The U.S. House Judiciary Committee could vote on a bill as early as next week that would make [tag]changes to bankruptcy law[/tag] aimed at helping borrowers with subprime loans avoid foreclosure, the body’s chairman said Tuesday. Consumer groups have thrown their full support behind the measure, saying that it could help 600,000 homeowners avoid foreclosure in the next two years. The banking industry, however, has lobbied intensely against the measure, arguing that it would increase the cost of credit and create confusion in the market for [tag]mortgage debt[/tag] because loan terms would be less reliable.

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With thousands of troubled borrowers facing foreclosure, two mortgage industry competitors are putting aside some of their differences and joining forces. [tag]Countrywide Finance[/tag], announced it’s partnering with the [tag]Neighborhood Assistance Corporation of America[/tag] (NACA), a gadfly/community advocacy group that has been its arch enemy for years. “A lot of people have been talking about saving people’s homes,” Bruce Marks, NACA’s CEO said. “Today, we have the solution that can act as a model for saving hundreds of thousands of people’s homes.” The initiative overlaps with the program announced on Tuesday by Countrywide (Charts, Fortune 500) where it would arrange [tag]refinancing[/tag]s, restructurings and rate reductions for adjustable rate mortgage (ARM) borrowers. But the partnership with NACA would apply to all the mortgage lender’s clients: prime and subprime, fixed and adjustable. (more…)

When a [tag]mortgage borrower[/tag] is unable to make the required payments, the servicing agent has an obligation to the owner of the mortgage to resolve the problem in the way that is least costly to the owner. The usual method is [tag]foreclosure[/tag], but an alternative is to modify the loan contract to make the payment more affordable. In making their decisions, loan servicers usually ignore an asset possessed by the borrower that could shift it from foreclosure to modification. This asset is the right to a share of the [tag]future appreciation[/tag] in the value of the borrower’s house. Borrowers with payment problems who have a lot of equity in their homes have the most to gain from pledging a share in future appreciation. Such borrowers are otherwise unlikely to qualify for a contract modification because foreclosure will be less costly to the investor. Borrowers in trouble, however, can’t assume that the servicer will take the initiative in proposing any modification deal, let alone a more complex variety that includes a pledge of future appreciation. The culture of loan servicing discourages such initiatives because they raise costs and do not generate any additional revenue.

September sales of existing homes fell by double the forecast. These sales are measured by closings of contracts written in the months before, and the mortgage crunch did not bite until mid-August. You should assume that October will underperform its forecast, also; September was the worst contract-writing month since that one in 2001. However, perverse good news: At street level it is clear that psychological damage is worse than actual [tag]loan-denial[/tag]. New-home sales are based on contracts-written, not closed, and the cancellation rate is running 30-50 percent. Builders are not “clearing inventory”; they are still building it and then dumping it at market-wrecking discounts — more than 10 percent of the gross revenue for some. Nothing would help housing more than the failure/merger/mothball of as many national builders as possible. (more…)

As reported in The Bellingham Herald, the availability of [tag]subprime loans[/tag] made it easier for poor people to borrow money in recent years, but that borrowing may have hurt more people than it helped, University of British Columbia geographer Elvin Wyly said Friday. Wyly, who spoke at Western Washington University, has researched the geographic concentration of the impact of subprime loans and the upswing in home foreclosures that followed. That research showed the greatest impact tends to be in black and Hispanic neighborhoods and regions. Blacks and Hispanics are almost twice as likely to have higher-interest subprime loans as other groups, he said. Today, Wyly noted, subprime loans are being blamed for billions of dollars in losses to everyone from homeowners to big Wall Street investment firms. Some have estimated that the eventual total lost wealth from the collapse of the subprime mortgage industry could be above $2 trillion.

