U.S. Plans Big Expansion in Effort to Aid Homeowners

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The Obama administration on Friday announced broad new initiatives to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

Another element of the program is meant to temporarily reduce the payments of borrowers who are unemployed and seeking a job. Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs.
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http://www.nytimes.com/2010/03/27/bu.../27modify.html

[aaron]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

One day, I hope home prices fall enough so I can get one. Every time the government does something like this, it is dragging out the collapse -- destroying my dreams.

Sure, now that all the poor people have been kicked out of their houses it is time to offer principal reduction.

[jtabeb]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

One day, I hope home prices fall enough so I can get one. Every time the government does something like this, it is dragging out the collapse -- destroying my dreams.

You ain't the only one, brother. Ain't it grand to know it's a bad time to buy, only to find out it won't be a good time to buy for like a decade or more (unless we get our high/hyper-inflation event soon). And then, well, crap, we really ain't gonna be able to afford no houses.

In its statement, the Treasury said the initiatives were intended to “balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone.”

Unless you are a TBTF Bank, then you get all the help we can muster, AND THEN SOME!

Anything in there comforting to you? Nah, me neither.

[bill]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

Its to bad people have to go threw such a gov and servicers hell hole program.
I hope they know better.
My comments on the subject.
http://www.itulip.com/forums/showthr...083#post154083


From a Broker friend of mine in Las Vegas a few weeks ago.

The banks are holding over 13,000 homes in Clark County, delaying foreclosure on 1,000's more... Yet we have no inventory... Its a disaster...

[centsless]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

One day, I hope home prices fall enough so I can get one. Every time the government does something like this, it is dragging out the collapse

Owning three houses (never a flipper) in hard hit areas of Florida, it is difficult for me to see any program "dragging out the collapse".

Percentages that median prices have been determined* to be undervalued as of Jan 2010...

Cape Coral currently selling at 36.8% below fair market value**
Fort Lauderdale -24.3%
Fort Walton Bch -17.1%
Gainesville -13.4%
Jacksonville -14.7%
Lakeland -17.5%
Miami -11.4%
Naples -29%
Ocala -17.5%
Orlando -17.1%
Palm Bay -24.4%
Panama City -8.6%
Pensacola -16.5%
Port St Lucie -33.3%
Punta Gorda -27.8%
Sarasota -28%
Tallahassee -11.1%
Tampa -16.1%
Vero Beach -39.8%
West Palm Beach -30.3%

*Source: IHS Global Insight/PNC Financial Services in article http://money.cnn.com/2010/01/27/real...reas/index.htm

**fair market as determined by, according to referenced article. "comparing median home prices, local interest rates, population densities and income, plus historical premiums or discounts that areas have exhibited over time."

[don]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

You ain't the only one, brother. Ain't it grand to know it's a bad time to buy, only to find out it won't be a good time to buy for like a decade or more (unless we get our high/hyper-inflation event soon). And then, well, crap, we really ain't gonna be able to afford no houses.

In its statement, the Treasury said the initiatives were intended to “balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone.”

Unless you are a TBTF Bank, then you get all the help we can muster, AND THEN SOME!

Anything in there comforting to you? Nah, me neither.

Here in bankrupt Cali the state is planning on picking up the Fed's $8K tax credit, scheduled to end in April, with a $10K Sacto alternative. The article that carried this piece of horseshit mentioned in passing that housing prices would drop with the loss of the Fed 'incentive'. That was seen as an obvious tragedy. :rolleyes:

What wasn't explained was the real estate crowd automatically adding another $10-12,000 to the asking price of housing when the Fed giveaway kicked in. Just making up for their "losses" by sticking Joe and Jane with a 30-year price increase to offset their one-time tax credit. Vermin.

I hope I live long enough to see the real estate 'industry' go the way of the travel agents.

[thriftyandboringinohio]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

As long as we're whining.....
...I want a big chunk taken off my mortgage principal, too.

Sure, I can pay the full amount, and I never missed a payment when I was unemployed for half a year. I'm responsible and bought a modest home and keep large savings.

But as long as mortgage principal reductions are available, I want one!

[Raz]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

As long as we're whining.....
...I want a big chunk taken off my mortgage principal, too.

Sure, I can pay the full amount, and I never missed a payment when I was unemployed for half a year. I'm responsible and bought a modest home and keep large savings.

But as long as mortgage principal reductions are available, I want one!

