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Tag Archives: Foreclosure

Seattle home sales drop 32% – worst October since record-keeping started in 1994 – “shadow inventory” of 2 million homes

Nationally, 26% drop in sales of existing homes for October 2010. This was reported to have been the worst October in at least twenty years, according to the NY Times’ David Streitfeld (NY Times, Wednesday, November 24, 2010)

Portland, OR home sales droped 39%, Minneapolis saw a 41% drop and Massachussets and Illinois saw drops of 28% and 34%.

According to Mr. Streitfeld, aout 4.43 million homes were sold on a seasonally adjusted annual basis in October 2010, compared with nearly 6 million in October 2009. In October 2008, at the height of the financial crisis, about 5 million homes were sold. Distressed sales, including foreclosures, have ben about a third o the market, while first-time buyers ahve ben as much as 50 percent. Both are high by historic levels, reports Mr. Streitfeld.

Mr. Streitfeld reports taht short sales, where the sellers negotiate with their lender to sell thier house and repay less than the full amount owed, are rising in popularity although they are still outnumbered by foreclosures. Bank of America, for instance, said it had agreed to more than 60,000 short sales this year.

It appears to Mr. Streitfeld that the slight drop off in foreclosures is in turn increasing the likelihood of a successful "short sale" – he reports that lenders see themselves under pressure from shoddy documentation procedures, so with all 50 state attorneys general investigating foreclosure procedures, the banks have de-emphasized foreclosrues and have emphasized short sales.

Mr. Streitfeld also notes that there still remains a large "shadow inventory" of more than two million delinquent and foreclosed homes that banks will ultimately have to bring to the market in order to dispose of the homes. For this reason, the sales of previously foreclosed houses has dropped. By way of example, in California, there were 19,925 foreclosed homes sold by the banks in October 2008, and that number had dropped to 15,621 in October 2009, and then down to 10,367 in October 2010.

http://www.nytimes.com/2010/11/24/business/economy/24foreclosure.html

Buying foreclosures? – Beware of what you buy – heed the story of Todd Phelps and Paul Whitehead – NY Times October 16, 2010

NY Times Financial Reporter Ron Lieber, on October 16, 2010 reported on the sad story of Todd and Paul: They purchased a Riverside, Calif. home at a foreclosure sale, only to learn that they had bid at the foreclosure of the second mortgage – and the house still remained subject to the lien/mortgage of the first mortgage company.

Todd and Paul paid $137,000 of their hard-earned cash – and faced not getting one penny back. (This story eventually has a happy ending – it appears the foreclosing bank from whom Todd and Paul purchased the property felt them to be such hayseeds that the bank relented and took the property back and returned the $137,000.

Mr. Lieber reports: "The auction process: Foreclosure auctions can be a dangerous place for people who don’t know what they’re doing or are relying on help from people who are sloppy or negligent. … Take your time. Assemble a panel of experts and apprentice yourself to them. And watch listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time."

http://www.nytimes.com/2010/10/16/your-money/mortgages/16money.html?scp=1&sq=Buyers+Beware+Foreclosures+&st=nyt

Financial planning in reverse: Convincing yourself to turn $14 million into $-0-, two pending home foreclosures and a marital separation – avoid this fate with my 10-step plan

The first part of this blog will be a bit random – but stick with me! It will all tie together in the end. TRUST ME – STICK WITH ME!

I am fond of asking people: "Who is the easiest person in the world to convince?" Rarely do people get the correct answer. The answer is "Yourself."

My Thanksgiving Day/Black Friday thought is that I am glad I know this lesson. Do I always follow and honor the wisdom – not exactly – but knowing this axiom makes it easier to temper and put the brakes on my behavior.

There are so many cool things upon which to convince yourself that you must spend your money. There are home and landscaping improvements, 65-inch 3-D plasma screen televisions, cool cars, trips to Disneyworld, Bose surround sound systems, boats, private school tuition, $1,000 Facconable suits, $300 Juicy sweatsuits and of course diamonds. Then there are products and goods to "purchase" security, such as life/disability insurance and even 401k plans & stocks/bonds. Some people convince themselves that they need $395,000 European cars, $173,000 horses and $5.3 million home renovations. Some people convince themselves that keeping up with their relatives and friends is the best way to spend their money.