A [tag]reverse mortgage[/tag] is a loan where the lender pays the mortgagee a lump sum, a monthly advance, a line of credit, or all three while the individual(s) continue to live in the mortgaged property. To qualify for a reverse mortgage, the applicant must own the property and all owners must be 62 years of age or older. The amount that can be borrowed is generally based on the applicant’s age, the home’s value and the interest rate the lender is charging. Funds received can be used for any purpose. Reverse mortgage loans typically require no repayment for the term of the loan, but must be repaid in full, including all interest and other charges upon sale or death. Reverse mortgages may have tax consequences, affect eligibility for assistance under federal and state programs and have an impact on the estate and heirs of the homeowner.

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Beautiful Wilkes County NC Executive Country Club Home.

MLS Number: 51211 List Price: $359,000

Bedrooms: 3, Full Baths: 2, Half Baths: 1, Est Total SqFt: 3425+
Type/Style: Tudor, Two Story, Area: 6
Elementary School : Moravian Falls Elementary
Middle School: Central Wilkes
High School: Wilkes Central

Construction: Brick Veneer & Other, Solid Masonry Foundation: Basement, block & brick. Roof: Shingle – Composition, Two Years Old, Floors: Carpet/Hardwood/Tile
Garage/Carport: Garage-Double Attached
Interior Features: Smoke Detector(s), Ceiling Fan(s), Newly Decorated, Painted and Carpeted, Central Vacuum, Large Master Bedroom, Walk-In Closets, Hardwood Floors, Basement, Two Fireplaces (Rock and Brick), Gas Logs, Workshop in Basement, Walk-in Cedar-lined closet, Formal Living Room, Dining Room, Den with Oak Bookshelves and Cabinetry, Cable TV w. broadband Internet

Exterior Features: Tiled Patio/Deck and Walkways, Very Private Yard, Level Lot, Set Back From Street.
Subdivision: Farmington
Lot Size: 1.14 acres

Contact Elizabeth Carter, 336.973.5594 or Greg Stikeleather, Broker, 704.880.5247 or email eacarter@charter.net

click here for more information

Seniors apply for a [tag]reverse mortgage[/tag] for all manner of reasons. There are some folks who need the funds to make their financial life easier, but there are many who simply want to enhance their current lifestyle. There are important points to consider about reverse mortgage and the homeowner doesn’t need good credit to obtain a reverse mortgage. The proceeds do not affect your Social Security, Medicare, or any other benefits you receive and the proceeds are income tax free, because they are not considered income.

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Most [tag]mortgage[/tag] professionals indicate that the next generation of [tag]subprime mortgage[/tag]s will look much different than the loans issued during the height of the housing boom. Many argue that subprime lenders have been very successful in increasing homeownership rates by creating liquidity and offering credit to those previously denied loans. Many are looking to the [tag]Federal Housing Administration[/tag] to step into the subprime void. Several proposals in Congress would expand FHA lending authority, allowing it to come to the rescue of subprime borrowers struggling with their current mortgages. The FHA, which provides government-backed mortgage insurance on [tag]low-down-payment loan[/tag]s, is in a good position to address the subprime market.

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High home prices meant that a large percentage of buyers overextended themselves to get into a home. They may have taken out mortgages with low initial interest rates that later reset much higher, counting on rising prices to allow refinancing at lower rates. But when home prices fell, those situations disappeared and the [tag]risk of delinquency[/tag] jumped. That’s what’s happening in many coastal states where property once appreciated at prodigious rates. In addition, high risk markets have [tag]foreclosure rate[/tag]s and fraud and collateral risk indices three times the national averages. High risk markets also have job issues such as high unemployment of low wages and wage growth, all indications of economic stress.

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Those age 62 or older looking for more income for retirement may want to look at their biggest asset for potential help. By using a [tag]reverse mortgage loan[/tag], homeowners can turn the value of their home into cash without moving. But specialists stress the importance of getting all information before making a decision. To apply for a [tag]reverse mortgage[/tag] loan, individuals must go through a free counseling service to get a certificate. Certificates are valid for six months after the counseling session. AARP, HUD and the [tag]National Foundation for Credit Counseling[/tag] have certified 500 counselors nationwide. There are three basic combinations of payment for a reverse mortgage. Borrowers can receive a lump sum after closing the loan, choose a line of credit and draw on it at any time or they can opt for monthly payments.

