What you need to know about a Reverse Mortgage

Seniors sixty-two and older may well be in luck, even in these harsh economic times, due to an interesting little thing called a “reverse mortgage.”

A reverse mortgage not like the mortgage you took out to pay for your home – you don’t pay anything but interest to the lender, because you are essentially borrowing money from yourself. What does this mean? Well, in a reverse mortgage, you’re extracting the value or “equity” of your home and converting it to money that you can use. This might seem a little shady – what happens when you’ve used up all your equity? Will the lender take your home from you?

In a word, no. A reverse mortgage isn’t like that at all. With a reverse mortgage, you receive either a lump sum right now, or a payment once a month from now until you stop living in your home (you pass away, sell your home, go into a nursing home, or otherwise aren’t there for an extended period of time). On the sale of your house, you or your heirs will receive whatever remains of your equity, minus fees and interest.

However, you have to be careful and do your research – there are several different types of reverse mortgage, and it’s your decision, in the end, which one you choose. Among these different types of reverse mortgages, there are:

 Single purpose reverse mortgages: these are the least expensive, and so are most suited for those seniors with the lowest income. However, this also means that these mortgages give you access to the least percentage of your home’s equity – about enough to cover some of your property taxes or home maintenance.

 Home equity loan or line of credit: if you can afford to make a small payment each month and have good credit, this could be the reverse mortgage for you. It provides you with more money to use, while still remaining fairly cheap.

 HECM Standard and Saver reverse mortgages: these mortgages are backed by the Federal Housing Administration, so you can be absolutely certain they’re legitimate. The Standard version takes 2% of your equity off the top, but you get access to 20% more of your equity overall than you get with the Saver mortgage, which only requires .01% of your equity to get.

 Jumbo reverse mortgages: these are for seniors with very high end homes, because there is a cap to the HECMs mentioned above. However, they are not nearly as regulated, and could be considered a risky gamble.

If you’re thinking about a reverse mortgage, but still have questions, explainreverse.com can help you. Their team of specialists will help you negotiate with your lenders and decide what the best mortgage is best for you and your home.

For more information, please visit www.explainreverse.com

House votes to end emergency mortgage aid

The House has voted to end a program designed to give federal loans to homeowners who can't make mortgage payments because they've lost their jobs or become ill.

Lawmakers approved the Republican-written bill Friday by a mostly party-line 242-177 vote. It marked the second time in two days that the House has voted to end aid for struggling homeowners.

The White House has threatened to veto the bill should it reach President Barack Obama's desk, saying the program would help keep people in their homes. Republicans said with sky-high federal deficits, it is time to make the government smaller and help companies expand and create jobs.

The $1 billion Emergency Mortgage Relief Program was created in last year's financial overhaul law, but has yet to make any loans.

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Cutting mortgage giants?

Mortgage giants Fannie Mae and Freddie Mac played key roles in the housing market meltdown just a few years ago. President Barack Obama has proposed dissolving the two companies. Some Republican leaders have praised the plan. What's not to like?

Not so fast. Indeed, Fannie Mae and Freddie Mac, through incredible mismanagement, helped bring on the current recession. But their roles in the mortgage loan system are so gigantic and basic that simply eliminating them without ensuring an adequate replacement is ready would be imprudent.

About half the home mortgages in the United States are either owned or guaranteed by Fannie Mae or Freddie Mac. They and other federal agencies played some part in issuance of as many as 90 percent of the mortgages issued during the past year.

Obviously, the two companies cannot be wiped out with the stroke of a pen. Doing away with them - while clearly a good idea - needs to be a slow phase-out as some mechanism of handling what they do now is put in place.

Again, Republican leaders in Congress seem to like Obama's proposal. But all involved need to take a very close look at the Obama plan to ensure it does not replace two evils with what might amount to anarchy in the mortgage industry.

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What Is A Reverse Mortgage And Is One Right For You

Are you sixty-two or older? Are you worried about your monthly income in today’s economy? If your answer to these questions is a resounding – or even whispered – “Yes,” then maybe it’s time to look at taking out a reverse mortgage on your home.

Maybe you’ve heard of a reverse mortgage before, but you aren’t sure what it means. Well, the financial definition is that a reverse mortgage involves a lender paying you a portion of your home’s equity until you stop living there. In laymans’ terms, you’ll receive either one lump-sum payment or a check every month related to the value of your home, until you (or your heirs) sell the house, you pass away, or you are otherwise not be there for an extended period of time. The amount of money you receive depends upon your age, the value of your home, and current interest rates, and this money is tax free, since it’s a conversion of your own capital – you’re essentially borrowing from yourself. Also, when the house is sold, you or your heirs will receive the proceeds, minus the fees, interest incurred, and the equity you’ve already used. Best of all, you can’t owe more than the equity in your home, and your home cannot be taken away from you when you’ve “run out” of equity.

While any reverse mortgage is best for healthy seniors who intend to spend a long time living in their own homes, there are several kinds of reverse mortgages, and it’s important that you do your research as to which one is best for you and your home. These different types include:

1. Single purpose reverse mortgages: these are the least expensive, often causing little or nothing to you, though the payout is also the lowest. These mortgages are best for the lowest-income seniors, and they will help cover some of your property taxes or home maintenance.
2. Home equity loan or line of credit: this type of reverse mortgage is suited for seniors who can make a small monthly payment and have good credit. These can also be very cheap to obtain.
3. Home Equity Conversion (HECM) Saver reverse mortgages: these mortgages cost a tiny .01% of your home’s equity to obtain, though you will receive about 20% less of your home’s equity than the otherwise very similar HECM Standard loan. Both of these loans are issued by the Federal Housing Administration.
4. HECM Standard reverse mortgages: this mortgage costs about 2% of your home’s equity right off the top to obtain, though you will receive more money yourself than you would with the three aforementioned mortgages.
5. Jumbo reverse mortgages: these are not as regulated as the two HECMs mentioned above, but they could be better for a senior with a more high-end home. Just remember to shop very carefully.

If you still have questions, bestreversemtg.com can help you! Their specialists will help you negotiate with your lenders to figure out what reverse mortgage best works for you and your home.

State AGs settle with mortgage servicers

The American Banker released a settlement online Monday it said is authored by state attorneys general outlining a code of conduct for mortgage servicing.