I invest plenty of time (and money) into my business of helping others. I keep up this blog and then try to read extensively about topics that will help me assist my clients. I attend far-away seminars of the highest quality, such as those given by the National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute. I could probably do "less" but I enjoy the prestige and and trust of my clients – the clients hold me in esteem for these "extra" things done which may reveal knowledge that I can use to the client’s benefit – and I receive the esteem of my clients in exchange.

I work hard to earn the esteem of my clients. I have very little time, but I invest what I have into my business of helping others in times of need. Over the Thanksgiving Day holiday, as of 8:05 a.m. on "Black Friday", I have thus far completed 102 pages of the 258 page book "Foreclosure Prevention Counseling" a 2009 publication put out by the National Consumer Law Center. The publication is actually 405 pages in length, but pages 259-405 are appendix, glossary, sample forms and other supplementary materials. Time I should perhaps spend at the gymnasium or recreating with my wife and family is frequently siphoned off to build my blog, websites and to increase my knowledge of consumer law and bankruptcy issues.

I do not have a functional TV (I find TV largely a waste of time and I do not want to model TV watching to my children) so I try to read as much as I can. This week I have have read two editions (Wednesday’s and Friday’s) of the New York Times – I adore the NY Times and throughout the financial crisis of the past two years, it has provided plenty of information for my blog. I try to read the NY Times at least twice weekly – you should think about it too, it is available for $2.00 at most any Starbucks or Tully’s coffee house.

Ok, here is where I tie it all together.

On this day after Thanksgiving (Black Friday 11/26/10), I am reflecting on how pleased and grateful to be working with my clients – and how much I learn in exchange from my clients about the frailty of finances and how elusive is the Nirvana of financial security.
http://www.nytimes.com/2010/11/26/business/26fall.html

The Friday 11/26/2010 "Black Friday" edition of the NY Times has an article entitled: "A Windfall, Blown Away". http://www.nytimes.com/2010/11/26/business/26fall.html

This is the story of Nick and Kate Martin, who in 1998 received $14 million from the sale of their shares of a family advertising business. Other relatives received more, but the Martins received a tidy sum of $10 million after taxes. They blew it all. All of it. It is all gone.

Mr. Martin is now 59 years old, and is thankful that he did find a job, paying about $51,000 per year. His wife Kate helps out at a school, earning $14,000 per year. Mr. Martin found a job in Kansas, and he lives there with the parties’ 13 year old son. Mrs. Martin to date refuses to leave New York, where she lives on the parties’ remaining property (soon likely to be foreclosed) with the couple’s 9 year old daughter. Given the article, it doesn’t sound like Mrs. Martin is in any hurry to live with her husband in Kansas. The article subtly presents a family perhaps irremediably ripped apart by the disappointment of vanished wealth.

The story of Mr. and Mrs. Martin served as a "wake-up" call for me. As my law practice has grown and an ever increasing number of people see the value of what I am able to offer and appreciate the care and concern with which my staff and I approach their cases, I have been rewarded with increasing revenues – and the accompanying and sometimes difficult responsibility to use such new resources wisely.

The "hook" in the article is towards the end – Mrs. Martin tries to explain why the couple moved from California (where they lived before the $14 million windfall) to England, and then on to Vermont and finally New York, where they plowed millions into building an Adirondacks (upstate New York) "family compound" residence. They tried to sell the Adirondacks property for $4.9 million, but the best offer to date has been about $1.25 million. The Martin’s have stopped making payments on the $1.1 million Adirondack’s mortgage, and $51,000 annual property taxes on the Adirondack’s property. They have also stopped making payments on the Vermont property’s mortgage and property taxes, which also has not sold.

The parties estimate that they poured $5.3 million into refurbishing the Adirondack property (acquired for $250,000) and an additional $600,000 into the Vermont property(acquired for $650,000). The Vermont property was listed in 2007 – and there have not been any offers.

The couple sold a $395,000 Aston Martin vehicle, and a horse for which they had paid $173,000, and drained their final $91,000 retirement account.

Ms. Geraldine Fabrikant of the NY Times reports as follows: "Mrs. Martin says she believes the move from California was motivated in part because he [Mr. Martin] resented his brother and brother-in-law’s bigger role in the community. [in California, where the family business that had been sold was based] She [Mrs. Martin] also speculates that the Adirondacks estate was alluring partly as a way of keeping up. ‘I think he wanted to show his brother and brother-in-law that he had a big home, too’, she said over dinner recently in Saratoga Springs, N.Y. Mr. Martin disagreed. ‘We are Irish Catholics, and we thought it would be a compound for our family over generations,’ he said. After the cramped rooms at their house in England, he liked the big rooms, he said. ‘Sometimes, things don’t work out.’

