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[O5]Obama New Mortgage Plan

by Shaun Greer, Sha

President Bush and Treasury Secretary Henry Paulson has announced their plans to help reduce the number of foreclosures and assist troubled homeowners nationwide. However, your next questions should be what does this new plan entail and can I qualify?

The proposed new plan against foreclosures is set to address the issues of many struggling homeowners who have not been able to be reached by housing counselors who have had to individually monitor each homeowner case to determine whether or not assistance was needed.

Now, counselors will be able to more efficiently determine which mortgages need help and what type of help they could use. These counselors can look at a variety of factors like the type of mortgage they have, the size of their mortgage, their FICO scores and payment history to determine whether it would be beneficial to step in and make additional help with these mortgages before it is too late.

Roughly 1.2 million homeowners can qualify for this plan with some homeowners able to refinance into loans that will have better terms for them. Other homeowners can qualify for a five-year freeze on their current mortgage rates and see the boon in having stronger financial success. How do you know if this new plan against foreclosures can benefit you?

In order to qualify for the assistance from your mortgage servicer, you will need to have an ARM or Adjustable Rate Mortgage at subprime rates. The initial fixed rate of the mortgage will need to be three or fewer years and your loan must have originated between January 1, 2005 July 31, 2007.

Your initial reset needs to occur between January 1, 2008 and July 31, 2010. If you are one of the hundreds of thousands of homeowners who have already faced a rate reset, you are out of luck with this plan.

If you are currently behind on your loan, you wont be able to qualify for a fast solution and will also be disqualified if the home is not your primary residence, like renters whose landlords face a foreclosure and the tenants face an immediate eviction.

If you are current with your loan payments, however, have some equity in your home and offer a good payment history and FICO score, you will be able to qualify for a refinance.

Your mortgage servicer can work with your situation to get you a possible refinancing solution that better fits your financial outlook and avoids a significant rate increase. You can qualify for a rate freeze if your loan-to-value ratio is 97 percent or higher, meaning you have less than 3 percent equity in your home. Your FICO score needs to be 660 or below and has not raised by more than 10 percent since you took out the loan as well.

If you are in a situation where you are thinking how can I sell my house fast myself then contact your local home buyer or local real estate investors. There are real estate investors who buy properties all over the nation; they are local to your area and professionals you can trust.

Remember, these are members of the same political parties that have urged loose lending practices over the last ten years? Now that the country's entire financial system is beginning to unravel Washington is going to fix it?

As an investor, in the long run, I am betting the politicians will just make matters worse and we better be ready to make adjustments in our investing tactics.

Too Many Dollars

You may have noticed that over the last 12 months Federal Reserve Chairman Ben Bernanke has been pumping the country full of billions of paper dollars, borrowed from the Chinese, trying to head off a real estate and financial crisis. Oops!

Now Ben-the-Bountiful is telling Congress that he is concerned about the threats posed by rising inflation.

What a surprise! When you have billions of new dollars chasing the same number of goods, prices are going up - way up! That's why, over the past 12 months, consumer inflation is up by 5%. That 5% is a government number and some say you should multiply it by two to find the truth.

Even at 5% it would be the largest year-over-year gain in inflation since May of 1991.

New Lending Regulations

All the problems were not caused by Washington alone. Greedy bankers and mortgage lenders indulged themselves with crazy lending practices that even a casual observer could see would lead to trouble.

Now, the Fed is granting its self sweeping new powers to control mortgage lending. The new lending regulations will make it much more difficult for potential home buyers to find financing.

Think about that for a moment…

There are now tens of thousands of homes sitting vacant for lack of buyers, so your pals in government feel this is the perfect time to make it harder to get a mortgage loan.

Investor Must Look Elsewhere

We now have restrictive mortgage rules coupled with a recession that is curtailing the income of a few million people. There is going to be far less demand for the thousands of homes waiting to be sold. Investors should move carefully with a great deal of thought.

Homes are, and will continue to be, very easy to buy. The question is how to avoid catching a falling knife?

Sellers are ready to convince buyers that they are offering their home at 25% below market value. The catch is that "market value" was based on six month old comparable sales! How do you determine the real value of a property in a falling market?

Many people are going to be badly burned when they buy a home today and one year from now find the value of the home has dropped below the amount owing on the mortgage.

What's an investor to do? Look offshore!

Even small real estate investors can buy in hot markets like areas of Mexico, Panama, Belize and Argentina, for example. It's not unusual to find real estate in certain foreign markets appreciating yearly by 20% or more.

In a few years U.S. real estate will again be ripe for investment. Right now, with Washington meddling, the risk is too much for me.

Article Source : Free Real Estate Foreclosure

About Author

Both Shaun Greer & Mark Walters are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Shaun Greer has sinced written about articles on various topics from Franchise, Real Estate and Property Agents. To A Local Home Buyer. Shaun Greer's top article generates over 60500 views. to your Favourites.

Mark Walters has sinced written about articles on various topics from Marketing, Modelling and Real Estate. Mark Walters is a third generation real estate investor. For a limited time Mark is offering his big guide to finding private and hard money loans for real estate investing free.. Mark Walters's top article generates over 90500 views. to your Favourites.