The AP is reporting that there are some new efforts being put in to the trying to defeat the mortgage slump. By providing additional resources to finance new first time home buyers they are looking to help give the market the pep it needs to get going. We for one feel that this is going to get a whole lot worse before things get better and even then it will be a slow economic recovery. We went into this problem with a fairly strong economy and the peak of loan set to reset in this case is much larger. Anyone with knowledge of payment option arms knows that there is nothing that can be done modification wise in most cases because if the homeowner is having trouble affording that payment then they can’t even be moved to an interest only loan. As the minimum payment is around 50% of the interest the homeowner is likely to need some major work to be negotiate an arrangement that will work for them. We do these on a regular basis for our clients but depending what the lowest interest rate that is available for a modification varies greatly per investor.
Administration unveils new effort to provide mortgage financing for state housing agencies
WASHINGTON (AP) — The Obama administration on Monday unveiled a new program to support state and local housing finance agencies. The plan will help the agencies finance mortgages for first-time homebuyers and develop rental housing.
The agencies have had a hard time raising money because of the housing crisis and credit crunch. This year, the agencies have sold about $4 billion in tax-exempt bonds — one-fourth the amount in a typical year. That reduction is limiting the number of loans they can make.
The new program uses mortgage finance companies Fannie Mae and Freddie Mac to help fix the financing crunch. The two companies will package mortgages made by the housing agencies and sell them as bonds to the Treasury Department.
“It’s an additional layer of assistance to borrowers who are seeking a mortgage at a time when credit is scarce,” said Howard Glaser, a mortgage industry consultant in Washington. “It doesn’t solve all the problems of the housing market, but every little bit helps.”