Mr. and Mrs. Martin convinced themselves that they needed a $5.3 million lakeside "family compound" in the Adirondacks for the benefit of their family.

I easily convince myself that I need to acquire additional investments/insurances, additional consumer goods and additional "all sorts of stuff" for the safety, enjoyment/recreation and security of my family. But here is the painful question – is all this work and all of this effort at success perhaps more weighted towards "all about me"? – am I not just perhaps searching for greater self-esteem through the drive to acquire greater financial security, more awesome toys and greater displays of success? Are the benefits of greater safety, security and enjoyment/recreation for my family just the side-effects and the collateral results of a personal drive to be recognized as a rarely rivaled and extremely accomplished leader in my field – with the security, financial success and toys to "prove" to myself that I am such a cutting edge leader?

Mr. and Mrs. Martin seem completely lacking in maturity and insight. Obviously, I am not THAT stupid or dimwitted. However, it begs the question, how much less stupid am I than the Martins? The Martins’ situation also asks you the same questions.

If you are considering bankruptcy for a "fresh start" to recover from past hard luck or perhaps past indiscretions (or maybe a combination of a little of both) remember well that there are creditors out there who wish to ruin your fresh start. The creditors want to "reward" you with new credit cards, financing for cars, boats, ATVs, bigger houses, RVs, vacations, time shares, sofas/furniture and you-name-it.

Your bankruptcy case may well result in the most unbelievable plethora of new credit opportunities. Consider making a plan – convince yourself to do it. The Martins obviously lacked any sort of plan (or if they had one, it was fueled by whimsy and "lets-do-this-for-now" reasoning of self-deceit).

Resist the creditors who want to ruin your post-bankruptcy fresh start. Convince yourself to follow this 10-step plan:

-Step one: I will max out my 401k contributions.
-Step two: Of my remaining income, I will save 10% until I have at least four months’ worth of net-pay saved up.
-Step three: I will acquire disability insurance paying about 75% of my current net pay.
-Step four: After having saved 3 months’ worth of net pay, I will set up 529 educational plans for my children and/or grandchildren contributing no less than $100 monthly per child, regardless of the child’s age.
-Step five: In addition to the minimum monthly payment, I will pay an extra 50% of the minimum monthly payment towards my student loan debt.
-Step six: In addition to my minimum monthly mortgage payment(s), I will pay at least an extra 10% to pay down the mortgage(s).
-Step seven: I will chat with my boss to see if he/she will considering establishing performance goals for myself, and attempt to negotiate the raises that I may achieve for reaching certain performance goals.
-Step eight: I will set up a "vehicle fund" into which I will deposit $125 monthly towards the acquisition of a replacement vehicle. -Step nine: Until I am "on track" and living on a budget that enables me to maintain all of the above goals #1-7, I will not seek any new debt in any form.
-Step ten: I will avoid refund anticipation loans, payday loans, rent-to-own, pawning and any other sort of short-term lending. I will not refinance unsecured debt into secured debt, such as paying off credit cards with a home equity line of credit (HELOC).

The nirvana of financial security is elusive…you may never have the chance presented to the Martins to be fully financially secure (the Martins blew it, of course). But you CAN do something. Consider steps #1-10 above.

Convince yourself. Its so easy to convince yourself.

Title Insurance – what does it do? – be cautious if you purchase a foreclosed home to fix up

The NY Times’ Ron Lieber assembled an important article for anyone thinking of buying and then dumping money into a foreclosed home to fix it up either to live in, rent out, or to try to “flip”.

The crux is that if the foreclosure was upset due to “foreclosuregate” or “robosigner” issues – your maximum recovery might be what you paid for the home – and you could not recovery your repair or improvement costs.

Now, to date, I am not aware of alot of foreclosed homes being returned to people who lost them in some flawed foreclosure process. Usually, the foreclosure was for lack of payments and the foreclosed individual is unlikely to want to begin making payments on the old “under water” mortgage.

However, recognize that your “title insurance” only gives you what you paid for the home if your ownership and title to the home is somehow threatened by litigation.

Mr. Lieber: “While homeowners … may ahve title insurance, it generally covers them only for the purchase price of the home. When you buy a home out of foreclosure, however, it often needs a lot of work. ‘If I bought it at $200,000 and it’s a steal but I had to gut it and sink $100,000 more in, my recovery is limited if there is a problem,’ said Matthew Weidner, a lawyer in St. Petersburg, Fla.”

