President Obama seeks to reform the mortgage industry in the United States. He plans on accomplishing this by significant changes in government backed Fannie Mae and Freddie Mac. President Obama has presented several different options to the United States Congress for reducing the country’s dependence on Freddie Mac and Fannie Mae. His program is one of fundamental reform of the mortgage industry. He hopes these reforms will provide greater protection for consumers and allow middle class Americans to obtain affordable mortgages.
Fannie Mae and Freddie Mac
Government backed Fannie Mae and Freddie Mac are involved in approximately 90% of the mortgages, one way or another, in America. As of now, these two government backed agencies have over $150 billion dollars in losses! It is anticipated these losses will climb to $400 billion dollars before the housing bubble is completely corrected.
New Programs
Some of the recommendations made by President Obama’s reform team will require Fannie Mae and Freddie Mac to charge banks the same amount for loan guarantees as paid by private financial institutions. Currently, federally backed mortgage loans can go up to $729,750. One of President Obama’s reforms would be to reduce this amount to $625,500. It is anticipated that this action will motivate the private banking sector to make more high-value mortgage loans.
The administration also seeks to have a minimum down payment of 10% regarding all government backed loans. One of the problems that caused the mortgage bubble is that Freddie Mac and Fannie Mae have been making loans with zero down payment. Query – if a homeowner has no money to put down for the purchase of a home, isn’t this an indication that if things do not go well, they will quickly walk away from making their mortgage payments? This is what caused the housing crisis. The giving of inappropriate mortgage loans to unqualified prospective homeowners!
The removal of government guarantees from the loan market is opposed by various special interest groups. Real estate agents, home builders, home supply companies, mortgage brokers and other individuals who make a living from the housing market oppose any changes to the current system. The Obama Administration seeks to make changes to the mortgage market over a five-year period.
Mortgage Modification and Foreclosure
If you have problems making your mortgage payments, reducing the amount of your monthly payments is a good idea. All financial institutions currently have mortgage modification programs. Unfortunately, some mortgage modification programs fail to provide belingered homeowners with realistic alternatives to their current mortgages. Our law office can help you deal with the complexities of the various mortgage modification programs.
Foreclosure is the process by which a bank takes back a home for the nonpayment of a mortgage. Should you be facing foreclosure, we can keep you in your home. Our foreclosure defense lawyers have developed an expertise in fighting these lawsuits. Once a lawsuit is initiated, we attend foreclosure court conferences on behalf of our clients. We defend defective foreclosure lawsuits. We deal with issues of predatory lending, defective mortgages and the failure of financial institutions to obtain the proper assignments and paperwork necessary to initiate litigation. We also update this foreclosure blog on a regular basis to keep our clients informed about the real estate industry in the United States. Call us for a free consultation at 1-800-344-6431, 516-561-6645 or 718-350-2802.
