is your take on this?

Plan to Let Judges Alter Loans Stalls [WSJ]
Senate Democrats seeking support for mortgage cramdown legislation [Bubble Meter Blog]

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Friday Link from The Real Deal

Photo by directmoneyhomeloans on Flickr.

Earlier this month, Brooklyn Borough President Marty Markowitz urged Sen. Charles Schumer to investigate plans by Fannie Mae to raise the pre-sale requirements for mortgage loans in new condominium and co-op buildings.Fannie Mae will raise the pre-sale requirement for new mortgage guarantees from 51 percent to 70 percent starting March 1, 2009. Many officials are concerned that the new policy that 70 percent of a building be sold out before Fannie will insure financing will put dozens of new condo projects at risk as individual unit buyers will be unable to obtain bank financing. Some banks may still lend in buildings that don't meet the pre-sale requirements, but Fannie will not buy loans from those banks. - By David Jones [The Real Deal]

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Fannie Mae & Freddie Mac to the Rescue

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Fannie and Freddie suspend foreclosures [CNNMoney]

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Golden Age For First Time Home Buyers

Photo by PatchworkPottery on Flickr.

The housing market today is a very controversial topic in the media that people rarely take a moment to assess their own situations. Everyone's priority is different and although no one knows how to time the bottom, if you look over the past year bargains are definitely available, mortgage rates are at their all time lows and there are an abundance of tax benefits. There are still opportunities to buy new construction developments that are eligible for 421b tax abatement. Even if prices decrease further, if you are looking long term, I believe the next generation of wealth will be made in this market. The following NY Times article emphasizes the advantages first-time home buyers have if they choose to buy a home now. With constant talks about the federal government trying to drive down rates to 4.5% that is truly an incredible rate to lock into for the next 30 years. Also, income-eligible first-time home buyers won't want to miss the opportunity for a $7,500 federal tax credit, since the deadline is June 30th. Most people don't realize that first-time home buyers don't have the luxury of gambling on the market bottom. Once the market starts to turn around, existing home buyers who wanted to move years ago will quickly sell their current home to buy a step-up home.

We wouldn’t let another decline bother us, said Michael Proman. You can never time a bottom. This is a long-term investment for us (referring to their recent home purchase in Minneapolis), and it truly is the best investment we have in our portfolio right now.

It May Be Time to Think About Buying a House [NY Times]

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Feds to pick up bad mortgages

The U.S. government is attempting to head off a collapse of the financial system by promising to provide "hundreds of billions" of support for financial markets and institutions by purchasing troubled mortgages from banks and other institutions.

Bush administration officials including Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have briefed lawmakers on Capitol Hill on the "urgent need for Congress to pass legislation approving the federal government's purchase of illiquid assets, such as troubled mortgages, from banks and other financial institutions," President Bush said today. Read Full Article »

Feds to pick up bad mortgages [inmanNEWS]

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