Beware buying a home from a divorcing couple!!

NEW YORK (CNNMoney.com) -- Marriage break-ups can be tense. And when divorcing couples sell their homes, it's buyer, agent and everyone else beware.

There are about one million divorces a year in the United States and in most cases, there's a home that needs to be sold. That can mean great bargains, because couples divorcing -- like those in foreclosure -- are often among the most motivated of sellers, willing to accept offers below market value.

Still, house hunters may well pay the price in terms of aggravation and time when working with these sellers.

Buyers must wade through the venom generated by the divorce. Often, one spouse is anxious to sell while the other tries to sabotage the deal -- either out of spite or an unwillingness to end the marriage.

"Most of my divorcing clients dislike each other very much so navigating the transaction can be tricky," said Scott Weeda, a Seattle-based real estate agent who specializes in divorce.

We're too afraid to buy -- despite low prices
In other cases, one spouse may delay signing off just to aggravate the ex. Other times, one party may want to maximize the profits while the other just wants to get out.

"In many cases, the joint ownership is the only remaining tie that connects couple selling," Weeda said. "They sometimes want to cut that ASAP."

Buyers may find themselves in agreement on a deal with one spouse until the other vetoes the deal. Sometimes, buyers don't even know there's a problem until the last minute.

Charles Vallis, a Massachusetts-based agent for discount broker Redfin, had a recent sale in which his buyers went to contract and had a closing date, but then the wife in the divorce disappeared.

"She was nowhere to be found for the last few days before closing," said Vallis. "The day before, their attorney notified us that they might not be able to close because the wife was unreachable

One of the buyers, Megan McGuire, who works in public relations for a large law firm, said she "floored" by this. "We thought it was really reckless on her part."

She and her husband, Josh Ledeen, had already given notice at their rental and had made a date with the movers. "We would have been out on the street," said McGuire.

Vallis kept leaving messages for the wife and calling her attorney, who couldn't reach her either. Luckily, her husband was anxious to sell. He even changed the locks before the final walk-through because he feared his wife might damage the interior.

After days of desperately trying to contact the wife, the sellers' attorney finally got a call back and read her the riot act about the legal consequences of breaching the contract. The sale closed on time -- but the agitation cost the buyers sleepless nights.

To try and avoid these situations, Randy Morrow, an Arlington Va.-based real estate agent who represents divorcing couples, tells potential buyers to find out early whether a divorce is acrimonious.

Then, there's a very good chance the settlement will not happen on schedule," he said. "Buyers should talk to their agents about placing protective language in the offer. If a case is really nasty, I would tell my clients to run."

Carol Ann Wilson, an expert in divorce financial planning, also advises house hunters to delve deeper into the sellers' backgrounds if the sale involves a divorce.

"If buyers find that both parties haven't signed off on the selling agreement," she said, "buyers should back off. The deal could be easily derailed."


Thanks for checking out my blog if you have any questions about refinancing or buying or selling a home please contact me. (562) 673-1136

Thanks Rob

Wells Fargo Clarifies Short Sale Criteria for Foreclosure Postponement

The National Association of Realtors (NAR) issued a notice this week explaining Wells Fargo’s new rules surrounding short sale transactions when a foreclosure is pending.

Earlier this month, Wells Fargo advised NAR that it has modified its existing guidelines to allow the postponement of a scheduled foreclosure in connection with a short sale, but only in limited situations. Please check my website at www.shortrefiusa.com

NAR explained that for loans owned by Wells Fargo, including those inherited with the bank’s Wachovia acquisition, as well as other loans serviced by Wells Fargo but owned by an investor, the policy allows for one fore-
closure postponement, but only if: (1) Wells Fargo has a short sale sales contract in hand that has been approved (including approvals from junior lien holders and mortgage insurers, if applicable), (2) the buyer has proof of funds or financing approved, and (3) the short sale can close within 30 days of the scheduled foreclosure sale. For alternante solutions please visit my website at www.shortrefiusa.com

However, Wells Fargo noted that not all investors allow for such postponements and stressed that in jurisdictions where the courts will not approve the delay, the postponement policy will not apply. Wells Fargo told NAR that it is willing to address situations that do not qualify under these guidelines on a case-by-case basis.

Last month, it was reported that Wells Fargo had stopped delaying foreclosures in order to allow distressed homeowners to complete short sales. But as NAR outlined, the foreclosure timeline can be pushed back for a short sale as long as Wells Fargo’s specified criteria are met.