How can you be so selfish? Don't you think everyone deserves to have a nice home?
Whether or not they can afford it shouldn't matter because it's a civil right - like someone else paying your medical bills is a civil right.

Just because you got lucky during your unemployment doesn't mean that everyone is lucky!
Why I bet that most of the people in 4,400 square foot homes were victims of predatory lenders.

A heartless, inconsiderate and selfish jerk like you must be a rich Republican. :rolleyes::p

[jacobdcoates]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

My idea of fair market value is what ever price some one is willing to pay in cash for it.

[GRG55]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

Here in bankrupt Cali the state is planning on picking up the Fed's $8K tax credit, scheduled to end in April, with a $10K Sacto alternative. The article that carried this piece of horseshit mentioned in passing that housing prices would drop with the loss of the Fed 'incentive'. That was seen as an obvious tragedy. :rolleyes:

What wasn't explained was the real estate crowd automatically adding another $10-12,000 to the asking price of housing when the Fed giveaway kicked in. Just making up for their "losses" by sticking Joe and Jane with a 30-year price increase to offset their one-time tax credit. Vermin.

I hope I live long enough to see the real estate 'industry' go the way of the travel agents.

don, it's unusual for me to find myself disagreeing with you...but that is the case this time.

Real estate agents can list a property at any price they can get the client to agree to, but the prices of properties aren't controlled by the agents as far as I can tell. The prices are set by whatever is transacted between [presumably] willing buyers and sellers. And these days I would expect that in many markets "asking prices"[listed prices] are basically meaningless, and most transactions are occurring at [sometimes steep?] discounts to them.

Real estate agents don't eat if they don't sell...and a falling market is a disaster for them because the first thing that happens is buyers go on strike and transactions go to zero, even before house prices have fallen very much.

Then again, like a lot of other things I've noticed, maybe "it's different in California"...

[GRG55]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

Owning three houses (never a flipper) in hard hit areas of Florida, it is difficult for me to see any program "dragging out the collapse".

Percentages that median prices have been determined* to be undervalued as of Jan 2010...

Cape Coral currently selling at 36.8% below fair market value**
Fort Lauderdale -24.3%
Fort Walton Bch -17.1%
Gainesville -13.4%
Jacksonville -14.7%
Lakeland -17.5%
Miami -11.4%
Naples -29%
Ocala -17.5%
Orlando -17.1%
Palm Bay -24.4%
Panama City -8.6%
Pensacola -16.5%
Port St Lucie -33.3%
Punta Gorda -27.8%
Sarasota -28%
Tallahassee -11.1%
Tampa -16.1%
Vero Beach -39.8%
West Palm Beach -30.3%

*Source: IHS Global Insight/PNC Financial Services in article http://money.cnn.com/2010/01/27/real...reas/index.htm

**fair market as determined by, according to referenced article. "comparing median home prices, local interest rates, population densities and income, plus historical premiums or discounts that areas have exhibited over time."

It could well be that much or all of Florida has "overshot" to the downside. But I do wonder in the determination of "fair market" how much influence the outsized inflationary effects of the past couple of decades is imbedded in the calculation

[vinoveri]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

Real estate agents can list a property at any price they can get the client to agree to, but the prices of properties aren't controlled by the agents as far as I can tell. The prices are set by whatever is transacted between [presumably] willing buyers and sellers. And these days I would expect that in many markets "asking prices"[listed prices] are basically meaningless, and most transactions are occurring at [sometimes steep?] discounts to them.

Perhaps you're overlooking the 6-7% commission charged by brokers, regardless of the market. So in effect, whatever a seller wants to walk away with, his bottom line rock bottom price, he must price and ultimately negotiate at a number 6-7% higher. The "Trading Places" comment by Don Amiche, that commodity brokers make money regardless of whether the price is going up or down applies hear (granted they make a bit less when the prices are falling); of course if sales are down then their commissions are down. The RE broker commission is a fixed overhead and is way to high in many markets IMO. Not blaming the realtors mind you, as I have used discout brokers or negotiated lower commission several times over the years. Other folks I suppose just take it for granted that they must pay the 6-7%. OTHO, NAR, has fought every step of the way to keep discount brokers and new business models from accessing the MLS, which is the great benefit and selling point for listing with a realtor. Fortunately, NAR has lost his battle.