All 50 state attorneys general met in Washington Monday at a National Association of Attorneys General conference, where Tom Miller hosted an update panel on the multistate foreclosure probe. Miller's communications representative Geoff Greenwood said the settlement, also known as "the term paper," has not been formally released. Greenwood said the leaked settlement is just a draft and not a final agreement.

The settlement is basically an outline for home borrower redress from the nation's mortgage servicers, especially in nonjudicial states — that is where a court is not required to review a foreclosure case.

"These provisions also apply to bankruptcy proceedings to the maximum extent possible, including proofs of claim and motions for relief from stay filed by or on behalf of" the mortgage servicer, the settlement reads.

In the settlement, there are 16 points mortgage servicers must follow for foreclosure affidavits. These are at the expense of the servicer and require confirmation that all documents are reviewable.

Robo-signed documents need to be reviewed, with proof required that proper processes were taken.

There are a further 12 points for requiring the accuracy and verification of the borrower's account information.

Dual track foreclosures are prohibited. A servicer cannot make a referral to foreclose or file a foreclosure "until borrower/applicant has been sent a written denial by registered mail of all loss mitigation programs for which the borrower is potentially eligible," the settlement says.

Other loss mitigation duties on the part of the servicer include extensive exploration into modified payment options for the borrower. Servicers are required under the agreement to "thoroughly evaluate" the borrower and his or her payment options, as well as "have an affirmative duty to promptly offer and provide" appropriate options.

If a borrower is enrolled in a trial period plan under the Home Affordable Modification Program and makes all required trial period payments, but gets denied a permanent mod, the servicer must suspend all foreclosure-related activity.

Servicing timelines are being condensed. A servicer must make a loan modification decision within 30 days of receiving all applicable documentation.

"Servicer's compliance with this agreement shall be monitored by an independent third party," the attorneys general said in the statement. This overseer would be selected by the AGs themselves and the Consumer Financial Protection Bureau.

Under the settlement, is a regulation for a single point of contact at the servicing firm — essentially one servicer per case, who keeps the borrower updated on servicer contact information and loss mitigation activities. Along with this servicers will create a single electronic record for each account.

The state's attorneys general also agree, in the document, to review the Mortgage Electronic Registration Systems at a later date.

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States: Let's make a deal to help homeowners

State attorneys general have launched talks with big banks accused of illegally foreclosing on homeowners with the hopes of reaching a deal that could result in more mortgage modifications, a top negotiator said Monday.

Iowa Attorney General Tom Miller has been leading a 50-state probe into mortgage servicers' foreclosure practices since October.

The negotiations are between the attorneys general and federal agencies on one side, and the five largest mortgage servicers, which comprise 59% of the market.

The AGs did not indicate which banks they are negotiating with. However, the five largest servicers are Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM), according to Inside Mortgage Finance.

Miller refused to confirm reports that the talks have included a proposed $20 billion settlement or a requirement that servicers provide that amount in mortgage modifications to underwater homeowners.

But the final deal could have a major impact on the housing market, making it easier for homeowners to get mortgage modifications, including reductions in the principal amount they owe on their house in some cases, Miller said.

Federal and state officials gave the mortgage servicers a 27-page opening offer late last week but Miller refused to give details of the offer, citing the ongoing negotiations.

So far, the federal government has shied away from forcing banks to offer principal reductions. Instead, the priority has been to lower interest rate payments. And several congressional efforts to pass bills allowing bankruptcy judges to modify loans have all failed.

"We realize the result we come to can have an impact on the housing market and hence the economy," said North Carolina Attorney General Roy Cooper. "That's why all of us at the table want it to be a positive impact."

However, Miller also added that the first offer made to the servicers lacked specifics on the two "most important" things: a proposed settlement figure and a proposal to make way for more mortgage modifications.

The big reason it was missing was because: "We struggled with it."

"Whatever that proposal is, it's going to have some limitations and leave some people out," Miller said.

The government probe of mortgage servicers followed reports that the institutions were using shoddy documentation to improperly foreclose on homeowners. That news prompted several servicers to halt foreclosures for a short period of time.

The attorneys general launched the probe in October to review improper documentation and mortgage modifications.

The government agencies involved include states attorneys general, the Department of Justice, the Department of Housing and Urban Development, the Department of Treasury, the Federal Trade Commission as well as the new Consumer Financial Protection Bureau.

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Loan standards curb demand for housing

NEW YORK — Don’t be quick to read strength in the January jump in housing starts. Home builders still face a raft of obstacles, not the least of which is the shrinking number of people able to get a mortgage.

Housing starts surged 14.6% in January to an annual rate of 596,000. All of the gain, however, was in apartment buildings of five or more units.

Multiunit starts jumped 80% to a 171,000 pace, the highest level since February 2009.Read the complete housing story on MarketWatch.

Starts of single-family homes fell another 1% last month, on top of an 8.4% fall in December. The declines follow the downtrend in home sales since last summer when a federal tax credit for home buyers ended.

In addition to the drags from high unemployment and record foreclosed homes for sales, another reason holding back housing is that banks are more particular about who qualifies for a mortgage.

The latest survey of senior loan officers compiled by the Federal Reserve in January indicated slightly more banks were still tightening their mortgage standards than the number that were lowering them. [By comparison, more banks were easing rather than tightening their standards on industrial loans, and they were evenly split on commercial real estate loans.]

While the net percentage of banks now tightening on mortgages is far lower than during the housing collapse, the number still indicates banks are wary about home-lending. And if fewer people qualify for a mortgage, it stands to reason that there will be fewer home buyers and thus fewer housing starts.

The bars to cross aren’t just high credit scores or income verification. As reported in Wednesday’s Wall Street Journal, downpayments are also rising.

The median downpayment in nine metro areas crept up to 22% of the purchase price at the end of 2010, double the rate three years earlier, according to real-estate tracker Zillow.com.

Even though the median price of a new single-family home has fallen sharply to $241,500, the higher downpayment hurdle means potential buyers need about $48,000 in cash on hand, plus extra for closing costs.

The recent rise in mortgage rates is also curbing home buying. According to the Mortgage Bankers Association, the average rate for a 30-year fixed mortgage is up to 5.12% compared to 4.78% at the start of 2011, and applications to buy a home have dropped 9% since then.

Another problem in the mortgage market is the uncertain future for Fannie Mae and Freddie Mac, the agencies that guarantee about 90% of all mortgages written in the United States. If the government decides to shut down Fannie and Freddie, it is unclear how the private mortgage sector will perform or what standards buyers will have to meet to qualify for a loan.

