Mortgage Foreclosure & Refinance Resource

The Federal Reserve threw a massive life-line to consumers on Tuesday with two new programs aimed at making it easier for them to obtain loans for homes, cars and on credit cards.

Under the new mortgage program, the Fed will buy up to $100 billion of debt issued by government-sponsored mortgage enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks. It will also buy up to $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.

The central bank also launched a $200 billion facility to support consumer finance, including student, auto, and credit card loans and loans backed by the federal Small Business Administration. This will lend to investors who hold securities backed by this debt. [Read more →]

Breaking news from WashPost: Federal regulators seized three banks tonight, including Downey Savings and Loan Association, a large California mortgage lender, expanding what is by far the most expensive crop of bank failures in modern American history and indicating that the pace of failures is increasing.

The Federal Deposit Insurance Corp., which took control of the banks, said holders of about $1.9 billion in Downey mortgage loans who have fallen behind on their payments would now be eligible for reduced monthly payments to help them avoid foreclosure. The unprecedented move in connection with a bank failure expands the agency’s controversial loan-modification program, which is opposed by other parts of the Bush administration.

Downey, with $12.8 billion in assets, is the third-largest bank to fail this year, after Washington Mutual and IndyMac Bancorp. All three institutions were large mortgage lenders focused on the California market and regulated by the Office of Thrift Supervision. [Read more →]

This was a recent Question asked to MarketWatch: What do you think of hiring a law firm to negotiate a loan modification? They charge $3,995 and say they have a 95% success rate. Do you think this is better than trying to do it on your own since so many people have so much trouble?

The Answer: I do not know anything about the law firm you mentioned. Four grand is a lot of dough, especially for something you should be able to do for yourself. But if you don’t think you are capable, it may be money well spent.

Yes, folks are having a difficult time dealing with their lenders, who are overwhelmed by the sheer number of delinquencies and foreclosures. But a lot depends on your window, meaning how long you have before you find yourself in real danger of losing your home. If you have plenty of time, then you can fight your own battle. If not, you may need all the help you can get.
The good thing about these kinds of specialists is that they know who to speak with and they know how far lenders will bend. They also know the right buttons to push to get lenders off dead center, and I’ve been told that lenders actually prefer to speak with them as opposed to dealing directly with irrational, hysterical homeowners.

Another avenue you might wish to pursue is seeking the aid of a nonprofit counseling agency, one that specializes in housing issues. Their success rate is very good, too, and they don’t cost nearly as much as a private law firm. [Read more →]