Rescue for U.S. Homeowners?

Housing is at the root of the financial crisis, and preventing foreclosures could bring a double-barreled benefit. It would allow families to remain in their homes and could also help keep the housing market from spiraling out of control. The more foreclosed homes that get dumped on the market, the more home prices will fall. The idea of helping Main Street has an undeniable appeal.

Given all the other imperfect emergency measures that the U.S. government has taken in recent weeks, it can certainly do more to stem foreclosures than it has. The Treasury Department's $700 billion bailout fund, as it's now structured, may spend almost nothing on troubled mortgages.

There are two separate groups of people who are at risk of foreclosure, and they often get muddled in any discussion of the housing crisis.

The first group is made up of people who, for whatever reason, will not be able to make their monthly payments. Some took out mortgages with initial monthly payments that they couldn't afford. Others took out adjustable-rate mortgages whose monthly payments have ballooned to an unaffordable level. Still others have lost their jobs.

The second group is quite different. It is made up of people who are at risk of foreclosure not because they won't be able to keep up with their monthly payments - but because they may decide they don't want to continue making them. These are the homeowners who are "under water," which is to say their houses have lost so much value that they're now worth less than the underlying mortgage.

In recent weeks, several intriguing ideas for helping homeowners have begun making the rounds. So who should be rescued? Tell us what you think. Use the "comment" link below this article to tell us what you think about the various rescue plans that are being tossed around. We'd love to hear what you think.

.

Home Sales Up, Prices Down

Sales of existing homes rose in September, but prices continued to drop, according to the latest reading on the battered housing market by the National Association of Realtors. The report shows sales by homeowners jumped in September to an annual pace of 5.18 million, up 1.4% from a year ago. It was the first time that sales rose compared to a year earlier since November 2005.

Sales got a boost last month because prices continued to fall. The median price of a single-family home fell 8.6% from a year ago to $190,600. The median price of all homes sold during the month - including single-family homes, townhomes, condominiums and co-ops - fell to $191,600, down 8.8% from $210,500 a year ago. Before the start of the current housing slump, it had been 11 years since prices fell compared to a year earlier. Experts say foreclosed properties are driving this sales jump.

The report offered some encouraging news, with the excess supply of homes on the market falling in September. Realtors estimated that there are now 4.3 million homes available for sale, which represents a 9.9 month supply. That is down from the 10.6-month supply in August. But that number could rise back above 11 months if sales begin to sink again and foreclosures continue to escalate.

.

Need a Mortgage? There's Still Hope

Credit standards have been getting tighter all year, reducing the number of people who qualify for loans. It's hard to quantify how many people have been disqualified because of stricter lending standards, but mortgages are still available despite all the hoopla about the credit crunch.

Qualified borrowers can find conforming and Federal Housing Administration-insured mortgages easily. So-called jumbo mortgages are scarcer but are still available. The mortgage market isn't frozen, at least in part because of federal intervention.

The one prominent change has to do with income documentation. A year or two ago, a borrower with an excellent credit history and no recent change in employment might have been able to refinance a mortgage without having to provide proof of income, even on a full-documentation loan. Those days are gone, mortgage lenders say. Be prepared to show W-2 forms or income-tax statements.

The market for jumbo mortgages has been in disarray for more than a year now, and it isn't getting better. Jumbo rates are higher than rates on conforming loans (mortgages of $417,000 or less), and restrictions are increasing on these types of loans as well.

Mortgage-financing giants Fannie Mae and Freddie Mac have been adding restrictions, too. Before they were taken over by the federal government in early September, Fannie and Freddie had been on a months-long campaign of adding fees that were then passed along to borrowers either directly or through higher mortgage rates. The Fannie terminology for these fees is "loan-level price adjustment."

So, even though mortgages are now tougher to get than they used to be, there is still plenty of mortgage money available. The biggest kicker now is, you'll have to prove you can afford a mortgage before a lender will just give you one.

Here's a thought… what if it had been this way all along… would we be in the financial mess we're in now? What do you think? We'd love to get your feedback on this. Click the comment link below and sound off.

.

Real Estate News - November 2008

Our November 2008 Newsletter is now up…

From the right Nav Menu, Find "PAGES AND NEWSLETTERS" and Select "November 2008 below "Our Monthly Newsletters".

.

True Costs of Home Improvements

How do you decide when hiring a contractor is the right way to go versus doing it yourself?

Money Editor Stacy Johnson looks at this question in this short video (runs 1:34)…

Any comments about doing it yourself versus hiring a contractor?  We'd love to hear your thoughts. Just click the comment link below and tell us what you think.

.