People still need to live somewhere, of course. Which explains why builders broke ground on so many more apartment projects in January.

“If there’s any hope for housing construction, it is not in home ownership but in rentals,” said Joel Naroff of Naroff Economic Advisors. “The surge in multifamily activity, which really started in the second half of last year, is an indication that builders may be looking toward the rental portion of the market, not just condos, as the way to stay in business.”

The curb on construction from higher mortgage standards is not an argument that lenders should return to their free-wheeling ways of the boom. Higher standards should prevent a new round of defaults even if home prices stay at current levels.

Housing, however, is one of those “big-ticket items” that needs financing. Few people have the cash to buy a home outright. Raise the bar on financing and demand will remain weak, meaning housing will be a drag on growth for some time to come.

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Allstate sues JPMorgan over mortgage debt losses

NEW YORK, Feb 16 (Reuters) - Allstate Corp (ALL.N) sued JPMorgan Chase & Co (JPM.N) on Wednesday to recover losses after the bank allegedly misrepresented the risks on more than $757 million of mortgage securities the insurer bought.

The lawsuit against the second-largest U.S. bank was filed just seven weeks after Allstate filed a similar lawsuit against Bank of America Corp (BAC.N), the largest bank, over losses on more than $700 million of mortgage securities.

Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to comment on the lawsuit, which was filed Wednesday in the New York State Supreme Court in Manhattan.

Allstate, the largest publicly-traded U.S. home and auto insurer, is one of many to sue lenders for allegedly misleading them about mortgage securities.

The Northbrook, Illinois-based company said it suffered "significant losses" after JPMorgan and its affiliates misled it into believing it was buying "highly-rated, safe securities" backed by high-quality loans.

"In fact," Allstate said, "defendants knew the pool was a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default."

The securities include many backed by Bear Stearns Cos, which was near collapse before JPMorgan bought it in May 2008, and Washington Mutual Inc (WAMUQ.PK), which failed and whose bank operations were bought by JPMorgan four months later.

Each of those companies were heavily exposed to subprime and other risky mortgages.

Allstate said most of the securities it bought from the various defendants started out with "triple-A" ratings, the same carried by U.S. government debt, but that 97 percent now carry "junk" ratings.

It is seeking to undo the securities purchases, which took place between 2004 and 2007, plus unspecified damages.

JPMorgan in January said it set aside an additional $1.5 billion for legal reserves, mainly to cover mortgage cases.

"This litigation is going to be fought almost securitization by securitization," Chief Executive Jamie Dimon said on a Jan. 14 conference call. "It is going to be a long ugly mess. The important thing is it is not going to be life-threatening to JPMorgan."

JPMorgan also faces a $6.4 billion lawsuit by the court-appointed trustee seeking money for victims of Bernard Madoff's Ponzi scheme. The bank was Madoff's principal banker for more than 20 years. JPMorgan has denied wrongdoing.

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Numbers still good in increasingly tight money market

IF you've heard it on television this week or read it somewhere, it's true, President Barack Obama does want out of the mortgage business.

Fannie Mae and Freddie Mac have been under fire lately simply because they are being blamed for the mortgage meltdown over the last few years.

The Federal National Mortgage Association, commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It was set up as a government-sponsored enterprise, but it converted into a publicly traded company in 1968.

The corporation's purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities, allowing lenders to reinvest their assets into more lending, and in effect increasing the number of lenders in the mortgage market.

The Federal Home Loan Mortgage Corp., known as Freddie Mac, is another GSE publicly traded company. Freddie Mac was created in 1970 to help defer some of the debt of Fannie Mae.

Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. U.S. taxpayers were held responsible for hundreds of billions of dollars in outstanding debts. We have seen this with the Troubled Asset Relief Program (TARP) bailout initiated by George W. Bush in 2008.

Taxpayers have been financing the bailout of these troubled institutions and it has become

a very unpopular topic among politicians seeking reelection. What does the new Congress and Obama have in store?

Obama's new plan calls for increasing downpayments of

10 percent on loans backed by Fannie and Freddie. No other state aside from New York will suffer a housing price decrease as much as California. This plan will reduce the number of qualified buyers in the market and thus affect the demand for existing and future inventory.

What does this mean for buyers and sellers? Tighter money markets equal lower home prices. Buyers are already having issues getting qualified for a home that they would have been able to purchase six months to a year ago.

When you reduce the number of qualified buyers looking to purchase a home you automatically reduce the asking price of the inventory out on the open market.

But there is still some resemblance of a private, capitalistic system in place when it comes to home buying.

At the moment, Federal Housing Administration (FHA) loans require a 3.5 percent down payment. In the local market, a first time buyer can essentially purchase a home for an initial investment of approximately $12,500 down and a minimum FICO score of 580.

Those are still good numbers in this ever increasing tight money market. If you have been on the fence on whether or not to sell or buy, look at the big picture. If you're a traditional buyer and not an investor, ask yourself, do I want to be in this house 30 years from now? If the answer is yes, an important factor in that equation - interest rates - are still at 30 year lows.

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5 costly reverse mortgage mistakes

Taking on a reverse mortgage can be a smart move or a financial disaster, depending on the type of loan and your circumstances. Avoid these mistakes to make a reverse mortgage a smart move.

Mistake #1: Taking out the wrong mortgage

What’s the best mortgage for you? The one that accomplishes your objectives at the lowest cost. Here, in order of cheapest to most expensive, are home equity financing options for seniors.

• 1. Single purpose reverse mortgage: This loan is available to very low-income seniors and costs little or nothing. It may provide a limited amount of funding for home maintenance or property taxes.
• 2. Home equity loan or line of credit: You have to have good credit and sufficient income to cover monthly payments, and if you do, these loans are very cheap to obtain.
• 3. Home Equity Conversion Mortgage (HECM) Saver reverse mortgage: This is a lower-cost option for those seniors who want to cash out a smaller percentage of their home’s equity.
• 4. HECM Standard reverse mortgage: These loans come with fairly high upfront charges but allow you to cash out a larger portion of your home’s equity.
• 5. Jumbo reverse mortgages: These loans are less regulated, so you need to shop carefully, but they allow people with high-end homes to get larger loans than HECM regulations allow.
• Mistake #2: Not considering your future

Reverse mortgages are characterized by one thing: you don’t make payments on the loan as long as you own and live in your home. However, the definition of “living in the home” can vary from lender to lender. So if you are planning a jaunt around the world or your health is less than optimal, a reverse mortgage may not be for you. The high upfront cost associated with some reverse mortgage programs means that they can be very expensive if you don’t keep your loan for a long time.