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Buying a house or condo with little cash to contribute towards the down payment and closing costs is actually still possible, even in with the mortgage community experiencing a sub-prime mess. Home sellers and home builders, as well as their real estate agents, have never been more eager to sell you a home. Simply, forget what you read or heard about the “subprime” mortgage market. That segment of the “for sale” inventory is a very small fraction of the home sales market. If you have good income and a [tag]FICO[/tag] score over 620, you can probably qualify for a conventional mortgage. Qualified veterans can obtain no-down-payment VA mortgages with minimal closing costs. PMI ([tag]private mortgage insurance[/tag]) home loans for 90 percent, 95 percent and even 100 percent are grabbing a rising share of the mortgage market.

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Mortgage and finance experts are predicting that about $50 billion in [tag]adjustable rate mortgages[/tag] will soon reset. The effect for homeowners is that interest rates on their adjustable rate mortgages will increase and unfortunately many of these consumers are [tag]borderline borrowers[/tag]. Despite efforts to raise awareness, it many aren’t fully prepared for what’s to come. Most borrowers are likely to just scramble to pay the higher expenses, some of which will jump by 50 percent and come as a big surprise. Other loan holders will find no choice but to default and some will be driven into bankruptcy.

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$5,850,000

MLS Number: 50913

City: Valle Crucis, NC
Stories: 2
Bedrooms: 4 Baths: 4.5
Area: Boone-Blowing Rock, NC
Year Built: 1990
Plus Five fully furnished 1,400 sq. ft. Rental Cottages. Each built in 1996 on approx. 1/2 acre sites. Current cottage average annual rental income $150,000.

39.4 acres with 360 degree view of Blue Ridge Mountains.

5,200 sq. ft. main house built in 1990 on 1.24 acres.

No restrictions and no zoning offer many other options:

* Family compound
* Corporate retreat
* Religous retreat
* Horse farm / Dude ranch
* Recording studio
* Cottages can be sold separately
* Land can be further subdivided if desired

Contact Elizabeth Carter, 336.973.5594 or Greg Stikeleather, Broker, 704.880.5247 or email eacarter@charter.net

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The US House of Representatives recently voted to remove a tax penalty known as “phantom income” tax. In the past, if a lender or creditor forgives all or part of a debt due to a foreclosure or short sale , the amount forgiven is seen as income by the IRS, which is taxable. The IRS requires that lenders send a Form 1099 reporting they cancelled the debt to any homeowners that foreclose or participate in a short sale. The IRS turns around and taxes the homeowner on the “phantom income.” The obvious issue with the current law is if the homeowner did not have the money to pay their mortgage (resulting in the foreclosure), they most likely will not have the money to pay taxes on income they were never actually given.

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For a decade, credit-challenged homebuyers have used a regulatory loophole that lets them get [tag]Federal Housing Administration[/tag] mortgages without putting their own money down, while at the same time avoiding costly [tag]subprime loan[/tag]s. About 7,000 buyers per month were exploiting the loophole, and now the feds are squeezing it shut. The new policy means that prospective homebuyers with marginal credit will have to act quickly if they want to buy houses without putting any money down. Otherwise, they will have to save for down payments or wait for the FHA to roll out its own zero-down program.

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To examine the surge in subprime lending, the The Wall Street Journal analyzed more than 250 million records on mortgage applications and originations filed by lenders under the federal Home Mortgage Disclosure Act. Subprime mortgages were initially aimed at lower-income consumers with spotty credit. But the data contradict the conventional wisdom that subprime borrowers are overwhelmingly low-income residents of inner cities. Although the concentration of high-rate loans is higher in poorer communities, the numbers show that high-rate lending also rose sharply in middle-class and wealthier communities.

