The election is over…phones will stop ringing, and it is time to focus on the economy and on our spending patterns– Protecting ourselves…and trying to deal with items like Upside Down Mortgages and how to survive this change….I’ll be posting tidbits over the next few weeks to help people deal with the problems they face…
The first problem I am hearing about is upside down mortgages and how to refinance…and get payments manageable in these times…
JP Morgan Chase has announced some innovative programs to attempt to avoid foreclosure.

J. P. Morgan Chase & Company has announced that it will make its own contribution to stemming the tide of foreclosures sweeping the country by modifying around $70 billion of its owned mortgages that are in or nearing default.

The bank’s efforts will focus on restructuring loans for borrowers who are at risk of foreclosure and it has placed a 90 day moratorium on all foreclosures in order to put guidelines for its program in place. The company will hire and train an estimate 300 additional loan counselors (it currently employs about 2,500) and open two dozen new regional counseling centers.

The company has targeted 400,000 families for the rescue program. This is in addition to what it claims are 250,000 families which have already been helped in the earlier restructure of some $40 billion in loans.

The bank is also a major servicer of loans owned by others. Its own mortgages account for only 20 percent of the total portfolio it controls. (The Wall Street Journal pegs the number at only 4.7 percent.) The restructuring program will not, at least at present, apply to those serviced mortgages however it hopes that eventually the initiative can be expanded to include some of the investor owned loans.

The Chase program joins one previously announced by the Federal Deposit Insurance Corporation (FDIC) for the assets it has taken from the failed IndyMac Bank which was a major player in the mortgage industry. Bank of American has also started a modification program as did Wachovia Bank shortly before it was taken over by Wells Fargo Bank.

(source Mortgage News Daily

If you are not a Chase customer…call your banker, find a broker, and see what can be done…The options are endless…You do not need to lose your home.

The FHA has announced some plans too…including the HOPE for Homeowners Program, FHA secure, and a few other options to help you through the process….
You are not alone….
If you need help in understanding your options, give us a call….we’ll be glad to help…..If your lender is currently not participating in one of the programs you may need a lawyer or a broker to help you…But, the time is right and now!

According to Forbes,  Rates on 30-year mortgages dropped sharply again this week, falling to the lowest level in seven months, as rates continue to decline following the government’s dramatic takeover of mortgage giants Fannie Mae and Freddie Mac. So, why is my phone not ringing? Why am I not busy as a beaver doing closings? Well, The Fed famously left the “target” Fed funds rate at 2.00% on Tuesday (The Fed funds rate is the rate at which banks lend to one another).  Today in the real world, Fed funds were trading between 6.00% and 8.00%.  That means, in the words of one bank CFO, “We’re not lending our money to anybody, even if they are a bank.”

Freddie Mac (nyse: FRE – news – people ) reported Thursday that its nationwide survey found 30-year, fixed-rate mortgages declined to 5.78 percent this week, down from 5.93 percent last week.

It was the fifth consecutive weekly decline and pushed the 30-year mortgage to the lowest level since it stood at 5.72 percent the week of Feb. 14. The decreases have accelerated over the past two weeks since the government announced on Sept. 7 that it was taking control of Fannie Mae (nyse: FNM – news – people ) and Freddie Mac because of huge losses the companies were experiencing due to soaring defaults on mortgage loans as home prices slump.

Frank Nothaft, chief economist at Freddie Mac, noted that the big drop in mortgage rates was fueling a boom in mortgage refinancings, with mortgage applications up 58 percent since mid-August, led by a 122 percent gain in refinancings.

So, what does this mean to us in the mortgage/title/closing industry? In July the rates were at total year high. We have people upside down in mortgages who have insufficient equity to refinance, adjusting rates, a stock market in crisis, and an overall crisis in Confidence. Steve Forbes said it well in the video link below:

Crisis In Confidence by Steve Forbes

On July 30, 2008, George W. Bush signed into law the Housing Assistance Act of 2008. Many think that this bill only deals with mortgage bailouts, but it is more expansive than that, and may actually affect many of you. Here are some of the key points (that do not include corporation givebacks—just the individual items)

• Property Tax Deduction For 2008 ONLY, a “real property tax deduction” is added to the standard deduction for non itemizers. What does that mean? For those who do not itemize (like senior citizens whose mortgages are paid off) and also own real estate, an additional deduction is added to the standard deduction up to $500 ($1000 for taxpayers filing jointly). This is effective for tax year 2008 ONLY.
• Refundable Credit for First Time Homebuyers: First time homebuyers are allowed a “refundable” tax credit for the purchase of a principal residence equal to the lesser of $7500 or 10% of the homes purchase price. (There are phase out provisions). So, whati s a first time homebuyer? It is an individual who has no present ownership in a principal residence during the three year period ending on the date of the purchase of the new home (nor may his or her spouse have had ownership). So what is the catch…: Those who claim the first time homebuyer credit are subject to “recapture” or paying it back with an increase in tax for the next 15 years (at 6 2/3 % per year). This is effective for principal residences purchased by the taxpayer after April 8, 2008 and is only good for purchases up to June 30l, 2009).
• Exclusion of Capital Gain from Sale of Residence!! Big nasty change! Currently, taxpayers are allowed to exclude up to $250,000 ($500,000 on a joint return) of the gain associated with the sale of their principal residence if they owned and occupied the property for 2 of the 5 years preceding the sale. The new law now changes this….Taxpayers will not be allowed to exclude any gain attributable to a “non qualified use”, even if they meet the 2 of 5 years rule. So, for example, if you rent your home because you were transferred and you are waiting for a market rebound prior to selling, even if you meet the 2 of 5 year rule, that gain is now taxable (There is a complicated formula for figuring this out). The law does not talk about any period before January 1, 2009, so it is effective for sales and exchanges after December 31, 2008.
• Mortgage Bonds: Mortgage revenue bonds are tax exempt from federal income tax and will be used to provide some of the funding to refinance subprime mortgages.

There are a host of other items such as Alternative Minimum Tax for low income housing, state allocations, etc. The biggie for business that accept credit cards is Financial Institution Reporting (where credit card companies will now have to report all credit card sales to the IRS beginning December 31, 2010.