In addition, some couples play a risky game when they remove the younger spouse’s name from the home’s deed so that they qualify for a bigger loan (your maximum loan amount is determined by the age of the youngest borrower as well as interest rates and the home’s value). When the older spouse dies or moves out (for example, to a nursing home), the younger one can unexpectedly end up homeless.

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Wichita's home equity market tight

Feb. 13--The home equity loan, derailed by the recession, is beginning a slow comeback nationwide.

But not in Wichita, where consumers are still running scared of debt.

"We're still doing home equity loans. We'd love to be doing home equity loans," said Gary Schmitt, who heads residential lending at Intrust Bank.

"The problem is we're not getting very many inquiries or requests. I think the consumer is still very, very hesitant to jump back into acquiring more debt."

The result is a significant Wichita-area slowdown in remodeling and renovation projects, making for an aggressive Home Show, which concludes today at Century II, as builders try to jump start their 2011 business.

"It is tight," said Chad Bryan of Southwest Remodeling in Wichita. "Today, we have a lot of cash clients. For the longest time, especially on our larger products, 50 to 60 percent were equity loans. Now, it's more like 25 or 30 percent, and there are a lot of people out there right now who are very excited about remodeling."

But, Bryan said, many of them can't get their banker to share the excitement.

"Many of our deals go right down to the signed contract, and then the people go to the bank and they can't get the loan," he said. "We've lost a good amount of business to people who just can't qualify for the funds."

Wichita's tight home equity market bucks a national trend, with many mid-size banks jumping back into the home equity loan market.

Risen from the dead

Nationally, the home equity loan has risen from the dead, said Stu Feldstein, president at SMR Research, a New Jersey firm that tracks the home loan market.

"There was a super severe problem from two vantage points -- the consumer and the lender -- that lasted for three years, and the problem was falling property values," Feldstein said.

"The lenders who had the home equity lines of credit are typically in the junior lien position on the loan, and then in foreclosure they lost everything. The loan losses on home equity and second mortgages were horrific. Home equity became a four-letter word, as a guy at a Big 4 bank put it."

But attitudes are shifting nationally, Feldstein said, and they'll shift the same way in Wichita -- eventually.

"Lenders see it as an opportunity right now, and it is for some of them because it's not for others," he said. "The comeback is not yet a national trend but some of the regional banks taking part in the bounceback are significant -- SunTrust, PNC, Associated Bank, Regions Bank."

Feldstein's faith in the Kansas market is grounded in its relative home price stability -- and not so much in the slow return of consumer confidence damaged by the recession.

"The untold side of this for the loan consumer is the income reductions the working have suffered in the recession, which affected more people than just unemployment.

"The fact is, a lot of people are making less. This recession was brutal for all consumers, and that drove loan demand down."

Sense of security

Like many struggling sectors of the Wichita economy, people will start putting money into their homes when their sense of financial security is restored, said Byron Tucker of LeaderOne Financial in Wichita.

"I imagine we'll see a rebound here when home values stabilize," Tucker said. "These loans are pretty difficult right now unless you've got a substantial amount of equity in the house. I haven't done a refinance or had a client pull out cash in about a year."

Local layoffs need to die down, and it wouldn't hurt if negative national real estate publicity dies down with it, Tucker said.

"I don't think we had the bubble like the sand states did, but we had the fear of God instilled in us because of that," Tucker said.

A little boost in big lender confidence wouldn't hurt either, Bryan said.

"It's pretty bank specific right now," he said. "Some of the banks that aren't the more national ones are taking a more aggressive line.

"I'm not talking B, C or D credit, but they are loaning aggressively to more qualified clients. The days of the B, C and D market might be gone."

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Pre-Approval On Real Estate Has Its Benefits

In an age where money is tight and time is money, getting a pre-approval for a real estate loan is one of the most useful things to do.

A pre-approval essentially puts individuals or couples in specific categories of houses they can afford. Instead of having a Realtor walking people through houses they know they cannot afford, people will only be shown houses within their certain frame.

All anyone has to do is tell their Realtor what their pre-approved loan is, and the Realtor takes it from their, deciding which houses are appropriate to view for each customer.

In addition, this also prevents any Realtors who try and add commission by selling the more expensive properties that people should not be investing their money into. Not that this happens often, but this only helps decrease it.

Pre-approved loans are consistently proving to be helpful in every aspect of purchasing a house. Whether it is from preventing individuals from getting denied a loan after an offer has already been made, or just saving your time and being more organized, pre-approved loans are the smart decision when buying a new home.

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White House's unwritten mortgage memo: Act now

The Obama Administration's newly unveiled housing finance plan may have clouded the picture for policymakers, lenders and bond buyers, but it made the future for borrowers starkly clear: It's going to cost more to get a home loan.

Mortgages have already become more expensive in recent weeks, as Fannie Mae and Freddie Mac began adding risk fees to almost all of the loans they sponsor. Average rates on 30-year fixed rate-loans have already moved from 4.4 percent in November to 5.2 percent now, according to Mortgage Marvel, a loan comparison web site.

In a much-awaited report released Friday, the administration proposed winding down the role of the two government-sponsored mortgage repackagers and left open for prolonged Washington debate what would remain in their place.

It also called for higher down payments, a lower cap on the amount of mortgage that could be guaranteed and another increase in the fees Freddie and Fannie charge in the short term. All of those measures are likely to steepen the cost of securing a home mortgage.

"Rates are probably on the rise, due to the increases in fees," said Keith Gumbinger of HSH Associates, a mortgage research firm. "But will the borrowing process get better, faster or easier as a result of reforms? No."If you can effect a transaction now, it's probably not a bad idea," Gumbinger said.

Rates are also likely to rise as the economy improves and the rock-bottom interest rates that have been protected by the Federal Reserve Board edge up.

The rising credit market rates will have a bigger effect on mortgages than the winding down of Freddie and Fannie, said Scott Happ, president of Mortgagebot, a company that builds and runs mortgage web sites.

The cost of loans that are not handled by the guaranteed mortgages and those that aren't guaranteed is roughly 0.6 percentage points now, he said.

RISING RATES, FEWER OPTIONS

It's not just low rates, but also mortgage products that could disappear as reforms worked their way through the system, some analysts believe. The end of U.S. loan program -- one of the options outlined in the White House report -- "almost certainly will lead to fewer long term fixed rate mortgages (and) higher prices," the Consumer Federation of America said in a statement released after the report.