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According to a new study by the Center For Housing Policy, many American workers can’t afford the [tag]median priced homes[/tag] in their cities. While prices have declined two percent from a year ago in 2020 metro markets, [tag]mortgage interest rates[/tag] have risen enough to make homes less affordable, which could well explain why the buyer’s market appears to be deepening nationwide, despite job growth and low unemployment. In better times, 40 percent of the market is driven by second home buyers and investors buying to resell for quick profits. Currently, speculators have left the market and housing has hit a bottom and will take years to recover.

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A new mortgage industry alliance has been recently formed to help beleaguered [tag]mortgage holder[/tag]s. The alliance, called [tag]HopeNow[/tag], was announced by Treasury Secretary Henry Paulson and counts as members some of the largest lenders and servicers that collect payments, a handful of housing counselor networks, and a group representing investors who hold mortgage debt. It is intended to coordinate efforts between servicers and counselors to provide “workouts,” which can include lowering the interest rate on a loan, spreading out [tag]past-due payment[/tag]s over the life of the loan or a short-term repayment plan.

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IRS officials agreed to take action in response to a report by a Treasury Department unit urging the agency to improve its oversight of [tag]like-kind exchange[/tag]s. Lawyers and accountants often refer to this as [tag]1031 exchange[/tag]s, named after a section of the Internal Revenue Code. These exchanges generally allow participants to defer, or sometimes even avoid, capital-gains taxes when they sell a business or investment property and replace it with a similar asset within a specified period. Some people have used the basic concept to defer taxes on gains in other types of property, including art and collectibles.

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More and more Americans are losing their homes to foreclosure. Many could have escaped that fate if they would just have talked to their lien holders. Instead, like and [tag]ostrich[/tag], they bury their head in the sand, hoping that something will happen before the mortgage company takes their home. For some homeowners, foreclosure may seem the easiest option. If interest-rate increases drive monthly payments too high and the property cannot be sold for enough to pay off the loan, many just walk away and let the lender have the property. Yet, there are many things that can be done to prevent foreclosure. Yes, you can fight back!

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Beautiful Wilkes County NC Timber Frame Home and Mountain Property.

MLS Number: 51166, List Price: $898,500

2 Bedrooms, 2 Baths, 2 half baths, 2 car attached garage, full basement, and a barn on 5 acres of land.

These terms are used to describe thousands of homes and yet some things just can’t be described, they have to be experienced. This is one of those homes that really has to be seen to be appreciated.

This majestic Timber Frame home of the Bob Timberlake genre is not just another house, it provides a feeling of home that is not about walls and floors and windows and doors. It creates a feeling of the flow between your outdoor and your indoor environment that is seamless. Everywhere you look there is a view. Everything you touch feels natural and beautiful in a way that cannot be described, only owned.

Contact Elizabeth Carter, 336.973.5594 or Greg Stikeleather, Broker, 704.880.5247 or email eacarter@charter.net

click here for more information

After World War II, virtually all mortgages carried fully [tag]amortizing payment[/tag]s. However, borrowers generally seek lower initial payments, and lenders seek to accommodate them if possible. The only way to reduce the initial payment is to reduce the [tag]principal payment[/tag] — principal is the only payment component that has any “give” in it. Lenders will not forgo interest but they may allow borrowers to delay making principal payments. This was the prevailing practice in the 1920s; the practice largely ended in the 1930s, and then it returned in recent years with interest-only options and options ARMs.