NAR has been holding meetings with the nation’s four largest lenders, including Wells Fargo, to address concerns about their processes for short sales and REO disposition. The trade group’s talks with the banks are ongoing, but NAR has indicated that the discussions have been productive in fostering mutual success and support for a market recovery.

Wells Fargo has been approving Short Refinances call me for details. Contact Robert at (562) 673-1136

Drowning In Home Debt!! Help Is HERE!!

Lisa Gibbs
(Money Magazine) -- A transfer in 2005 landed Air Force major Richard Hallbeck, his wife, and two kids in Southern California smack in the middle of the real estate bubble. Home prices in the area had doubled in the past five years and were still climbing. So the Hallbecks swallowed hard and bought an $845,000 four-bedroom in a suburb of Long Beach.

The $3,800 monthly payment was high but affordable on two incomes. (Laurie, now 37, worked as a claims adjuster.) And they figured the market was so strong that when they had to move again, they'd at least break even. "Our house actually appraised over what we paid for it," Richard, 42, recalls wistfully.


Since then, area sale prices have fallen 26% -- when properties sell at all. Meanwhile, the recession cost Laurie her job, and the payment on the couple's adjustable-rate mortgage will jump $800 in July. Next year Richard will face mandatory retirement from the Air Force, and his pension will be a third of his current $117,000 income.

All that's got the Hallbecks anxious to move to a more affordable city -- like Dayton, where they used to live. But they're just as anxious about how much they could lose on the sale of their house.

A similar home down the street lists for $655,000, $21,000 less than the Hallbecks' outstanding mortgage. At that price, the couple would be out $231,000, including their down payment and closing costs. "The stress has really worn on us," Richard says.

Nationwide, about one in four home mortgages are now underwater, meaning borrowers owe more than their places are worth. No surprise, California and other bubbly states -- Nevada, Arizona, and Florida -- lead the nation.

While a bevy of new federal programs aim to help, underwater owners who want to move still face uncomfortable choices: Postpone the move and continue sinking money into a pit; sell for a loss, forfeiting the down payment and some savings to close the deal; desperately try to enter into a short sale; or simply walk away and face the consequences of foreclosure. If you (or your kids) are in this situation, here's how to think about the options.

Keep on keeping on!!

If you don't have to move and can afford the payments, it probably makes sense to soldier on and wait for housing prices to recover, says Denver financial planner Ross Schmidt. Moody's Economy.com projects that prices in 61% of metro areas will return to recent peak levels by 2015.

If you live in one of the harder-hit cities -- which may take 20 years to rebound -- and you're more than 25% underwater, your house won't be a financial asset anytime soon. But as long as you're happy to stay in it for many years, that may not matter.

In the meantime, you may be able to cut your loan balance -- and lower your payments -- through a new federal program with Affinity Lending Group that refinances existing loans into smaller FHA loans. To qualify, you must be current on payments -- but it's up to the lender to agree to it www.Shortrefiusa.com.

The Hallbecks might have been eligible for some of this aid, but Laurie is eager to move with the kids by this fall, rather than waiting until Richard retires -- which will be in the middle of the school year.

Beg the bank for a break

What if you need to get out of the house? The Hallbecks initially considered renting their place out. But they'd probably lose money, given the spread between their mortgage payment and rental prices. Becoming a landlord is a risk even in areas where you can cover carrying costs, as you're still on the hook in between tenants, says Maryland financial planner Timothy Maurer.

If you have any questions on these Government Programs or what type of Mortgage solutions you may qualify I'm here to help.






Thank you
Robert A Vaughan
Vice President
Affinity Lending Group
562-673-1136

FHA 90 Day Flip Rule Waived!!

FOR RELEASE
Friday
January 18, 2010

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.

In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

•All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
•In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
•The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Affinity Lending Group is here to help you with your questions please contact my office at (562) 685-8159

Thank you
Robert Vaughan
Vice President
www.shortrefiusa.com

More Homeowners Struggling As Option ARMs Reset Higher!!

Mark Koba S.E.


Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages—where both interest and principal payments rise sharply—is already leaving many homeowners struggling to keep a roof over their head.