[GRG55]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

Perhaps you're overlooking the 6-7% commission charged by brokers, regardless of the market...

Although I don't have much to do with the real estate market directly [my only significant holding being the site of the bunker which I bought eleven years ago in a private sale], I think I understand how the role of a broker works...

Real estate agents don't eat if they don't sell...and a falling market is a disaster for them because the first thing that happens is buyers go on strike and transactions go to zero...

...

So in effect, whatever a seller wants to walk away with, his bottom line rock bottom price, he must price and ultimately negotiate at a number 6-7% higher. The "Trading Places" comment by Don Amiche, that commodity brokers make money regardless of whether the price is going up or down applies hear (granted they make a bit less when the prices are falling); of course if sales are down then their commissions are down. The RE broker commission is a fixed overhead and is way to high in many markets IMO. Not blaming the realtors mind you, as I have used discout brokers or negotiated lower commission several times over the years. Other folks I suppose just take it for granted that they must pay the 6-7%. OTHO, NAR, has fought every step of the way to keep discount brokers and new business models from accessing the MLS, which is the great benefit and selling point for listing with a realtor. Fortunately, NAR has lost his battle.

There's no shortage of real estate brokers in most markets these days. And like all professions, in each market there are a few really good ones, a fair number that are "average", and some that really need to find another vocation. As you point out, if sellers don't like the comissions it probably because they don't feel they got value for one of several possible reasons:

1. They didn't hire one of the premium brokers, even though they are paying a premium price;
2. Given the market they should have negotiated the fees, and didn't;
3. They think it's "easy" even though they don't have the first clue how to sell a house themselves;
4. They know how to properly market and present a home for sale, and for some reason feel that knowledge entitles them to resent the fee of the person they willingly hired to do it for them.

Auto sales people get treated the same way...

[radon]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

It could well be that much or all of Florida has "overshot" to the downside. But I do wonder in the determination of "fair market" how much influence the outsized inflationary effects of the past couple of decades is imbedded in the calculation

My thoughts exactly. Apparently fair market value no longer has anything to do with what someone is willing, or even able, to pay.

[centsless]

Re: U.S. Plans Big Expansion in Effort to Aid Homeowners

It could well be that much or all of Florida has "overshot" to the downside. But I do wonder in the determination of "fair market" how much influence the outsized inflationary effects of the past couple of decades is imbedded in the calculation

Aside from that I always thought (been here since the 70s) that Florida was underpriced, wouldn't that outsized influence have colored across the bed so that a block could still be judged to have overshot its square, relative to the rest of the quilt. (Did I take that imbedding too far? Sorry.)

My thoughts exactly. Apparently fair market value no longer has anything to do with what someone is willing, or even able, to pay.

As already noted:

**fair market as determined by, according to referenced article. "comparing median home prices, local interest rates, population densities and income, plus historical premiums or discounts that areas have exhibited over time."

Besides that, since when is everything in business fair? Just because a person offers a price and a person accepts a price, does not necessarily determine a fair market value.

http://en.wikipedia.org/wiki/Fair_market_value

"Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the real estatemarket."

Certainly a seller under duress by the buyer does not presume a fair market value upon sale. But what if the seller is under pressure of their own (un)doing? I don't think they sell at fair market value. I think they just sell.

Or am I using the wrong phrase? I'm new to all this finance stuff. Am I trying to determine some intrinsic value if there is such a thing?

In my recent purchase, (yes, a fool catching a falling knife), I bought two homes on one property. I plan to move there in part because the area reduces my cost of living by 20%, and so I will live in the main house & rent the guest cottage. But if I stayed in my other house (which I have not yet decided to sell), based upon what I'd be able to rent (even after rents have also crashed) both the new-to-me houses, it turns out I bought at half what the 1999/2000 price to rent ratio for the area indicates should have been the selling price today (if that's a reasonable fundamental by which to judge). Research of prices in the area also indicated to me that I was buying at about a 1993/1994 price. And three houses purchased in the area after I bought, including one recently, paid at least 20% more each per sq ft of house than I did.

So did I buy at fair value? I don't think so. I think it was a very unfair price but the best the seller was going to get who, under threat of losing their homestead to foreclosure, sold this ATM'd inherited property instead. No pressure by me. All of their own squandered undoing. Fair? I don't know. Karmic maybe if you are into that. Fair market value? I don't think this market knows what that word fair means. I think brutal market value better describes current conditions here.