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Mortgage Borrowers Need Improved Access To Credit To Help Distressed Homeowners And Sweat Equity Buyers

  (June 15, 2012)

Minneapolis. MN (PRWEB) June 15, 2012

The next highly anticipated Federal Reserve's policy making committee meeting is June 19-20. However we are already seeing positive responses to U.S. Federal Reserve Chairman Ben Bernanke comments at the Joint Economic Committee hearing on economic outlook and policy held June 7, 2012. New opportunities and leadership for mortgage borrowers to access credit are coming forward and helping some to become buyers and others to maintain ownership of their home.

At that time, when asked about the housing crisis and mortgage principal reduction, Chairman Bernanke said, A lot would depend on what the criteria are for being eligible for principal reduction and how it would be structured. For example, some think it would be a principal reduction but to have an equity sharing arrangement, whereby if there are future gains, those would flow back to the lender. So I think it depends very much on the way that the principal reduction is structured. No doubt there are some situations where that would not be the most effective method for averting unnecessary foreclosures. But I think we should look not only at that (principal reduction), but at the whole range of tools. We should look at other issues like the conversion of foreclosed homes to rentals and steps to improve access to credit of mortgage borrowers.

Home Destination, hoping to see other sectors take supporting actions, is glad to see a greater range of tools being considered and offered to home mortgage borrowers.

Yesterday, in a press release, The U.S. Department of Housing and Urban Development announced that it has awarded $13.5 million in sweat equity grants to produce at least 741 affordable homes for low-income working families and individuals. Funded through HUDs Self-Help Homeownership Opportunity Program (SHOP), the grants awarded, along with the labor contributed by these families, will significantly lower the cost of homeownership. Many industrious homeowners have proved they are willing to work hard to gain the privilege of being a homeowner. Pressing past the lack of credit funds, and being willing to "sweat" can significantly reduce the cost of the housing. By participating in the construction of the home by assisting in areas like painting, carpentry, and roofing the difference in the homes price is resolved. These grants are about families devoting their own sweat and labor into their American Dream, said HUD Secretary Shaun Donovan. With the help of these organizations and armies of volunteers, families are able to see that dream become reality brick by brick.

Additionally, yesterday United Guaranty issued clarifying guidelines for verbal employment verifications, self-employed borrowers and borrower with prior bankruptcies. The mortgage insurance company said that it had been deferring to Fannie Mae and Freddie Mac on requirements for verifications of employment. But a recent announcement from Fannie, SEL 2012-04, indicated that lenders can alternatively obtain verbal verifications after a loan closes, which is a requirement that United Guaranty considers too risky. Fannie May has sought to assist borrowers who have been able to demonstrate an acceptable payment history on their mortgage loan, but were otherwise unable to refinance due to declining property values.

The Fed's third round of quantitative easing, coined "Operation Twist," with the goal to further lower long-term interest rates to encourage borrowing and spending, ends June 30. Hopes are that Operation Twist centered on selling shorter-dated Treasury securities and buying longer-term ones, may be extended. Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York, spoke out saying, "the case for a continuation of the current policy is very high. A move close to the status quo is likely, along with mortgage buying to further lower borrowing costs. For a backdrop, the first round of quantitative easing began in March of 2009 when $1.7 trillion was invested in U.S. securities. QE2 began in November 2010 and ended in June with the purchase of $600 billion in short- and medium-term Treasury notes.

Taking a lead in innovative ideas, Bank of America is offering a limited number of customers facing foreclosure to remain in their homes as renters through a pilot program called Mortgage To Lease. The National Association of Realtors says that while needing a cautious approach, borrowers meeting eligibility requirements will have their outstanding mortgage debt forgiven; any deficiency judgment waived, and be provided a lease agreement for up to 3 years.

Answering concerns of economic instability overseas, Bernanke spoke with confidence saying, "I think we can be strong here in the United States."

Home Destination agrees. We need not be paralyzed by uncertainty and fear. Contact Jenna Thuening, a Certified Distressed Property Expert, who offers help and hope to distressed homeowners seeking to stay in their homes. We can add strength by being resourceful and by giving guidance to those facing home foreclosure or seeking to buy distressed properties.

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