"It's going to kill off housing," warns Patrick Pulatie, CEO of Loan Fraud Investigations, a predatory lending audit firm. "We have pretty close to 500,000 option ARM payments going higher in California over the next couple of years. The impact of the higher payments will be devastating for homeowners who are having trouble now making ends meet."

Option ARM mortgages, which have been around since 1981 and are aimed primarily for people who had fluctuating incomes, became popular during the housing boom. Terms of the loan usually allowed the borrower to make low monthly payments initially—sometimes by just paying interest only.

But as the terms of those mortgages now readjust, homeowners are facing much higher mortgage payments at a time when the value of their house has plummeted and many are out of work. In some cases, homeowners who chose a very low starting interest rate have actually seen the overall amount of their mortgage increase—known as negative amoritization—putting them even deeper in debt.

"Option ARMs have been a disaster from day one and a lot of them have already defaulted," says Greg McBride, senior financial analyst with Bankrate.com. "This is a very big issue because interest rates are rising." Reduce your principle balance with Affinity Lending Group Shortrefiusa.com


There are no specific numbers on how many option ARM loans there are. But analysts estimate that as many as 1.3 million borrowers took out $389 billion in option ARMs in 2004 and 2005 alone.

Many of those option ARM loans have already re-adjusted to higher payments, but more are on the way. Some 88 percent of Option ARMs originated between 2004 and 2007 are going to adjust higher between now and 2012. Those option ARM borrowers could see their housing bills go up as much as 63 percent, according to Fitch ratings.

And there's more misery. If the Fed increases rates in the months ahead to fight inflation, rates tied to option ARM indexes will rise further—causing more payments to adjust up even sooner. And while Option ARM borrowers might want to re-finance, they often can't because of falling home values and tighter credit restrictions.

"I don’t see how the option ARM problem is not a huge issue," says Sylvia Alayon, vice president and director of operations for the Consumer Mortgage Audit Center, which provides auditing services to advocacy groups. "This is a major hit for housing. It will continue to feed the excess supply of housing with more foreclosures."

But Mark Zandi, chief economist at Moody's, says the option ARM problem is just one of many for housing.

"It's more of a bump in the road," Zandi says. "Many of these loans defaulted before they even got to higher payments. "I think the jobless situation is hurting more and the increase in interest rates. Add that with the coming ending of the home buyer tax credit and those are the bigger problems facing housing."

And David Adamo, ceo of mortgage banking firm Luxury Mortgage, says lenders are helping to ease the situation.

"Many of the good ones are entering into agreements to help borrowers ease their payments," says Adamo. "I don’t think that the re-casting of option ARMs will have any greater effect on housing than any other troubles facing borrowers."

In fact, some 21,000 home loans modified in the third quarter of 2009 included a principal reduction or deferral, according to Mortgage Metrics.

But that's not nearly enough says Loan Fraud Investigations Pulatie and getting most lenders to help now is not that easy. He also says they were part of the problem from the beginning. "They were pushing option ARMs. Anytime they sold to Wall Street, they received 3-4 points in commission," Pulatie said. "If you have $500,000 loan you’re talking about $15,000 in your pocket. That's why Wall Street liked them."

As for borrowers, Adamo says they need to do some honest personal appraisals when applying for a loan. "A lot of option ARM loans should not have been made in the first place, " Adamo says. "Many of them had lower stated income levels than should have been listed. Both the lenders and borrowers are at fault for that."

As the option ARM implosion hits housing, solutions seem few and far between. Homeowners are advised to work with their lenders in reducing loans payments if they are behind or can't re-finance. The White House has been increasing pressure on banks to help borrowers, but it's still up to the banks to decide if they will.

And there is HARP, the government program designed to help homeowners refinance an existing mortgage with lower mortgage rate or to refinance to lower monthly payments. But this too has had limited effect with tough restrictions and qualifiers.
Affinity Lending Group is one of the leaders offering shortpay refinancing. Please view this testimonial of a California couple that refinanced through Affinity Lending Group http://www.youtube.com/watch?v=WY7MToO1fdM


While the number of foreclosures has slowed somewhat, it could reach 4 million in the US in 2010 according to RealtyTrac. Numbers like that, says one analyst, mean housing needs a major financial overhaul.

"We need to have these option ARM loans modified and help homeowners pay them off," says Alayon. "People who say 'don't help my neighbor because I made my payments' are missing the point. Missed mortgage payments mean foreclosures and falling home values. This effects us all."

