Welcome to another edition for our Ezine-Newsletter as always you will find some very useful and sometimes very revealing information. Best of all its free so tell your friends.

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God Bless!

Guy Te

Date of Newsletter: 01-2008-08

This Issue Number, Category and Headline: Issue # 2 - Real Estate / Stop Foreclosure "Is This New Housing Bill Passed in to Law a Good Deal - and the Answer to Stopping Foreclosure for Most Homeowners? Nope."

By Guy Te Watson

The new Housing Bill and Now Law is being heralded as a great thing for homeowner to use in dealing with the current foreclosure crisis. However, homeowners benefiting from this new government program may not be as easy as one might hope.

One problem with the new law is it requires some voluntary participation on the part of   Bankers for it to work according to reports.

Getting bankers to willing participate may be a significant issue unless this traditionally  money hungry bunch has a major change of heart that causes them to care little about making  money or there are unknown forces that will motivate Bankers to volunteer.

If lenders/bankers see the least bit of equity in your home where they can make some money they will likely want to foreclose, take your home, resell it and make the money. Remember also banks/lenders have loan officers/personnel on staff every day they need to pay. 

Heads of banks would rather have their staff working on reselling foreclosed on homes and making thousands on the loan origination and other fees associated with selling foreclosed on homes than for their staff to be sitting around doing nothing if they don't get new loan customers in. 

To Bankers your foreclosed on home becomes "A bird in the hand (is) worth two in the bush” that they can use to pay their staff from even if there is no equity in your home.  Bankers still have this reason to want to foreclose on your home and resell it, so they can make the thousands they get on selling a home to pay their staff.

It is likely that bankers will still need significant external pressure to motivate them to do what is right and help homeowners refinance with this new or any type of refinance program.

A common motivation for bankers to work with homeowners is getting their banking hands caught in the proverbial cookie jar and the banker being shown he has been caught breaking state unfair and deceptive acts and practices (UDAP) laws or other state laws and/or shown the bank is involved in federal Truth in Lending, RESPA and HOEPA violations in the creation and servicing of the homeowner's loan.

Exposed Violations of these laws and statutes and the accompanying remedies require lenders to go back to the negotiating table and work with the homeowner to refinance his or her loan and/or pay damages or work out some other fair and equitable answers that will help the homeowner out of foreclosure. 

It is estimated that this bill will help 400,000 home homeowners stave off foreclosure on their home, yet there will be an estimated 2 million plus foreclosures this year.  That means this program will help less than 25% of the people in foreclosure at best estimates if all banks easily volunteer.

Another potential problem is a lot of people who do not qualify may be wasting valuable  time exclusively going for this loan and not have enough time left after being turned down  to mount an effective law violations case against the bank to stop their foreclosure or stop  the foreclosure through other means.

'Time' is usually the worst enemy of someone trying to stop foreclosure and save/keep their home. Therefore, people should not sit around depending on this program working for them.

Homeowners, at the same time they are going for this loan, even if they are being told they  may qualify, they should be investigating additional ways of stopping their foreclosure  since there is a better than 75-80 percent chance that refinancing through this new  government program will not work for homeowners.

There are some other important areas where the new program lacks and it can even be seen as harmful to homeowners.

Writer Ron Lieber on the New York Times Website NYTimes.com and Les Christie a CNNMoney.com  staff writer report there are strings attached or something the homeowner must give up to  get refinancing with this new loan program.

To get this new FHA loan homeowners must agree to share any appreciation profits from any future sale or refinance of their home. First they will pay to the FHA a "3% exit fee," i.e.,  3 % of the mortgage principal, when they resell or refinance their home.

Above that, homeowners must agree to pay FHA 100% of all profits the homeowner earns from higher home prices when they sell or refinance within the first year.

After the first year, homeowners will share 90% of the profits with the FHA. Then the percentage drops by 10% increments down to 50% after the fifth year, and it remains no lower than 50% of appreciation value that the homeowner must give FHA whenever they sell or refinance after the five year mark.

Many of these people that are in foreclosure are in that position because they were taken advantage of by bankers/lenders in the first place. Now it looks like the government is taking advantage of these same people again and using this as a way to feed its own government pockets with money and property value unfairly.


Considering the estimates of how many it will help and the strings attached to getting the loan:

• Is this new loan program the exclusive answer for most people to stop foreclosure? Nope.

• Is it good for some? Yep.

• Will most homeowners in foreclosure benefit from it? No, again.

• Because of how it is being overly glamorized will this new loan program distract a lot of people and cause them to get their hopes up to far, waste valuable time just going after this loan, and fail to pursue other viable means to stop foreclosure? Unfortunately and probably “Yes.”

People need to be realistic about what this new loan program is likely to do for them or others in foreclosure and consider the strings attached and continue to check out other options while they are investigating or applying for help through this new program. Don’t waste valuable time and get caught up in all the excitement and let that actually contribute to you losing your home instead of helping you save your property.
 

Without Prejudice - All Rights Retained
Copy Claim June 2008, Watson Lord and Watson - Guy Te Watson