Mr. Lieber’s October 9, 2010, NY Times article (section B1 “Business Day”) is a “must read” for those investing in realty:

http://www.nytimes.com/2010/10/09/your-money/mortgages/09money.html?scp=1&sq=After+Foreclosure%2C+a+Focus+on+Title+Insurance&st=nyt

Homeless shelters see 20% increases in need – 550,000 receive aid from Federal Homeless Prevention and Rapid Re-Housing Program

[categories: Washington bankruptcy attorney]

The NY Times’ Michael Luo reported upon the extreme toll the recession has taken upon young families. See NY Times "National" Section, Pages 19 & 28, September 12, 2010.

The Federal Government knows of the problem as well. The Feds have allocated $1.5 billion to be made available to homeless prevention causes over the ensuing three years as part of the stimulus package, known as the Homeless Prevention and Rapid Re-Housing Program.

This article is striking and heartbreaking. It follows the story of Mr. and Ms. Griffith (aged 40 and 26) and their two children aged 3 and 16 months. Mr. Griffith was a hard working gentleman working two jobs. His primary $25/hour job as a waiter at a Florida Applebee’s restaurant ended when the restaurant closed. The family could not find work and returned to Providence, Rhode Island after a three day bus ride from Florida.

I was shocked at the story; living in a homeless shelter with an infant and a toddler is no freeloader’s picnic; I don’t know that I personally could survive the Griffith’s daily life. There are many, many rules at the shelter, and after three infractions of the rules the entire family is evicted – no exceptions.

The rules are easy to violate, and include rules against being found in your living quarters between 10:00 a.m. and 4:30 p.m. There is a rule against congregating around outside seating benches. If you are caught watching news programming on the TV in the common area, it is also an infraction.

The Crossroads shelter in Providence, Rhode Island (the shelter where the Griffiths reside) has seen a 20% increase in demand and occupancy for June, July and August 2010, over the same time period in 2009. Similarly, an Ohio Y.W.C.A. shelter in Columbus, Ohio, has seen similar increases in occupancy.

Homeless families jumped from 131,000 to 170,000 between 2007 and 2009.

6% Drop In Mortgage Delinquencies – only 13.52% of Households now Behind (but 1 out of 7 Remain Delinquent!)

[categories: Washington bankruptcy attorney]

The NY Time’s David Streitfeld reported on Friday, November 19, 2010, that mortgage delinquencies dipped from 14.42% of households to 13.52% of households. This works out to about a 6.0% reduction in mortgage delinquencies from Q2 2010 to Q3 2010, according to the Mortgage Bankers Association. http://www.nytimes.com/2010/11/19/business/19delinquent.html?

Likewise, seriously delinquent mortgages (in excess of 90-days) fell from 9.11% of mortgages to 8.7% of mortgages, a drop of some 4.5% overall.

Federal Reserve Bank governor Elizabeth A. Duke testified before Congress this week – the Federal Reserve expects 2.25 million foreclosure filings for each of 2010 and 2011. 2 million foreclosures are expected for 2012.

David Streitfeld reported: "…foreclosures are no longer being caused by bad [subprime] loans, which was the case for much of the recession. Now most foreclosures occur with prime loans, which are harder for banks to modify than subprime [loans]. Prime fixed-rate loans, the safest kind of loans, represented 36 percent of all new foreclosures in the third quarter, up from 30 percent in the third quarter of 2009. Meanwhile, the percentage of new foreclosures generated by the worst kind of loans, adjustedable subprime, fell sharply.

CHECK THIS OUT – MODIFICATIONS LARGELY A SHAM! – D. Streitfeld reported: "…only 24,000 hoseholds had gotten permanent new loans during October. It was the lowest number since the government’s Making Home Affordable Program was getting started last year. [ ] ..483,000 homeowners ahve gotten permanent new loans through the program; 719,000 enrolled in a trial but were either foreclosed or got a modification without government oversight.

I personall feel that banks seem to seek avoidance of the guidelines of the HAMP program, which recite a modification must meet certain criteria – so the banks seem to make up their own modification programs so as to avoid the strictures of the HAMP program. Accordingly, "Bank of America said that it modified 25,000 loans in October, up from 16,500 in September. Relatiely few were done through the government program." recites the NY Times’ David Streitfeld, in his 11/19 article.