Home loans in Europe and Canada are dominated by variable-rate loans, for example, and it's conceivable that the long-term fixed-rate loan could become much less common -- or even extinct -- in the U.S., if lenders don't want to offer them without guarantees.

A more likely scenario is that fixed-rate loans would remain, but become relatively more costly, said Sam Garcia of Mortgage Daily, a trade publication.

Homeowners who haven't already nailed down long-term low-rate loans may want to jump at the chance with a refinance now, even if it means bringing cash to the table to replenish equity that may have disappeared in the housing market's price decline.

SHORTER DURATIONS, MORE SAVINGS

Some advisers say the best way to save money on a mortgage could be to look at shorter-term financing, instead of focusing on rising rates and fees that they cannot control. The pullback of Federal subsidies might encourage more prudent borrowing.

READ MORE HERE

Keep Your Home programs launch for Californians in need

The California Housing Finance Agency will use nearly $2 billion in federal funds for four programs to help families avoid foreclosure.

The "Keep Your Home California" programs are for those struggling to pay mortgages. To be eligible in Stanislaus County, homeowners must earn less than $71,400 per year, document a financial hardship (such as loss of employment), be delinquent on their principal residence's first mortgage, owe more than their home is worth, but less than $729,750, and meet other requirements.

The programs provide mortgage assistance of up to $3,000 per month for unemployed homeowners in imminent danger of defaulting on their home loans. Some homeowners may receive up to $15,000 to reinstate mortgages to prevent foreclosures. There also are funds to reduce the principal owed on a mortgage for homeowners facing a serious financial hardship.

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JPMorgan Names New Head for Mortgage Business

Hoping to troubleshoot some of the problems plaguing its mortgage operations, Jamie Dimon on Friday dispatched one of his top lieutenants to oversee the Chase Home Lending business.

Frank Bisignano, JPMorgan Chase’s chief administrative officer, will now add supervising the Chase’s mortgage origination and loan payment collection businesses to his duties managing many activities, like technology and real estate, for the bank. David Lowman, the current head of Chase Home Lending, will retain his title but now report to Mr. Bisignano.

The management change comes as Chase’s mortgage business has faced considerable challenges amid the recession. Chase, like most of its peers, has faced enormous losses on its large portfolio of home equity and mortgage loans after loosening its lending standards in during the housing boom. But it has also struggled to digest the mortgage operations that it acquired with its takeovers of Washington Mutual and Bear Stearns during the financial crisis.

Many parts of the business ran on separate technology systems, making a three-way integration especially tricky. At the same time, Chase has come under fire from Washington for failing to cope with a giant wave of foreclosures as well as overcharging several thousand military veterans.

“The mortgage business for everybody has changed tremendously,” Mr. Bisignano said in a brief interview on Friday. “Adding help to it can never be a bad idea.”

Charles W. Scharf, the head of Chase Retail Financial Services, and Mr. Lowman have had their hands full contending with all of these issues over the last few years. They have significantly tightened the bank’s lending standards, halted the sale of new mortgages through independent brokers, and overhauled its servicing operations with thousands of new hires and improved technology to try to keep up with the foreclosure mess. In 2010, Chase also began cordoning off its existing portfolio of real estate loans from those that conformed to its tougher new standards — a so-called “good bank – bad bank” strategy that has been used frequently by financial institutions to restructure their operations.

But with Mr. Bisignano, Mr. Dimon is installing one of his strongest managers with long history overseeing the operations of several banks. He also comes from a family of veterans, which will be crucial to smoothing relations with lawmakers, regulators and military brass.

A trusted lieutenant since their days at Citigroup, Mr. Dimon brought him to JPMorgan Chase in 2005 as his chief administrative officer and tasked him with consolidating the bank’s real estate and finding other cost-savings.

At Citigroup, Mr. Bisignano ran its global transaction services business and helped oversee technology and operations for its investment bank. Mr. Bisignano, 51, will report to both Mr. Dimon and Mr. Scharf.

Here is the email from Mr. Dimon and Mr. Scharf:

As you know, our Home Lending business has gone through a period of enormous challenge and change. Our team has worked day and night for almost three years to deal with the unprecedented credit environment and the added complexity from the WaMu and legacy Bear Stearns EMC merger integrations.

We recognize how much we’ve accomplished, but know we still have a great deal of work ahead of us. Given the importance of this business to our company and our customers, we’ve asked Frank Bisignano, our Chief Administrative Officer, to take on additional responsibilities and get more directly involved in managing this business. Effective immediately, Dave Lowman, CEO of Home Lending, and his team will report to Frank.

Frank will continue to report to Jamie as CAO and will report to Charlie on Home Lending, which will remain part of Retail Financial Services. He continues on the firm’s Operating Committee and Executive Committee, and joins the RFS Management team.

Frank is a great partner to all of us and an extraordinary operating executive. He is an integral part of all six of our lines of business, and we are thrilled to be able to leverage his leadership and experience more directly in Home Lending.

We have a leading Home Lending business. Chase is the third-largest mortgage lender and the #3 mortgage servicer in the country. We have 8 million customers who are living in a home with a Chase mortgage. When customers have difficulties, we do everything we can to help them find a way to avoid foreclosure. We have offered more than 1 million modifications and prevented foreclosure for more than 480,000 customers. We recently announced that we are opening another 25 Chase Homeownership Centers, bringing our total to 76 in 23 states and the District of Columbia.

We look forward to working with Frank to make our Home Lending business even stronger.

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Reverse Mortgage Information for Senior Home Owners

If you are a Senior Home owner over the Age of 62, you are in luck! You are now able to tap into your home's equity and use the newly available funds to pay for any expenses you may have. Whether its bills, monthly home expenses, old debt that has been lingering along, or if you just want some extra money to further enjoy your retirement. With a reverse mortgage you can do just that.

The great news about a reverse mortgage is you the borrower can be paid in either one lump sum, given a line of credit to use which will require no repayment fees or receive money monthly. What ever method you choose can benefit you dearly especially if you are in financial hardships, additional income from your very own home can be a big help.

Let Explain Reverse Mortgage help you to secure your financial future today. No more debt, untouched retirement fund, and extra money in your pocket. If that sounds good to you then contact us today.

