Under previous programs by the Bush administration, lenders were urged to voluntarily modify mortgages. Even though a large number of mortgages were modified, there were 2.2 million foreclosures in the U.S. in 2008.

Most of the largest mortgage-servicing corporations in the country are expected to participate in the program. Pending legislation, which would allow judges to modify mortgages and protect services from lawsuits, could also influence their participation.

Also, any bank that receives additional funds from the TARP would be required to participate.

Here are some specifics:

• Borrowers with mortgages as high as $729,750 will be able to participate.
• Fannie Mae and Freddie Mac will be allowed to refinance loans at lower interest rates, even if they lack 20 percent equity in their homes.
• Fannie Mae and Freddie Mac will receive up to $200 billion in additional capital to finance the program.
• For servicing companies, the government will pay $1,000 upfront for every loan they modify, and then pay an additional $1,000 per year for the first three years if the borrower stays current with their payments.
• The government will also directly reduce the borrower’s principal balance by $1,000 per year if they stay current with their payments.

The government believes that this program could prevent as many as 5 million foreclosures.

An additional program, designed to help with “piggy-back” mortgages is said to be under development.

Borrowers who wish to participate in the program should contact the company servicing their mortgage.

Originally posted on pfhacks.com: Details on the New Foreclosure Prevention Program

30 year fixed rate mortgages finished the year at 5.14%. This is the lowest rate since record keeping began in 1964.

Originally posted on pfhacks.com: Mortgage Rates At Record Lows

One of the highlights of my week is seeing a new episode of “This American Life” pop into my podcasts folder in iTunes. For those of you not familiar with the show, it is a one hour radio program produced by Chicago Public Radio and hosted by Ira Glass.

This weeks show “The Giant Pool of Money” should hold special interest for readers of this blog. It is a wonderful explanation of the housing crisis, going step by step how it developed, and who were the players, from the borrowers to the ultimates purchasers of the mortgages.

If you are looking for more “This American Life” content after listening, you can check out this list of staff favorites.

Originally posted on pfhacks.com: The Giant Pool of Money

Image: RealtyTrac

RealtyTrac has released their March, 2008 “US Foreclosure Market Report”. It reveals that foreclosures were up 5% from the previous month, and 57% from March 2007!

The report also shows that one out every 538 US households is now in foreclosure. Additionally, foreclosures are highest in Nevada, Florida, and California.

Click here to read the report.

Originally posted on pfhacks.com: US Foreclosure Activity Map

A friend e-mailed me a link to a presentation (hosted on Google Apps), that I feel, does the best job of explaining the whole subprime mess.

Warning: The presentation does contain adult language, so if you are offended by four letter words in a comedic context, this might not be for you.

Originally posted on pfhacks.com: SubPrime Mortgages Explained

Here is a screen shot of the Atlanta metropolitan area:

And here is Phoenix:

The red colors indicate a higher foreclosure rate per household, while blue indicates a lower number of foreclosures (you won’t see much blue in the examples above).

Checkout how you neighborhood compares: hotpads.com

Originally posted on pfhacks.com: View Foreclosure Rates Visually

This pause would allow time to attempt renegotiation of mortgage terms.  The plan would include home equity loans and secondary mortgages in addition to traditional first mortgages. 

The six lenders participating in the plan are: Bank of America, JPMorgan Chase, Citigroup, Countrywide Financial, Washington Mutual and Wells Fargo.

The plan will be called "Project Lifeline".

The banks reached this deal as the US housing market – particularly he portion financed with adjustable rate subprime mortgages – continues to deteriorate.  According to data from The Federal Reserve, about 1.5 million subprime mortgages are scheduled to reset to a higher interest rate this year.  An additional 500,000 will reset in 2009.

Homeowners already in foreclosure, or within 30 days of a foreclosure sale are not eligible for the plan.

Also, vacant homes and investment properties will not be eligible.

Source:

Banks to pause delinquent mortgage foreclosures

Originally posted on pfhacks.com: Big Mortgage Lenders To Pause Foreclosures

• Applications to refinance are up 92% since the beginning of November, while purchase applications are up 7%.
• Refinancing applications represented 66% of the total last week.
• The average rate for a 30 year fixed mortgage was 5.49% last week.
• The average rate for a 15 year fixed mortgage was 4.96%.

The takeaway is that mortgage rates are very low compared to their historical average. Now might be a great time to refinance, especially if you have an adjustable rate loan.

To illustrate this point, I have included a chart from the St. Louis Federal Reserve Bank, that shows the interest rate on 30 Year fixed mortgages going back to the early 1970’s.

Note: This chart ends with rates as of 12/01/07.

Originally posted on pfhacks.com: Falling Mortgage Rates Creating Refinancing Boom

According to Bankrate.com, the National Average rate for a 15 year fixed mortgage was 4.93% over night, and 5.42% for a 30 year fixed mortgage.

As illustrated by these charts, these rates are the lowest we have seen in over two years.

3 Year Chart of 15 Year Fixed Rate Mortgages:

3 Year Chart of 30 Year Fixed Rate Mortgages:

I hope this provides an opportunity for many of the individuals that took adjustable rate loans to refinance into a fixed rate loan.

Originally posted on pfhacks.com: Mortgage Rates Lowest In Over Two Years

The Mortgage Bankers Association’s seasonally adjusted mortgage application index fell 7.6% in the week ended Dec. 21 to 603.8 — its lowest reading since falling to 575.6 in the Dec. 29, 2006 week.

Source: USA Today

Originally posted on pfhacks.com: Mortgage Demand Lowest of 2007