D. Streitfeld quotes Michael Fratantoni of the Mortgage Bankers’ Association: The post-modification re-default rate of modified loans can be as high as 50% after the first year, another reason foreclosures are unlikely to decline significantly.

Mismatch of skills: There are jobs – but none for you! Especially, if you have stretched out your earlobes.

[Categories: Washington bankruptcy attorney]

Many jobs go unfilled, because of a "mismatch of skills" reports Jeff Joerres, CEO ofstaffing giant Manpower. (See USA Today, Section 1B, October 11, 2010, Paul Davidson "Jobs are starting to open up again".

Mr. Joerres is quoted: Companies are being pickier." With sales rising modestly, "There’s no big wind at thier back that says they have to hire right now…[they] want to fill it with the exact person they want."

"…employers added a net 64,000 private sector jobs in September. That’s far better than last year’s steep job losses, but less than the roughly 125,000 additions needed to lower the 9.6% unemployment rate." reports Mr. Davidson.

Mr. Davidson focuses on a case study of Gentex, a Zeeland Michigan maker of electronics and rearview mirrors for in-car technology systems. Gentex has found it nearly impossible to fill about 100 engineering positions after searching for six to nine months, and having received over 1,000 applications. The company has struggled to find skilled engineers, and it is also being very selective. Gentex’s Vice President of human resources Bruce Los recites: "If there wasn’t a good fit culturally, we would not hire them."

What does this mean to you? Ideas for action?: I think it is pretty darn obvious. For starters, take out the unusual face jewelry and laser out those tatoos! Anything even slightly offputting to employers means you will not get the job, so before you insert the earlobe-stretchers in your earlobes, think about the impact it will have on employers! And by all means take out the nose ring for your interview and don’t say anything stupid or offensive! This is the time to "fit in" and not be offputting in a job interview.

What is MERS? My Halloween thoughs on witches, lynchmobs, “Dancing with the Stars”, Arthur Miller and “The Economist” magazine.

[categories: Washington bankruptcy attorney]

MERS stands for Mortgage Electronic Registration System. It is a company based in Reston, Virginia, and its services are utilized by the mortgage industry to track mortgages and their ownership, and has been around since the late 1990s. USA Today reports that 64 million mortgages are tracked by MERS, and that about 60% of new mortgages are tracked by MERS. (See USA Today, Page 1B, October 11, 2010, "The mess gets uglier, more confusing".

When a mortgage loan is signed by the borrower, two documents are created; the first is called the promissory note (the note) and the second is the deed of trust or mortgage document (deed/mortgage). The deed/mortgage is thereafter "recorded" in the county records where the property is located, such as the Office of the Pierce County Auditor, here in Pierce County, Washington.

But what so often happens is that the loan originally written up, funded and then recorded by local Bank A, is then sold off later to Investor B, who later sells the loan to Investor C. The idea behind MERS was to reduce costs; it is expensive for Investor B to record a "Notice of Transfer/Assignment" in the Pierce County records and it is again expensive for Investor C who buys the loan from Investor B to again record another "Notice of Transfer/Assignment" in the Pierce County records. There is the cost of hiring someone to draft up the transfer/assignment document and then to pay the fees to Pierce County, which can be substantial as to recording a transfer. I believe the current fee is $11.00 for the first page and $2.00 for every page thereafter, thus a 6 page document costs $21.00 to record (please check these fees, though, I am going from memory!).

The idea behind MERS was that Bank A would send a "Notice of Transfer/Assignment" to MERS (instead of to Pierce County) regarding the transfer to Investor B and likewise MERS would receive notice from Investor B and Investor C that investor B had transferred ownership of the loan to Investor C.

If there was later a problem with the loan and a foreclosure had to be commenced, then Investor C could go collect all of the transfer/assignment documents plus perhaps even the original mortgage/deed and perhaps even the original note from MERS because MERS served as a registry and repository for these documents and transfer information, per my understanding.

MERS probably works quite well at keeping track of millions of documents and transfers, but if say Investor B and Investor C forgot to tell MERS about their transfer, then MERS might hand out inaccurate information to Investor C’s loan servicer and the loan servicer for Investor C could become confused and perhaps start a foreclosure saying "Investor B hereby commences foreclosure on parcel #12345" when in fact Investor C is truly the owner.

What does this mean to you? Well, prior to joining the lynchmob that is trying to blame the "mortgage industry", MERS and loan servicers for the rising tide of foreclosures, you should be a thoughtful and well read person and take a moment to reflect – you should separate the baby from the bathwater before throwing both out the window: MERS is not inherently evil; it is little more than a storage facility for information and in my opinion, has been doing little more than trying to keep track of who really owns what mortgage as banks, hedge funds, mutual funds, investors and institutions holding mortgages have swapped the mortgages like young boys swapping baseball trading cards.