We can be reach by visiting our website at www.explainreverse.com

Home loan from relatives eligible for tax claims

For those taxpayers who want to realise their dream of owning a house, the Income Tax Act has a provision which allows them to claim interest on loans taken for a buying a house. Deduction is available for loans taken not only for the purchase or construction of a house, but also for repairs and renovation.

This article will discuss various provisions in respect of allowability of interest under the Income Tax Act and conditions to be met for this.

1. No. of properties eligible for claims

There is no restriction with regard to the number of properties for which you can claim the interest. For the purpose, the properties are classified into two categories — self-occupied and let-out. However in case you own more than one house and these houses are either being used for self-occupancy or by your parents or any other relative from which you do not receive any monetary compensation, you have to opt one of these houses as self-occupied and treat other/s as self-occupied.

One property can be treated as used for your own residence, whereas for other properties, you have to offer notional rent for tax. In case of self-occupied property, the taxable value, known as annual value, is taken as nil. In respect of all other properties, the actual rent received or expected to be received is taken as annual value of the property.

2. When can you claim?

Though you are entitled to claim deduction in respect of home loan taken for constructing your own house or for booking an under construction house, the actual deduction cannot be claimed till you take the possession.

It can only start from the financial year in which the construction of the house property is completed and possession is taken.

However, aggregate interest paid on the money borrowed while the property was being constructed will be allowed in five equal installments.

First such installment can be claimed from the year in which the construction of the property is completed or the possession is taken.

3. Requirement with regard to holding period

In respect of claims made towards housing loan repayment to specified institutions, you are required to hold the property for a period of five years from the end of the financial year in which you had taken the possession, failing which all the benefits allowed to you earlier under Section 80C will be subject to taxation in the year of sale.

However, there is no such requirement of minimum holding period in respect of interest allowance. However in case of interest paid for under construction property to claim the full interest, you have to retain the property for five years. Otherwise, you will lose your claim for rest of the years.

4. Limits up to which the interest claim is allowable

In respect of the self-occupied property, there is an overall limit of Rs30,000 for which you can claim the deduction. However, this deduction goes up to Rs150,000 in case the amount has been borrowed after April 1, 1999. For claiming deduction of Rs150,000 you have to satisfy two more conditions. Firstly, the construction of the property should be completed or possession of the property should be taken within three years from the end of the year in which such money is borrowed.

Secondly, you have to obtain certificate/s from the lender specifying the amount of interest payable on such loan. These certificates need to be produced before the assessing office in case your Return of Income is selected for detailed scrutiny, as presently you are not allowed to attach any document with the Return of Income.

There is no upper limit on the amount of interest which you can claim in respect of the let-out property or the property which has been treated as let-out. In case of let-out properties, you do not even have to produce the certificate of interest from lender also.

However, you will have to provide the evidence that the interest is in respect of the money which has been used for the purpose of buying, constructing or repairs etc of the property. Even interest paid in respect of personal loans taken for making down payments or for repairs of the property can also be claimed without the certificate from the lender.

5. Other points to be considered

You may not be aware that you can claim the interest payable in respect of any money borrowed for the purpose of repaying the first loan taken for the purpose of construction, purchase or repair of your house. Thus interest paid on the second loan to repay the first loan is also allowable as deduction under the Income Tax Act.

There is a perception among the general public that for claiming interest deduction the home loan should be taken from banks or specified financial institutions. In reality this is not so. You can borrow the money from anybody including your relatives and claim the benefits of interest claim against your house property.

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New Consultant Joins Wells Fargo Home Mortgage To Help Clients

Wells Fargo Home Mortgage recently announced that Gayle Erickson has joined the company as a reverse mortgage consultant. She will exclusively advise senior homeowners wishing to purchase a reverse mortgage loan in order to tap home equity built up over the years. She is headquartered in St. Petersburg, Florida but will serve clients across the state.

Before joining Wells Fargo, Erikson worked as a personal banker for 12 years at Wachovia Bank.

“We are excited to have a reverse mortgage consultant on our team who will be able to focus on the needs of our senior customers in Florida,” said Raymond Newton, Reverse Sales Supervisor. “Reverse mortgage loans are gaining in popularity among senior homeowners, so we are pleased to offer Gayle’s expert consultation.”

A reverse mortgage loan allows homeowners 62 and over to take out as cash some of their home’s equity as a tax-free lump sum. The owners do not have to sell the home, give up the deed, or pay new mortgage payments. The product can be most ideal for persons wanting to supplement their retirement funds or for those with a small balance remaining on their first mortgage and where a portion of the reverse mortgage funds would go to pay off the original mortgage.

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Bank of America takes aim at toxic mortgages Read more: Bank of America takes aim at toxic mortgages | Phoenix Business Journal

Bank of America Corp., the Phoenix area's third-largest bank, has formed a division to deal with toxic mortgages. Legacy Asset Services will service defaulted loans and discontinued residential mortgage products.

The unit will be headed by Terry Laughlin, who will oversee the bank’s mortgage modification and foreclosure programs, and will continue to be responsible for resolving residential mortgage representation and warranties repurchase claims.

Barbara Desoer, BofA’s home-loans president, will continue building the Charlotte, N.C.-based bank’s mortgage business. Desoer is responsible for servicing loans for the more than 12 million mortgage customers who remain current on their accounts, and for implementing the bank’s strategy to be the preferred mortgage choice for its 50 million household customers going forward.

In 2010, Bank of America (NYSE:BOA) delivered $306 billion in mortgage lending to 1.4 million customers. It has a 22 percent share of deposits in Maricopa County at $13.7 billion.

“This alignment allows two strong executives and their teams to continue to lead the strongest home loans business in the industry, while providing greater focus on resolving legacy mortgage issues,” says CEO Brian Moynihan. “We believe this will best serve customers — both those seeking homeownership and those who face mortgage challenges — as well as our shareholders and the communities we serve.”

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Understand reverse mortgage options

If you know a senior homeowner who is running out of money, a reverse mortgage might generate enough cash to allow them to stay in their home for many more years. Last fall the Federal Housing Administration created new rules, and opportunities, for lower-cost reverse mortgages. Now that most lenders have launched these new products, it’s worth an updated look.

Reverse mortgage basics

A reverse mortgage turns your home into your pension, either giving you a lump-sum payout from the equity in your home, or a fixed monthly check that will keep paying you as long as you live in the home.

This reverse mortgage is available to homeowners age 62 or older, who have either paid off their mortgage or have a small remaining balance. The amount you can receive is determined by your age, the value of your home, and current interest rates. Basically, the older you are when you take out the reverse mortgage, the more money you can receive — either in a lump sum or monthly payout.

