Business & Finance Finance

Mortgage And Loss Mitigation Information

According to the latest numbers, pricing on single-family homes in the top twenty metropolitan areas in February had dropped by at least 18 percent from the year before, but the rate of change has slowed showed some hope for the distressed housing market.

The declines of the past year were more than ten percent, and home prices around the entire nation were back down to where they were in 2003. There has been a ray of light, however- January was the first time in sixteen months that the declines for the year did NOT set negative records. But analysts are still not sure if they can officially announce a real turn around for home prices.

The market might be stabilizing somewhat, but the price drops remain harsh, especially in more "bubbly" areas where they previously rose very sharply. Recent indices and studies show that the worst off cities in the past year have been Las Vegas, San Fransisco, and Pheonix, homes of previous housing booms.

As prices fall and waves of unsold homes sit empty, foreclosed-on houses aren't selling either, making the market particularly hard on those who owe more than their houses are now worth. For that reason, real estate short sales are becoming more necessary and more prevalent, but they aren't helping the overall situation. Prices will only continue to drop in areas with a high rate of foreclosures and short sales.

Due to all of these recent reports, the Obama admin is planning to help reduce mortgage payments for more than a million homeowners who are at risk for default. The government will tap into a fifty-billion fund created specifically for the housing crisis to incentivizes mortgage servers to allow for more loan modifications and reduce monthly payment with re-amortization.

More than half of all troubled mortgages have been re-financed and have second mortgages in an effort to help buyers dodge mortgage insurance and reduce principal and down payments. But this makes it harder to get loan modifications for the first loans, making more people involved and bogging down proceedings.

The plan will give mortgage servicers up to $500 in order to encourage them to allow loan modifications on second loans at lower interest rates for at least three years. Servicers would also be paid a small amount so long as the borrowers don't default, further encouraging them to work with homeowners to avoid foreclosure.

The plan will likely c home loan modifications, and discourage foreclosures, perhaps even having a positive impact on prices and foreclosure rates.

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