Remember that, unfortunately, when a witch-hunt begins, it is the non-witches that pay the worst price. Consider reading or re-reading playwright Arthur Miller’s "The Crucible" before you join the mob seeking to set fire to MERS, loan servicers and the banks/investors who gave nearly every American the chance to borrow money to fulfill a dream of home ownership. ANYONE who bothered to turn off their TV and take a little time and effort to be reasonably well read could see that we were in a housing price bubble 2002-2006 – if the lynchmob was too busy watching "Dancing with the Stars" and sports on TV instead of taking a little time to slow down and read a few issues of "The Economist", then my suggestion would be that the lynchmob should extinguish their torches and take its medicine. The news about the real estate bubble was out there – the lynchmob just wasn’t listening.

You can be a thinker or you can be a mob…the choice is yours.

Floodgates Open: Foreclosure filings jump 71% in Seattle/Tacoma/Bellevue – Sharpest annual increase in the country! Housing prices sure to drop as foreclosures flood the market.

[categories: Washington bankruptcy attorney]

One in every 129 Western Washington households received a foreclosure filing notice with the largest annual increase in foreclosure filings anywhere in the country.

What does this mean to you? It means that you have little hope of your home price rising in order to allow you to pull funds out of the home to pay off credit card debt or other bills. In my estimation, your home value is going to sink like a rock at worst and stall out completely for many years, at the very best.

The next largest jump was the Chicago-Naperville-Joliet area, with a 35% annual jump, with one in every 84 households receiving a foreclosure notice.

The Washington state unemployment rate stands at about 9.0%, by official statistics, but remember that many more people that this are out of work, because people who are unable to find a job after an extended search are not counted in that 9.0%, so "real" unemployment is likely higher. Also this statistic does not well include the "underemployed" working significantly less than full time (but who would rather be working full time) or those who are working out of their normal field of labor at a reduced wage (e.g. the geologist once earning $100k annually no working as a Walmart greeter). Nationally, "official" unemployment stands at about 9.6%.

The highest foreclosure rate was in Las Vegas-Paradise, Nevada, where one in every 25 homes received a foreclosure warning in the July-September time period.

In more bad news, spending by companies on capital goods (excluding aircraft purchases) dropped 0.6% in September, after a brief rise of 4.8% in August 2010. This category is viewed as a good proxy for business investment in the economy, and it has declined in two of the last three months. New home sales are down 78% from their peak of 1.4 million homes in 2005. New home sales are at their worst level since 1963, with sales at an annual pace of only 307,000 for the month of September.

Banks have seized/fully foreclosed some 816,000 homes nationwide January 1, 2010 – September 30, 2010, and will have seized more than 1,000,000 homes by the end of the year.

Source: Tacoma News Tribune, Thursday, October 28, 2010, from Alex Veiga of The Associated Press.

Yes it will all happen again – Fannie Mae and Freddie Mac return to politicized (instead of economic) lending/refinance decisions – 21% of all HFannie Mae/Freddie Mac refinance purchases must involve lower income families.

[categories: Washington bankruptcy attorney]

The Investor’s Business Daily reported on Friday, September 3, 2010, that the federal regulator of Fannie Mae and Freddie Mac has ruled that 21% of all refinance loan purchases under must be granted to lower income families. The earlier proposal had been 25%.

The federal government took control of Fannie Mae/Freddie Mac in 2008 amid losses in large part attributable to the agencies’ political agenda to grant more loans to lower income borrowers.

With the government now running Fannie Mae/Freddie Mac pursuant to the federal takeover, it appears that the politicized lending decisions will continue. An earlier overemphasis upon lending to the economically disadvantaged was significantly responsbile for the recent Fannie Mae/Freddie Mac failures of 2008.

In this writer’s humble opinion, Freddie Mac/Fannie Mae should concentrate on lending to the strongest borrowers so as to ensure the ongoing solvency of both programs.

IDEAS FOR ACTION: If you are of lower income and wish to buy a home or obtain a refinance of your presently difficult loan, then ensure you request a Fannie Mae/Freddie Mac product by name from your mortgage broker, or better yet, appproach the Federal Housing Finance Agency yourself to see what Fannie Mae/Freddie Mac options are available to you.