Hi, and Thank for your continued support. If you have any questions or are just curious at what the banks are doing for solutions to this mortgage crisis. Please contact me at 562-685-8159

Thank you
Robert Vaughan
Vice President
Affinity Lending Group

Foreclosures Weigh On Home Appraisals

LOS ANGELES - It wasn't the first time that Katherine Scheri ruined a real estate agent's day with a low property appraisal.

Scheri, a real estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers' shot at the American Dream.

"That's what he laid on me," Scheri recalled. "And I said, 'Don't you care they could be potentially spending $30,000 too much for a house?"

Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to botched appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it's not fair to compare distressed properties to brand-new homes.

And that gets to the heart of the problem.

Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they've hit more than 50 percent.

Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool or finished basement. And generally, a foreclosure isn't used as a comparison for a standard sale.

But in some areas, appraisers like Scheri contend they are only sizing up homes according to the reality of the market, though they concede its becoming increasingly harder pinpoint what a home is worth.

Home prices in many large metro areas, including Los Angeles and San Diego, hit bottom earlier this year and are recovering, data last week showed. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.

"It used to be a very infrequent thing that you did an appraisal and the value wasn't supported," says Scheri, who is based in San Diego. "Now, it's more common than not."

So, if you're trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.

Part of the problem, critics contend, is that many real estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.

Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they're evaluating.

The result, however, can mean that low-cost appraisers are hired from outside the area and don't have the local knowledge to find homes that can be a better benchmark for regular homes.

Chris Heller, agent-owner of Keller Williams Realty in northern San Diego, recently had the sale of a home nearly botched for the second time because of a low appraisal.

The three-bedroom, two-bath house in the Poway suburb of San Diego was appraised for $55,000 less than what the buyer agreed to pay. The seller wasn't willing to drop the price down to $400,000, but knocked off $20,000 when the buyer agreed to come up with $35,000 in cash.

"The seller is taking less because of the appraisal," Heller said, noting that almost all of the comparable homes used to gauge the property's value were distressed sales.

Still, the buyer is paying a premium not to have to deal with the risks involved in buying a foreclosed home or a short sale, which can take several months to close.

So, should distressed homes sales be compared with other homes? Is one inherently worth more than the other?

A new analysis of foreclosure and non-foreclosure sales by checking AffinityLendingGroup.com found that even when most of the market is made up of bank-owned homes, non-foreclosures sell for as much as 30 percent more. Another study by Harvard's Joint Center for Housing Studies came up with a similar conclusion.

Happy New Year from the entire Affinity Team. We are here to assist you with any questions you have about about your real estate needs. Visit our website www.shortrefiusa.com We Thank you for a great year 2009. We saved hundreds of homes facing foreclosure this past year and we gained a solid communications with all the major banks. If you have any questions please contact my office at (562) 685-8159 and ask for Robert.

Thank you,
Robert Vaughan
Vice President
Affinity Lending Group

Obama Urges Mortgage Refinancing!!

President cites low rates while announcing a loan modification program

WASHINGTON (Reuters) -- President Barack Obama encouraged Americans Thursday to take advantage of historically low mortgage rates and said his administration was rolling out further phases of its plan to address the housing crisis.

Turning his attention to the U.S. economy after finishing his first trip as president to Europe and Iraq, Obama said more people across the United States could save money by refinancing their loans.

"The main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates," he told reporters during a meeting with advisers and a group of people who had taken advantage of the lower rates.

"We estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of these various mortgage programs that have been put in place."

Obama said citizens could check a Web site, MakingHomeAffordable.gov, to see if they were eligible for mortgage refinancing.

"We are in the process of rolling out additional phases to the program," he said, referring to the administration's housing measures.

"We are putting in place a loan modification program, working with banks, working with services that will allow other folks who are closer to losing their home (be) in a stronger position in the future.

Interest rates to go lower?
Meanwhile, the top U.S. housing official said interest rates on typical home loans will continue to fall from their current, record lows.

"I think you will see them continue to come down, based on everything that we're doing, but recognize that they've already started to make a big difference," Housing and Urban Development Secretary Shawn Donovan said on CNBC.

Obama, who spent part of his trip to Europe working on solutions to the global economic crisis, emphasized that the U.S. problems stemmed from the housing sector.

"Obviously one of the triggers of the financial crisis and now the economic crisis that we've suffered is that because in some areas ... housing values got way overheated, in some cases you had a lack of regulation that allowed all sorts of complex financial instruments take advantage of home owners," he said.

