Obama's Homeowner Assistance Plan-Can it Stop Foreclosures?

Last year, the Obama administration put into effect the Homeowner Affordability & Stability Plan through the HFA. (Housing Finance Agency). This legislation came about because of the enormous amount of foreclosures across the country. It provides assistance for homeowners who have been responsible with their mortgage payments. In general that would mean those who have been making regular monthly payments but might be facing some hardships that might affect their ability to continue to pay. Homeowners who knowingly entered into contracts they knew they couldn't afford would not be included. Neither would the banks who made the loans to them.
The bill also gave financial institutions monetary incentives to participate in refinancing and reduced payment programs. This would apply to Fannie Mae and Freddie Mac insured loans.The bank would lower interest rates and would be able to lower homeowner payments to no more than 31% of the homeowners income. Also, the loans cannot exceed 105% of the current value of the home. Not many sub prime loans would be included in the program.
This year the administration introduced a new assistance plan that targets the hardest hit housing markets. The first phase applied to areas or states where housing prices had declines of 20% or more.
The second phase of assistance targets areas with high concentrations of economically distressed neighborhoods. These areas would be counties that had an unemployment rate that exceeded 12% in 2009. Details of these plans can be found at makinghomeaffordable.gov.
These programs are not designed to instantly bring the housing market back and are not designed to help every homeowner in financial trouble. However, it is a step designed to slow down the speeding foreclosure train.

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Should You Buy a Foreclosed Home?

The short answer is yes, with certain conditions. The process of buying a foreclosed property is generally the same as purchasing any property. (Unless it is a HUD home. If it is HUD owned you will have to go through their on-line bidding program.)

First understand that a foreclosure is simply a property which has been taken back by a lender because the former owner was not able to pay the mortgage according to the signed agreements. It is an unfortunate situation for the former owners, but once it is foreclosed, you wont be dealing with them. You will deal solely with the lender or their agent.

Do your research as you would with any home.

1. Get a market analysis of the value of the home. That is to make sure the home is worth the asking price and hopefully that price shoudl be a lot lower than the market price.

2. Make sure it fits your criteria for a home. That includes the number of beds and baths, school districts, neighborhood crime and location, especially if you are going to reside there. For an investor, make sure it is a property and neighborhood that you don't mind putting your funds into.

3. Make sure the property is a good financial match for you. You should already be pre-qualified for the amount of the offer you are willing to make. Foreclosures often times will have multiple bids on them and the lender will not wait around for you to find out if you can afford it.

4. Inspect the home inside and out. You will probably need to use the services of a realtor to access the property. If there are a lot of repairs needed, you will need to take that into consideration when making a decision. The lender will not generally repair much if anything and the house will be sold as is.

5. Be prepared to make an offer quickly. A good foreclosure property will not stay on the market for long periods of time. Check your local papers and use the internet services to always be aware of new foreclosed properties on the market.

The bottom line is that if the house fits your criteria and you can afford it, Buy It! If you don't someone else will.

Here is a site for more info: Homes are selling for up to 60% off home market value. Nationwide Foreclosure Search

What is a HUD Foreclosure?

A HUD (Dept. of Housing and Urban Development) foreclosure is basically the same as any other foreclosure except for the method the property will be sold. HUD is not a lender. They insure certain loans like FHA loans. If the loan goes into default, HUD will pay the outstanding balance of the loan to the lender. The home then becomes the property of HUD.

HUD will then sell the property through an outside marketing and management company. The property can be purchased by anyone, but is must be done through a realtor or a real etate brokerage company that is registered to do so with HUD. You cannot access the property without a registered realtor.

What makes the HUD foreclosure sale process different is that they use a bidding system. . Once the house is available for sale, all bids must be made during an open bidding period. During this time period, bidding is open to the general public. Investors cannot bid during that period. The bids must be put in by a registered licensed realtor or broker. If the home dosen't sell during that first bidding period, then it becomes open to everyone including investors, during the next bidding period. These bidding periods will continue until the property is sold.

Many people are under the false impression that HUD homes are run down, undesirable properties. That is not true. Some might be in need of repair just like any other foreclosure. However, in my experience as a realtor, most are no different than any other foreclosed property and might not need any significant repairs. In addition HUD provides funds in escrow for repairs up to a certain amount.

HUD foreclosures can be a great deal. Just make sure you are pre-approved and have visited the properties to see if they are a fit for what you need.

Why Talk About Foreclosures?

The main reason to talk about foreclosures is they are still rampant in most areas of the country. They affect thousands of people in different ways. Hopefully we will talk a little about how foreclosures work. Some talk will be about trying to avoid them. Other talk will be about purchasing foreclosured properties. . This will be done with no disrespect to those who have gone through that devasting loss. However, the reality is that once all is said and done, and a property forecloses, some one is going to purchase it. So both sides of the issue will be addressed.