And all the money you withdraw is tax-free, since it is the return of your own capital.

You don’t need a credit check, and you retain title to your home. You won’t have any mortgage payments, although you will be responsible for homeowners insurance, property taxes and upkeep on your home. But you’ll now have a monthly check to pay for those expenses, or a pool of money in the bank to cover emergencies.

Basically, you are just borrowing from yourself — although you will be paying interest on that loan. But the interest is added to the amount of equity taken out of the home. When you sell the home, or die, the amount you have borrowed out of your home’s equity must be repaid from the sale proceeds.

Importantly, you — or your heirs — can never owe more than the home is worth. And you can never be forced out of your home because you’ve “run out” of equity. Eventually, when the home is sold, because you move or die, any proceeds (minus the withdrawals, interest and fees) are returned to you, or your heirs.

If that sounds too good to be true, this is the one product that really is as good as it sounds — if you understand all the details and costs.

Costs and considerations

There are basically two kinds of reverse mortgages, and they are offered by many banks. Since all of these mortgages are insured by the Federal Housing Administration, they must follow the same basic rules — although there could be some differences in cost.

A reverse mortgage is called a HECM loan, which stands for Home Equity Conversion Mortgage. There are two types of loans — the Standard HECM and the newer “HECM Saver.” Each lets you borrow a different percentage of your equity, and each has different fees.

The amount you can borrow on a reverse mortgage depends on the appraised value of your home. But no matter how valuable your home, the FHA has determined that the maximum amount of equity that will be considered for a reverse mortgage in 2011 is $625,500.

The interest paid (taken out of your remaining equity) on both of these loans can be either at a fixed or variable rate. These days, few lenders will promise a fixed monthly payment at a fixed interest rate for the rest of your life. So most loans are variable rate, based on an index set by the FHA, and typically the interest is adjusted monthly. The initial interest rate on the Saver loan is slightly higher than on the Standard loan.

The Standard HECM loan allows you to access more money from your home equity than the Saver HECM, which allows access to about 20 percent less equity. But, the Standard requires a 2 percent upfront premium — again taken out of your equity — while the Saver has a tiny .01 percent upfront fee. Both loans also take a monthly insurance premium of 1.25 percent out of your equity to pay for the FHA insurance on these products.

(The FHA insurance protects the lenders, so they don’t lose money. Think about it this way: If the bank promises to pay you $2,000 a month for life in a reverse mortgage, and if you live to be 100, instead of the expected 85, the bank will lose out on the deal. The FHA insurance covers that possibility.)

The one place lenders do compete is in origination fees on these loans. The law allows banks to charge a maximum of $6,000 in origination fees, but many lenders today advertise that they will waive the entire origination fee. (They know they will make money on the loan interest over the years — as long as you don’t live too long.)

Getting started

If you’re interested in knowing what you could get in a reverse mortgage, go to ReverseMortgage.org, and use the online calculator, to see what monthly payment or lump sum may be received out of your home. You can also search for reverse mortgage lenders in your area.

In the box here you can see an example of what you could receive in a reverse mortgage.

Are you still worried about taking money out of your home? It’s understandable if you are because a reverse mortgage is only available to a homeowner who has paid off the mortgage, or has a small remaining balance. If you fall in that category, you’ve been a good saver all your life. So think of it as your home repaying you for all those years of saving.

Before taking out a reverse mortgage you must go through a counseling process, to make sure you understand how this works. And as part of that process, the lender must estimate for you how much you will have withdrawn from your equity after three, five and 10 years, and up to the youngest borrower’s 100th birthday, even if the interest rate adjusts upward to the cap. (Important note: On all these adjustable loans, the rate can rise up to 10 percent higher than the initial rate.)

There is one good way to beat the lender on a reverse mortgage. That’s to stay healthy and live in your home for many years, while you keep collecting the money. That’s what I keep telling my own father about the reverse mortgage I organized for him nearly a decade ago. I think it’s an inspiration for him.

And it could be the answer for you, so if you’re planning and hoping to stay in your home for a while, check out a reverse mortgage. Lenders know they are dealing with seniors and their families, so they are set up to patiently explain the process. It doesn’t cost anything to investigate a reverse mortgage and it may pay off big time. That’s the Savage Truth.

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Not All Home Mortgage Interest Is Tax Deductible

The new issue of Forbes has an article, Learning To Love Your Home Loan, which details the benefits of the once beloved, now feared, home mortgage. Of course, the ability to deduct interest on up to $1.1 million of mortgage debt is a big part of a home loan’s appeal, particularly to upper income folks who are taxed at higher rates.

As the article, by Stephane Fitch, puts it:

“Believe it or not, the mortgage is still one of the greatest wealth-building tools available, especially for well-to-do homeowners. Thanks go partly to the laws of economics; leverage in the guise of a mortgage, after all, can amplify gains in a rising market just as it amplified losses in a falling one. Then there’s the Uncle Sam effect. Thanks to federal tax law, no form of debt is potentially as beneficial to the average citizen as the venerable home mortgage.”

It’s an interesting article. But there’s one trap I wish it had discussed—and that anyone considering mortgage debt needs to be aware of. If you want to take on a big mortgage, you must do so when you first buy your house. That’s because, as the Internal Revenue Service explains in Publication 936, the only interest that is generally deductible is from loans you take to “buy, build or improve your home” or a second home. This is what’s known as home acquisition debt. (The exception is that the interest on up to $100,000 of borrowing against your home equity is deductible, but only in the regular tax, not in the calculation of the alternative minimum tax, which traps many upper middle income folks, particularly those who live in states with high individual income tax rates.)

So, for example, if you buy a $1 million home with an $800,000 mortgage, interest on the whole $800,000 is deductible. But if you buy a $1 million house with a $600,000 mortgage, pay down the principal of that mortgage to $590,000 and later refinance with an $800,000 loan, using the extra $210,000 to invest in the stock market, interest on only $590,000 of the new mortgage will be deductible as home acquisition debt; another $100,000 will be deductible as home equity debt, but not if you’re stuck paying AMT. (Put another way, what’s left of the principal on the original mortgage is what counts as home acquisition debt and this is the best type of debt to have, from a tax point of view.)

