Obama's Foreclosure Fix

The highly anticipated news du jour, Courtesy of CNBC

Housing Fix: $275 Billion To Help 9 Million Families
"President Obama unveiled his much-anticipated plan Wednesday to fight the housing crisis, pledging up to $275 billion to help stem a wave of foreclosures sweeping the country.

A total of 8.1 million U.S. homes, or 16 percent of all households with mortgages, could fall into foreclosure by 2012, according to a report by Credit Suisse.

An Obama administration official said the total plan commits up to $275 billion for housing, including $50 billion from funds already committed in the country's financial sector bailout. It aims to help up to 9 million American families."

Bair's On Board With Obama

This morning's story on Bank.com's blog:

Sheila Bair Encouraged By Barack Obamas Foreclosure Ideas

"The chairperson of the FDIC, Sheila Bair, has been pushing an aggressive plan, modeled off of what was tried when IndyMac went under, to help stop foreclosures. Her efforts, though, have been running into opposition from the Treasury Secretary, Henry Paulson, as well as other prominent members of the Bush Administration. The current administration seems reluctant to fund such a comprehensive plan aimed at helping individual homeowners. Now, though, it seems as though she can bide her time and wait for a Barack Obama administration. Maybe Timothy Geithner will be a more compatible and understanding Treasury Secretary."

Bair has been standing out on a limb for some time now with her forward thinking ideas about mortgage modifications. As we discussed in an August post, Indy Mac's failure and quick takeover by FDIC in August provided Bair and team an opportunity to do things her way. The success or failure of the modification program is yet to be seen, but I'd be very surprised if President-elect Obama didn't keep her on board to see it through (and possibly help implement it with other banks/lenders).

Friday Links

Breaking news on WSJ, Treasury Is Close to Finalizing Plan to Backstop Fannie, Freddie. It sounds more like a major liquidity injection, rather than a plan to "nationalize". Apparently the fact that Fannie & Freddie are very profitable right now isn't going to keep the Feds from intervening. But according to CNBC, Paulson & Co don't have many options.

I guess it's not official until someone comes out with a study and announces it: "Housing Bubble Has Popped". Yeah, I'd say...

Folks, you might want to stock up on a few supplies and batten down the hatches. It's going to get wet & windy this weekend.

On a lighter note-
I've heard of (and seen) homes in which house cats have the run of the place, but this is ridiculous: Bobcats on a bank owned roof (LA Times blog). "Taking advantage of a slump in local real estate, a family of bobcats has moved into a foreclosed Lake Elsinore home, lolling about on fences and walls and riveting an entire neighborhood."

Last but not least (I couldn't help myself)-
A new foreclosure avoidance (scam) book: "Save My House, Save My A**". This is not an endorsement. I haven't read it, nor do I plan to.

The Hook, 1/24/2008

GIMME SHELTER- Fearing foreclosure: How can I avoid losing my house?

published January 24, 2008

Jason Crigler
Crown Mortgage Services

Q: Lately, I've been having trouble making my mortgage payments, and my lender keeps calling me. One of the houses in my neighborhood was foreclosed recently, and I'm worried the same thing could happen to me. How can I avoid a foreclosure? If I can't, how would one affect me as a buyer in the future?

A: Real estate foreclosure occurs when a borrower is unable to meet the obligations of a loan, and the lender claims and sells the property used to secure the mortgage. The most important thing to do if you believe you may not be able to make your monthly payments and are falling behind is to be proactive about the problem.

First of all, do not avoid calls from you lender. With such a large and important asset as your home at stake, it is essential that you face the lender and work together to find a solution.

When you do call your lender, you may hit a brick wall and get sent directly to the collections office. If you can break through this department and actually speak with someone who makes decisions, however, perhaps you and you lender can come up with a solution that will mutually benefit both parties.

If your lender is unable to help, there are also several local and national organizations that specialize in credit counseling services. If for some reason you are unable to contact your lender or do not have the time to work with them, you should contact an approved HUD counselor or real estate lawyer.

Typically, foreclosure is a last resort, and lenders wish to avoid it as much as homeowners. In fact, a foreclosure costs lenders and investors an average of $58,000 per home, according to the Homeownership Preservation Foundation. Lenders often go through several steps before considering foreclosure.

If you do suffer a foreclosure on your home, it will have an extremely negative impact on your credit report. Today, credit scoring has become an integral part of the lending process, and a bad credit score often diminishes your chances of securing a loan or mortgage in the future.

Fortunately, a foreclosure does not remain on your credit report forever; it often falls off the report in about seven years. As you re-establish good credit through a record of timely payments and responsible borrowing, it may even be possible to own your own home again one day.

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