Sellers cutting prices on homes up to 50%

September 7, 2010 by · Leave a Comment
Filed under: Real Estate News 

This is actually good news if you look at the long term effects of these price reductions.  Prices need to find a sustainable level that reflect what people can afford each month on a mortgage depending on the market.   Prices are still very elevated from pre-bubble days and still have some ways to come down.

The Obama administration also released a new program today to help underwater home owners that have loan principles that are still higher than the actual value of the home.  The program calls for the lenders to refinance the loan and reduce the principle amount in exchange for a FHA guarantee.  The lenders need to lower the principle by atleast 10% of the previous note.

As we should know by now that all White House administration are conservative and optimistic in all projection they officially give.  If they say prices need to come down 10%, it should be safe to think that more like 20-30% is what we really need to see for a real bottoming of home prices.

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Fannie Mae & Freddie Mac expand eligibility on home loan refinancing options

July 2, 2009 by · Leave a Comment
Filed under: Real Estate News 

Honestly I see what is trying to be accomplished with this expansion of the acceptable loan-to-value amount to 125% of the home’s value.  The goal of the program is to allow more people to refinance their home loan to a lower interest rate that will hopefully make it less likely the homeowner will default on the mortgage.

Instead, it is more likely going to set a “floor” in more home prices.  This is actually preventing the market from reflecting the actual value of all these homes that are being refinanced through this government sponsored loan program.  Yes, foreclosures are hard on the people being affected, there is no doubt in this.  But on the other side you have to think about the people who are striving to own their own home.  This in effect is artificially keeping prices higher than they would normally be without this intervention.  That is counter-productive in the way it punishes people who did not get an regular mortgage over these more exotic loans that had a huge rate hike baked in the formula.  Personally I would like to see less intervention and more market forces determining the outcomes of all these private contracts and agreements.

News (Reuters):

Mortgage finance companies Fannie Mae and Freddie Mac will expand efforts to prevent foreclosures by allowing refinancings by borrowers whose outstanding loans exceed the value of their homes by up to 25 percent, the Obama administration said on Wednesday.

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