Margert in the News
Fannie Mae to Rent
Foreclosed Homes Back to Borrowers
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The Wall Street Journal
By Nick Timiraos
Fannie Mae plans to allow homeowners
facing foreclosure to stay in their homes and rent them for up to one year as
part of the latest effort to help troubled borrowers while keeping a glut of
foreclosed properties from hitting the housing market.
The Deed for Lease Program, which Fannie plans to roll out on Thursday, will
offer borrowers who fail to complete or don't qualify for a loan modification or
other workout to deed their property to the lender in exchange for a lease.
Borrowers-turned-tenants will be able to sign leases of up to 12 months and will
pay market rents, which in most cases are lower than the cost of mortgage
payments.
Fannie Mae wouldn't say how many homeowners it expects will take advantage of
the program. The company acquired 57,000 properties through foreclosure during
the first half of the year, bringing its total real-estate owned inventory to
63,000 properties valued at $6 billion. The rental program will allow Fannie to
hold inventory off of already saturated housing markets and makes a bet that the
housing market will be stronger one year from now.
"If you keep more people in their homes, it's better for the community. It's
better for the financial institutions that own those homes," says Jay Ryan, vice
president of equity investments at Fannie Mae. "Hopefully less foreclosure
product on the market will help stabilize those communities."
Borrowers who haven't missed any mortgage payments aren't eligible for the
program, and the borrower's mortgage servicer would have to show that a borrower
isn't eligible for a loan modification before the homeowner could apply for the
Deed for Lease program.
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Home-Purchase Index in U.S. Plunges to Lowest Level Since 2000
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Nov. 12 (Bloomberg) -- Mortgage applications to purchase homes in the U.S.
plunged last week to the lowest level in almost nine years as Americans waited
for the outcome of deliberations to extend a government tax credit.
The Mortgage Bankers Association’s index of applications to buy a house dropped
12 percent in the week ended Nov. 6 to 220.9, the lowest level since Dec. 2000.
The group’s refinancing gauge rose 11 percent as interest rates decreased,
pushing the overall index up 3.2 percent.
The drop in buying plans points to the risk that the recent stabilization in
housing will unravel without government help. In a bid to sustain the recovery,
Congress passed and the administration signed a bill last week to extend jobless
benefits and incentives for first-time homebuyers, adding a provision that also
made funds available to current owners.
“Uncertainty over the housing tax credit sent some tremors through the market in
recent weeks,” Michael Larson, a housing analyst at Weiss Research in Jupiter,
Florida, said before the report. “But now that Congress has extended and
expanded the credit, we should see demand pick back up.”
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Mortgage Delinquencies
Hit another Record in 3rd Quarter
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NEW YORK (AP) - The pace at which people
fell behind on their mortgages slowed during the summer for the third
consecutive quarter, but the overall delinquency rate hit another record, a new
report shows.
For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60
or more days past due, according to credit reporting agency TransUnion. That's
up 58 percent from 3.96 percent a year ago.
Being two months behind is considered a first step toward foreclosure, because
it's so hard to catch up with payments at that point.
The rate was up 7.6 percent from the second quarter. That's a much smaller jump
than the 11.3 percent rise in the second quarter from the first, and the 14
percent leap seen in the quarter before that.
While the slowing growth rate is a positive sign, the increase shows there's
still a lot of problematic mortgages out there, said F.J. Guarrera, vice
president of TransUnion's financial services division. The company doesn't
expect the figure to start declining until the middle of 2010.
Two things must get better before mortgage delinquency rates start reversing
themselves, he said: home values and unemployment. "Until we see improvement in
both of those areas, it's possible that it will take longer for delinquency to
improve," Guarrera said.
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New York Foreclosures Slowed by Loan Modifications
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New York foreclosures for sale declined in October as more distressed
homeowners were able to negotiate loan modifications with their lenders.
According to a report released by the Treasury Department, New York was among
the states with the highest number of loan modifications as of October 31. New
York had 27,773 of its home loans modified. California topped the report with
134,609 mortgages modified. Second was Florida, which posted 82,614
modifications and Illinois was third with 33,514.
New York was fourth in loan modifications despite its lower ranking in total
number of foreclosures. This indicated that more distressed homeowners in New
York were qualified under the Home Affordable Modification Program.
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