Photos from Rick Hauser, ABR, CNE, GRI Exclusive Buyer Agent - 100% Buyers
Home in Countryside Glen subdivision of Hawthorn Woods lit up around the Holidays.Located in: Hawthorn Woods, IL
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If you have excellent credit and are thinking about buying a home in the Chicago Illinois area during the next 60-90 days:
"That's because the intention of the plan is to reduce housing inventory. The large supply of homes on the market right now are driving down prices."
(Comment -- unfortunately - by not allowing people to refinance at that rate - you will still have more people getting stuck with higher payments and getting foreclosed upon - thus - bringing more inventory into the system - thus defeating the purpose. What rocket scientist came up with this bone-headed plan?)
"And Olick has another concern. She says it’s widely believed that the government didn’t want the information released yet, and as a result potential homebuyers could refrain from making their purchase."
(Comment - Yes - this is a legit concern.... Who would lock in a mortgage at 5 ½% today when they can wait and get 4 ½%, tomorrow?)
Lenders appear to be on track to initiate 2.25 million foreclosures this year, up from an average annual pace of less than 1 million during the pre-crisis period, he said.
To provide additional relief, Bernanke outlined a number of what he called "promising options" to reduce preventable foreclosures.
Under one plan, Bernanke called on Congress to ease the terms of a government program called "Hope for Homeowners," which lets distressed homeowners refinance into more affordable, federally insured mortgages if the lender writes down the amount owed on the mortgage and pays an upfront insurance premium.
Bernanke suggested Congress lower lender's upfront insurance premium as well as reducing the interest rate borrowers pay, which presently is quite high, roughly 8 percent. To bring down this interest rate, Treasury could buy Ginnie Mae securities, which fund the mortgage program, or Congress could decide to subsidize the rate.
Another option would ease the terms of a loan-modification plan put forward by the Federal Deposit Insurance Corp. that seeks to make monthly mortgage payments more affordable. The FDIC put this plan into effect at IndyMac Bank, a large savings and loan that failed earlier this year, and has used it to modify mortgages at other financial institutions.
Under the so-called IndyMac plan, struggling home borrowers pay interest rates of about 3 percent for five years.
Rates are reduced so that borrowers aren't paying more than 38 percent of their pretax income on housing.
Bernanke suggested this threshold could be lowered to perhaps 31 percent of income, with the government sharing some of the cost.
Yet another option would have the government purchase delinquent or at-risk mortgages in bulk and then refinance them into the "Hope for Homeowners" or another government program that insures home mortgages.
Other options include a broader push for lenders to forgive a portion of the home loan for certain borrowers, and other permanent modifications over the longer term so that people don't fall back into distress again.
The housing crisis has driven up foreclosures and forced financial companies to take massive losses on soured mortgage investments. The housing debacle touched off the worst financial crisis since the 1930s that Bernanke and Treasury Secretary Henry Paulson have been desperately trying to bring under control.
All the fallout has plunged the country into a painful recession.
*****Bernanke stressed the importance of curbing the foreclosure mess because it is so inter-linked with the economy's health.*****
"Weakness in the housing market has proved a serious drag on overall economic activity," he said.
(Comment - Gee Ben - no kidding. Why didn't you have the rate drop program put into place back in early 2006 - when you should have? You finally "get it" - 2 years later...)
Paulson and his colleagues within the Bush administration have come under fire by Democrats and some Republicans for not doing enough to help Americans at risk of losing their homes.
Paulson has been opposed to tapping the bailout pool to fund a mortgage-relief program championed by FDIC chief Sheila Bair. The $24 billion FDIC plan would use some of the rescue money to help back refinanced mortgages that would lower monthly payments.
(Comment - ANYONE WONDER HOW MANY CLUELESS GOVT WORKERS IT WILL TAKE (AND HOW LONG IT WILL TAKE TO HIRE THEM) - AND HOW LONG IT WILL TAKE THEM - TO ADMINISTER SUCH PROGRAMS?)
As I Predicted a Few Days Ago.... Rates Going to About 4.5% for a 30 Year Fixed. The question is - will that be low enough - given all the other factors that I mentioned in my blog post.....
I stated:
"I expect they will have to go into the 4's or less.... to counter the glut of foreclosures and tighter lending standards. So - if you are a buyer - now is probably the best time to buy in the history of the US. (You just have to have good credit, a job (fancy that), and a nice downpayment now...) But - Many people who had short sales or foreclosures will be out of the market for a number of years....unable to buy. Also - though lower rates can help borrowers seeking to refinance - many of those may have been "no doc" in the first place - and they won't have an opportunity to do a "no doc" refinance. So - they are stuck with the loans they have."
The scoop --
The Treasury Department is developing a plan to try to reduce mortgage rates on home loans to 4.5 percent on typical mortgages by expanding its purchases of mortgage backed securities, sources familiar with the plan said this evening (Dec 3).
The plan would see mortgage finance companies Fannie Mae and Freddie Mac expand their purchase of mortgage securities to help drive down borrowing costs. The 4.5 percent target interest rate is roughly one percentage point lower than the average rate currently on a 30-year, fixed rate mortgage.
Both the mortgage giants, which finance or guarantee about half of all U.S. mortgages were effectively nationalized by regulators in September after losses on mortgages eroded their capital.
The announcement by the Fed last week helped to lower home mortgage rates by about a half-percentage point and sparked a jump in refinancings. However -- I put out a release to my past clients telling them that they may want to hold off on that (though ultimately - it was their call of course) - as I expected rates in the 4's within a month or two. I was right....(& thus saved my past clients from having to do another refinance again soon after - saving them several thousands in fees tacked to their principal balance...)
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Are you buying a $250,000-$9,000,000 Home in the Chicago area within 90 days? Then you need to meet with us to compare the difference. Call 847-566-7558 or e-mail info@relocationadvisorsgroup.com
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