"We have seen a collapse in the housing market, a precipitous drop in values, and that led to our problems in the financial markets."

Thank you so much for checking my bolg out. If you need help with your mortgage or just need some advice on what to do if your house is upside down and your payments have adjusted Please call me I can help.

New Hope for Homeowners is Available!!

Robert Vaughan
Vice President
562-685-8159

Mortgage Rates Inch Up

The 30-year fixed rate increases to 5.41%, as government issues massive amounts of debt to finance spending.

NEW YORK (CNNMoney.com) -- Mortgage rates rose over the past week, as home prices and sales fell and the government issues massive amounts of debt to pay for federal spending.

The average 30-year fixed mortgage rose to 5.41% for the week ended Feb. 25 from 5.34% the week prior, according to Bankrate.com. The average jumbo 30-year fixed rate slipped to 6.87% from 6.92%.

It's likely mortgage rates will remain at their historically low levels, as money is funneled into the perceived safety of Treasurys, driving down interest rates and keeping mortgage rates low, according to Patrick Newport, an economist at IHS Global Insight.

"As long as the economy remains weak, mortgage rates are probably not going to go up very much," Newport said.

The average 15-year fixed rate mortgage was unchanged at 4.93%.

Adjustable-rate mortgages were mixed, with the 1-year ARM increasing to 5.58% from 5.47%; the 5/1 adjustable-rate mortgage rose to 5.4% from 5.37%.

This week, the Treasury is offering a record $94 billion debt over three days, including $22 billion in 7-year notes being auctioned Thursday.

In January, sales of newly constructed homes fell 10%, to the lowest level on record, while the median sales price of new houses sold fell 15% from a year ago, according to a government report.

Thank you for checking out my blog if you or someone you know is going through a hardship and they are having trouble paying there mortgage please have them contact me. I can help call me direct 562-685-8159

Robert Vaughan
Vice President

Mortgage Rates Slide

The 30-year fixed rate falls to 5.34%, as investors trade stocks for Treasurys following unveiling of bank bailout plan.


NEW YORK (CNNMoney.com) -- Mortgage rates fell during the past week, pushed lower from the uncertainty stemming from the bank bailout plan unveiled Tuesday.

The average 30-year fixed mortgage rate fell to 5.34% from 5.70% for the week ended Feb. 11, according to Bankrate.com.

The average 15-year fixed rate mortgage sank to 5.03% from 5.31%, and the average jumbo 30-year fixed rate slipped to 6.98% from 7.12%.

Adjustable rate mortgages also dropped over the past week, with the average 1-year ARM falling to 5.67% from 5.73% and the 5/1 ARM sinking to 5.37% from 5.5%.

Mortgage rates edged off the six-week high set the week of Feb. 4, helped by investor skepticism of Treasury Secretary Tim Geithner's plan to attack the financial meltdown. Jittery investors sold stocks and bought Treasurys, lowering the yields and pulling down mortgage rates, according to Greg McBride, senior financial analyst at Bankrate.com.

"We're going to continue to see volatility in mortgage rates between 5% and 6%. There's a tug of war between the Fed and the Treasury trying to push rates lower, and the volume of government debt issuances that pushes rates higher," McBride said.


Thank you for checking out my blog.

Robert Vaughan
Vice President

Fannie, Freddie to ease mortgage payments?

WASHINGTON (Reuters) -- The Obama administration is crafting a mortgage-rescue program that would see Fannie Mae and Freddie Mac ease payments for hundreds of thousands of borrowers and offer a model for Wall Street to do the same, sources familiar with the plan said.

Late last week, officials from the Treasury Department and Department of Housing and Urban Development worked with the companies' regulator to agree on standards for who could get relief and how they might coax other finance companies to follow their lead, said two industry sources familiar with the deliberations.

Those discussions were still going on over the weekend with Treasury officials trying to weigh the merits and costs of several possible approaches, said one source familiar with the talks.

Washington's two largest foreclosure-prevention initiatives of the last 12 months have fallen flat with only a handful of borrowers having been helped despite promises that hundreds of thousands would qualify.

Officials hope to clear the red tape and rigid terms that have doomed past mortgage-aid efforts without burdening taxpayers with many billions of dollars in funding costs.