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FHA-insured home mortgages — marginalized or squeezed out of the market during the [tag]subprime loan[/tag] boom years — are poised to roar back. And if Congress passes a compromise version of FHA reform legislation, maximum loan limits for FHA could rise immediately to $417,000 — or even a lot higher. The House bill authorizes FHA loan terms up to 40 years, but the Senate bill is silent on that issue. The Senate bill allows FHA to use “[tag]risk based pricing[/tag]” on all loans where borrowers make less than a 3 percent downpayment — a provision favored by the Bush Administration. The Senate bill has no language on the subject, but some Republicans are strongly opposed to allowing FHA to directly compete with [tag]private mortgage insurance[/tag] firms for borrowers who present varying levels of default risk.

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Will [tag]housing weakness[/tag] tip over the economy, or will global strength pull us out? How can consumers continue, energy and [tag]healthcare costs[/tag] rising steeply, incomes mostly flat versus inflation, no monthly savings budget to flip to spending if necessary, [tag]home-equity[/tag] ATM shut off, and now psychologically undercut by the housing-wealth effect running in reverse? The consumer’s only other source of spending: the credit card, and those balances are showing a very rapid rise, in one report 2.5 times GDP growth. No global cavalry can rescue that pattern. The overall picture is erosion. Financial-market commentary always expects quick resolution, like a stock’s reaction to the arrest of a chief executive.

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As the list of proposed remedies to the subprime crisis has grown longer, the chorus against helping troubled borrowers has gotten louder. On Wednesday the Democrats called on the White House to increase funding and implement proposals for [tag]foreclosure prevention[/tag]. Joseph Mason, an associate professor of finance at Drexel University and a senior fellow at Wharton, argues in a research paper released Wednesday that proposed remedies could actually make things worse and even that troubled borrowers have gotten some benefit from their loans.

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Beautiful Wilkes County NC Log Home and Mountain Property.

MLS Number: 50863, List Price: $359,900

Bedrooms: 3, Full Baths: 2, Half Baths: 0, Est Total SqFt: 2600, Type/Style: Log Home, Area: Area 6, Middle School: Cntrl Wlks, High School: Wlks Cntrl, Construction: Log

Foundation: Combination, Roof: Metal Roof, Floors: Carpet/Hardwood/Tile, Garage/Carport: None-Garage, None-Carport, Interior Features: Master Bedroom, Main Level, Large Master Bedroom, Walk-In Closet(s), Hardwood Floors, Fireplace(s), Great Room, Exterior Features: Double Pane Windows, Wooded Lot, 1-5 Acres, Hot Tub, Subdivision: N/A, Lot Size: 2.47, Apx SqFt: 2600 – 2800 SF, Basement: None

Contact Elizabeth Carter, 336.973.5594 or Greg Stikeleather, Broker, 704.880.5247 or email eacarter@charter.net

click here for more information

FHASecure, the program recently announced by President George Bush, may be about the first to get borrowers, at risk of foreclosure, into a new loan fast. To date, fewer than one-hundred [tag]FHASecure loans[/tag] had been originated. Countrywide Financial has started offering the program. Offices of First Horizon Home Loans, an affiliate of First Horizon National Corp., Memphis, were gearing up to launch FHASecure. Learn more at www.fha.gov. FHASecure aims to get [tag]loan payments[/tag] back to around what they were before the loan rate reset, says Bill Glavin, the U.S. Housing and Urban Development’s special assistant to the federal housing commissioner. The program has strict rules, which generally are the same as for a traditional Federal Housing Administration mortgage.

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One consumer group estimates that 600,000 foreclosures could be avoided over the next two years by making a simple change to the bankruptcy code. The [tag]Center for Responsible Lending[/tag] (CRL) calls it a tweak, but it could be a significant change for homeowners and the market for mortgage-backed securities. Under current law, when a person files for Ch. 13 bankruptcy, judges cannot reduce mortgage debt owed on a person’s primary residence, although they may modify mortgages on investment property or second homes. Under the House bill, the [tag]bankruptcy judge[/tag] would have the option of reducing what the homeowner owes the lender. Say a homeowner’s property is worth less than what he owes. The judge could reduce the principal to match the home’s current market value as well as reduce the loan’s interest rate.

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