On the other hand, if you swap your old (now $590,000 in principal) mortgage for an $800,000 mortgage and use the extra $210,000 to build a home addition for your in-laws, interest on the whole $800,000 is deductible because that sum has been used to buy and improve your house. (For tips on multigenerational living, see staff member Ashlea Ebeling’s story here. For advice on dealing with difficult aging parents, see contributor Carolyn Rosenblatt’s post here.)

Also, beware the following trap: You can’t get a new $800,000 mortgage on your first home and use the extra $210,000 to pick up a bargain second home in a depressed, but sunny market like Tucson or Phoenix. (The 10 Best Places For Bargain Retirement Homes are here.) That’s because to qualify as home acquisition debt a mortgage must be used to buy or improve the home it is secured by. So you’ll need to take a new, separate mortgage, on your second home.

The bottom line: When you first buy a house, take as big a mortgage as you can qualify for, as you’re comfortable with, and as it makes economic sense to carry. So, for example, you may want to put 20% down to get a better mortgage rate and to avoid having to pay mortgage insurance premiums. (Yes, mortgage insurance premiums are now deductible—but not if your adjusted gross income is more than $109,000 per couple. Anyway, do you really want to give your hard-earned dollars to PMI Group or MBIA?) On the other hand, why put 30% or 40% down? You can always pay down some of the mortgage early if you find you have no better use for your cash—or if Congress limits the value of the mortgage interest deduction, as President Obama’s deficit reduction panel suggested last month it do.

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Tax refund? Buy a house!

Did you know you only need a 3.5 percent down payment to buy a home if you’re eligible for FHA financing? If your tax refund is a sizable chunk of change, now’s a great time to buy because it’s a buyers market, no doubt about it. For first-time homebuyers, now’s an especially advantageous time to take the plunge.

The most common loans for first-time buyers, without a doubt, are Federal Housing Administration loans. FHA loans require only a 3.5 percent out of pocket down payment. For instance, on a $100,000 loan, the buyer would only need to come up with $3.500 and the seller could pay the rest of the closing costs. Still a bit short on funds to close? The nice thing about FHA is that it allows gifts from blood relatives. So if you need some help, Daddy can close the gap. You are limited to a base loan amount on average of $200,160, but that doesn’t usually pose a problem for first-time buyers.

Tennessee Housing Development Agency specifically targets first-time homebuyers. It sets interest rates below current market rates, offers reduced mortgage insurance, and can assist with down payments if you go to class and learn about budgeting and home buying. I spoke with a couple the other day, and we figured out they were getting paid roughly $360 an hour to go to class for eight hours. Not a bad deal, huh? However, you must income-qualify for this program. It’s designed to assist moderate- to low-income families. I guess the reasoning is that if you make a certain amount of money, you can afford a down payment. And its loan limit cap mirrors FHA for the most part. THDA can be used to finance FHA, Veteran, Rural Housing or conventional loans.

Speaking of Rural Housing and Veterans, these are also great deals for first-time homebuyers. Both offer 100 percent financing without monthly mortgage insurance! Of course, you have to fit into a niche to qualify for either. If you aren’t a veteran or have a pertinent connection to the qualification guidelines, you can forget about VA. But it has no income limit, no loan limit, and the seller can pretty much pay for all closing costs. What a deal! With Rural Housing, you not only have to income-qualify, you must also property-qualify. Like it sounds, Rural Housing loans encourage buying homes in less populated areas.

With foreclosures abounding, great deals exist that allow for instant equity for first-time homebuyers. But be aware, most of these programs mentioned are quite particular about the condition of the property. Any health and safety issues must be addressed before closing. Many times the banks that own foreclosure properties want to sell “as is.” It can be difficult to marry first-time buyer financing with foreclosures, but it can be done. Just be sure to work with a Realtor who is experienced in this area and a lender who knows their stuff.

So, if you’re getting money back from Uncle Sam, stop paying rent and start building equity in a home of your own!

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RBI reduces home loan exposure of co-op banks

The Reserve Bank of India said cooperative banks cannot give housing loans beyond 5 percent of their total assets.

Earlier, state cooperative banks and central cooperative banks were allowed to extend housing finance up to 10 percent of their total loans and advances. These banks, with exposure in excess of the new limits, have been asked to initiate steps to bring it down to the revised limits within six months.


Their assets may be reckoned, based on the audited balance sheet on March 31 of the preceding financial year, RBI said.

The decision would curtail their exposure to real estate. The revised limit would be applicable with immediate effect. They were earlier allowed to give house loan to an individual borrower up to  20 lakh. In case of a bank having a net worth of  100 crore and above, the limit was  30 lakh.


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Current Low Fixed Rate Mortgages for January 24, 2011

Fixed rate mortgages are one of the most popular type of home loans in the United States. The interest rates on these mortgages are fixed during the life of the loan, so borrowers do not have to worry about their mortgage rates changing when interest rates rise. Fixed mortgages could be good for borrowers who plan to stay for a long term 10 years or more in the same house.

For qualified borrowers, a 30 year fixed rate mortgage is available at a 4.375% rate and 4.581% APR. A 20 year fixed rate mortgage is available at a 4.250% interest rate and 4.532% APR, and a 15 year fixed rate mortgage is available at a 3.750% mortgage rate and 4.106% APR.

In addition to low fixed rate mortgages, Total Mortgage also offers a wide array of other mortgage products such as FHA mortgages, jumbo mortgages and adjustable rate mortgages at some of the most competitive rates in the industry.  To see all our current mortgage rates please visit us online, or call 877-868-2503 to speak with a licensed mortgage professional today.

Mortgage rates are always changing. All rates were quoted at 12:30 P.M., on January 24, 2011.

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Treasury Promises First-Ever Release of Loan Modification Records

At the end of this month, for the first time ever, the U.S. Treasury plans to release to the public a treasure trove of demographic information on people who have received loan modifications. That is, if the government releases the information as promised — information that has a critical impact on policies that prevent home foreclosures.

So far, the Treasury has stalled on making this key information available, despite requests by housing and consumer advocacy groups and media organizations, including New America Media, under the federal Freedom of Information Act. Loan modifications are changes made to the terms of a home loan and could include such things as being granted a different interest rate, a principal reduction or a decrease in how often the loan payments must be made.

Housing advocates say they have been waiting for the Treasury to the release the information for more than a year.

National Consumer Law Center attorney Geoffry Walsh, whose organization filed a FOIA request at the end of 2009, says the Treasury still hasn’t provided the information. Walsh says his group requested data detailing why borrowers were denied loan modifications.

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