"They want to get rid of all the high-cost mortgages out there and figure that there are 1.5 million people who could stay in their homes this year if their loans were modified," said one industry source who asked for anonymity. "But it's just really complicated and expensive to do these kind of workouts."

Since Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) were nationalized in September, the government-controlled companies have been retooled as agencies for delivering housing aid. Both put a moratorium on foreclosures late last year, and are pioneering programs to let borrowers rent their homes after default.

But while Fannie Mae and Freddie Mac have had some success with stopgap measures to keep people in their homes, the companies' effort to rewrite home loans announced in November has been a disappointment, industry sources said.

Fannie Mae and Freddie Mac own or insure 31 million mortgages -- about 58 percent of all U.S. single-family home loans -- but only a fraction of their borrowers qualify for a refinancing program that was meant to save several hundred thousand. A similar initiative run by the Department of Housing and Urban Development that promised to help 400,000 borrowers has only reached a few hundred.

Policy-makers agree they must relax the terms of any new foreclosure-prevention effort and are trying to identify which tardy borrowers could keep up payments under a new home loan, said two industry sources.

Fannie Mae and Freddie Mac will likely be the cornerstone of an administration mortgage-aid program that will tap between $50 billion and $100 billion from the government's $700 billion financial rescue fund.

The money would be used to underwrite failing loans and give mortgage companies a subsidy to follow the lead of the two government-controlled companies, industry sources said.

Officials are also discussing how fresh legislation from Congress could buttress their efforts by clearing some accounting and legal hurdles that obstruct loan modifications, the sources said.

Treasury Secretary Timothy Geithner could nod to the evolving plans Tuesday when he lays out the administration's thinking on how to use the funds remaining in the $700 billion program, although details might take longer to work out.

RobertAVaughan.com
Vice President

Snag a great deal on a short sale!!

Short sales - where a lender agrees to take less than it's owed on a mortgage - are rising sharply. Here's how you can profit.

Money Magazine) -- When Brian Gavitt, a physician, and his wife Gayleen, a stay-at-home mom, started to eye homes in Sacramento last winter, they knew they were looking in the hardest-hit areas of the housing bust. So the couple, who were relocating from Lansing, figured they could land a fantastic bargain in no time at all.

The part about the bargain turned out to be true. The Gavitts bought a five-bedroom house in the upscale Natomas Park neighborhood ("Even now, you don't see FOR SALE signs up anywhere," says Gayleen.) And it was a steal at $300,000, a full $200,000 less than they would have paid just two years ago.

The amount of time it took to land the deal was another story. It was more than six months from when the Gavitts first saw their dream home to the moment they held the keys in their hands. The reason: The home they bought was a short sale.

Not along ago, few people had even heard of a short sale, which occurs when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth.

If you're in the market for a home today, you're almost guaranteed to be looking at some short sales. Nationwide, 14% of homeowners are currently underwater on their mortgages, calculates real estate website Zillow.com. And in many areas, it's far more: In the Gavitts' zip code, for example, over half of homeowners would owe more than their home is worth if they sold today, calculates Dee Schwindt, the Gavitts' realtor.

The good news is that short sellers are likely to still be living in the home and some may even be current on their payments. That means these aren't the run-down, distressed properties that you often find among foreclosures; in fact, there's a good chance that some of the most deluxe homes for sale in your market are underwater.

Before you get too excited about buying a short sale, know that they generally aren't, well, short. For the sale to go through, the seller's lender must approve the price and agree to take the shortfall as a loss. That extra step can cause the process to drag on three times as long as a normal home sale.

But as the Gavitts discovered, the hassles can be well worth it. Some buyers and realtors don't want to deal with short sales, leaving many choice homes with very few bidders. So if you're willing to brave the intricacies of the process, you'll be far more likely to land the home you always wanted. The key to snagging a good deal is knowing how to avoid the land mines.

Know what you're getting into. In a short sale, you are dealing with several parties: the sellers, their agent and the sellers' lender. That's why a short sale can take anywhere between two and six months to execute, compared with about 30 days for a typical sale. Though many banks are willing to take a loss on a mortgage in a short sale if it means avoiding an even bigger loss in a foreclosure, with so many owners trying to unload properties, the lender's negotiators are flooded with short-sale offers. So if you're moving or selling another property, keep in mind that you'll likely need to budget for a few months' worth of rental payments so you have somewhere to live in the interim.

Find the right pro. Lenders often make realtors who work on short sales take a hit on their commission, so some brokers may be loath to show you the listings. But don't even think about going solo. These deals take a lot of work and persistence, says Loni Parmelly, author of Success in Short Sales. Before you sign up with an agent, ask him how many short sales he's closed. If he hasn't done at least two, find someone more experienced.

Weed out candidates. In most cities, home listings will indicate in the description whether the property is a short sale. Ideally, you want to knock off ones that come with extra complexities. If possible, pass on any home that has more than one lien against it; having to negotiate loans with two lenders can greatly increase the amount of time it takes to complete the deal. Also avoid homes where the seller has other offers. That's because if another offer is pending, the seller's agent isn't likely to even submit yours for approval until the first one is rejected, meaning you'll have to wait for another negotiation to play out before you even get a chance.

Set the right price. The first step is to have your agent submit your offer to the seller. Don't just rely on the current list price to come up with your initial bid, says Bill Richardson, a district sales manager for the Keyes Co. Realtors in Boca Raton, Fla. The seller's agent may have far underpriced it in hopes of attracting buyers, but the bank likely won't accept a lowball offer. Ask your agent to determine the home's fair market value by searching comparable sales in the area, with an emphasis on other short sales and foreclosures (or get a rough estimate yourself at zillow.com). If the fair market value is lower than the list price, set your offer 10% lower than that.

At this point, you'll also want to get pre-approval for a mortgage; many banks won't even consider your offer if you don't have one, says Schwindt.

Protect yourself. Next, the seller's agent will submit your offer to the seller's lender. At this point, you'll be asked to sign a sales contract. See if the lender will agree to pick up all closing costs as part of the contract, says author Parmelly. Also ask your realtor to specify that you won't do an appraisal or inspection of the property until the offer is approved. That way you won't have to shell out hundreds of dollars until you know you realistically have a good chance of getting the home.

Finally, though most lenders will require you to make some kind of deposit along with the contract, don't put down more than $3,000 before your bid is accepted. That will give you room to put offers on other homes or even to pull out of the sale if it drags on for too long.

Be a pain in the neck. After your offer is submitted to the lender, you're likely to hear nothing for weeks, if not months. This is no time to relax. Call your agent at least once a week, and make sure the seller's agent is contacting the bank's negotiator nearly every day.

"These negotiators may have 400 files on their desk. They'll want to get rid of the squeaky wheels," says Parmelly, who worked as a loan negotiator for lenders for 16 years. To help the seller's realtor in her negotiations with the lender, it's a good idea to have your agent show her which comparable homes you used to arrive at your number.

If the clock keeps ticking and you're reaching the end of your rope, try playing hardball. After months, the lender the Gavitts negotiated with was still dragging its feet and their pre-approved loan rate was about to expire. "We said, 'We need an answer by Friday or we walk,' " Gayleen says. The bank responded by week's end.

Keep your eye on the market. When the bank finally sends its counter-offer, use it as a guideline rather than an ultimatum. Most of the time, the lender's number is based on its own research, that of a local realtor it hires and the outstanding loan balance. Usually its goal is to sell for at least 90% of the home's value, says Amy Bohutinsky, a spokes-person for Zillow.com.

The lender's offer may not be what you'd hoped for, but don't despair: You have a chance to counter. If the market has been flat since your initial bid, try for 5% to 10% less than the bank's number. If the market has been sinking rapidly, however, you may be able to prove that the home's value has shrunk further and offer even less. Once you have the lender's ear, the new offer should take less time to process.

Despite all the legwork and wait, the Gavitts are thrilled with their new home. "I'm glad people are turned off by short sales," says Brian. "It just means more choices for the rest of us."

Have you found a way to pay for your child's college education without taking on too much debt? Did you choose a university based on its lower cost or loan programs, research scholarships, or just save up and pay in full? We want to hear from you. Send your stories to pwang@moneymail.com and you could be featured in an upcoming story.

Robert Vaughan
Vice President

Mortgage Rates Slide in Sour Housing Market!!

30-year fixed mortgage rate falls to 5.48% as Federal Reserve keeps key interest rate near 0%.


NEW YORK (CNNMoney.com) -- Mortgage rates fell over the past week, benefiting from the Federal Reserve's pledge to take all necessary action to stimulate the economy.

The average 30-year fixed mortgage rate fell to 5.48% from 5.59% for the week ended Jan. 28, according Bankrate.com.

The average 15-year fixed rate mortgage slipped to 5.10% from 5.2% and the average jumbo 30-year fixed rate dropped to 7.06% from 7.22%.

Adjustable rate mortgages were lower also, with the average 1-year ARM pulling back to 5.87% and the 5/1 ARM sinking 42 percentage points to 5.41%.

The Federal Reserve kept its key interest rate near 0% Wednesday, and said it is prepared to take additional steps to try to fix the troubled U.S. economy and credit markets.

"The Fed is trying to entice home buyers back into the market," said Greg McBride, senior financial analyst at Bankrate.com. "It'll take time to get buyers back into market, but it's critical to help soak up the inventory of unsold homes."

Despite the lower rates, mortgage applications plunged to levels not seen since November during the week ended Jan. 23, according to the Mortgage Bankers Association.

The Fed said it stands ready to purchase longer-term Treasurys if it determines that such a move will help get credit flowing once again. This may help lower the yield on the government bonds and further lower the rates because most of the rates are based on Treasurys.

Thank you for checking my blog out if you or anyone you know is having difficulty paying there mortgage. They do have options and I can help.

Thank You,
Robert Vaughan

New Fannie, Freddie rules on the way!

Regulators will issue new rules governing the mortgage finance company's portfolio holdings. Also coming, new capital requirements for Federal Home Loan Banks.

NEW YORK (CNNMoney.com) -- The federal regulator of Fannie Mae and Freddie Mac will set new rules early next week governing the mortgage finance companies' portfolios, which play a crucial role in the nation's housing market.

The Federal Housing Finance Agency is required by Congress to issue regulations ensuring the companies' portfolios are backed by sufficient capital, while keeping in mind their ability to provide funding for the mortgage market by turning home loans into securities. Their portfolios contain mortgages and securities backed by home loans.

The agency will also establish new capital rules for the 12 regional Federal Home Loan Banks, which provide much-needed low-cost funding for more than 8,000 banks nationwide. The home-loan banks have suffered in the economic crisis and may have to reduce their lending to shore up their finances.

"The regulations will address items critical to the safety and soundness of the 14 government-sponsored enterprises, which play a vital role in the nation's mortgage market," said James Lockhart, the agency's director.

Analysts, however, say it's more important to determine the future of Fannie and Freddie, which were taken over by the federal government in September, than to issue portfolio regulations.

"What Congress decides to do with these two companies is the real question," said Jonathan Koppell, associate professor at the Yale School of Management.

Portfolio problems
Fannie and Freddie are the largest sources of funding for the U.S. housing market. They buy mortgages from lenders and either hold them on their books or bundle them into securities. The companies also buy mortgage-backed securities.

Their $1.7 trillion portfolios have long been a source of controversy. Regulators had capped the growth of the companies' portfolios after the pair emerged from accounting scandals earlier this decade in an effort to minimize their riskiness.

But as the mortgage crisis unfolded over the past two years, the federal government has leaned more heavily on Fannie and Freddie to keep the housing market afloat. With investors shying away from buying mortgage-backed securities, the two companies are essentially the only players in the arena nowadays. Regulators lifted the portfolio caps last March.

Fannie and Freddie, however, continue to suffer as delinquencies rise. On Friday, Freddie announced it would ask the U.S. Treasury for up to $35 billion more in assistance as it anticipates losses in its fourth-quarter results. The company has already drawn down $13.8 billion of the $100 billion in federal funds made available to it when it was placed into conservatorship in September.

Trouble at FHLB
Meanwhile, the agency must also set capital requirements at the Federal Home Loan Banks, which are owned by the 8,000 member banks but have an implicit government guarantee. Established during the Great Depression, the home-loan banks are the nation's largest source of residential mortgage and community development credit. They provide low-cost loans, called advances, to member institutions, taking collateral such as high-quality mortgage-backed securities in exchange. Banks nationwide have increasingly relied on the home-loan banks for crucial funding as other sources dry up.

But as the value of the mortgage-backed securities drops, the home-loan banks are facing a credit crunch of their own. Some have cut back their dividends. Others have announced they may fall below their current capital requirements.

If the Federal Housing Finance Agency ups the home-loan banks' capital rules, they may not be able to lend as much. But that may not be a bad thing, experts said.

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Robert Vaughan
Vice President