Is this going too far?

I’ve heard of people paying for their entire wedding by having it “sponsored” by advertisers.  I’ve heard about people being paid by advertisers to wear certain clothing around town.  But this is new to me.

A couple from California are having their mortgage paid for a year by a company called Brainiacs from Mars.  If you put a billboard advertising their services in front of your home, they will cover your mortgage expenses.  The company started advertising this service on their site in April of last year.  Since then, they’ve received 38,000 requests.  The CEO said he’s hoping to add billboards to 1,000 homes this year.

I have to say I’ve never heard of anything like this before.  I can definitely say it’s creative advertising, for sure.  If it helps keep people from losing their homes, great.  However, what do the neighbors think?  I wonder if any car accidents happen from people driving down the street and stopping suddenly to notice the huge billboard in front of the house.

I’m guessing A LOT of communities wouldn’t even allow homeowners to do this because of zoning laws and city codes.  But it has me wondering how many people would consider doing this if the city allowed it.  Would a year of mortgage payments be worth it to you?

 I’d absolutely love to hear your thoughts on this.  You can contact the Brainiacs to apply (although the majority of the requests are coming from California, Florida, and Nevada – the three states with the highest foreclosure rates) through their Web site.  And more information on the program can be found in this CNBC article.  But please leave me your opinions.  I’d love to start a good conversation going!

Lawsuits for nation’s largest banks

Another lawsuit is in the works for the mortgage industry.  I had recently blogged about the Obama administration’s plans to create a Justice Department unit whose main goal and intent was to prevent mortgage fraud by bringing together investigators from across the country aimed at finding out what the causes of residential mortgage backed securities.  They want to know what led to it and how to continue to prevent it.  

Well, New York Attorney General Eric Schneiderman has taken it one step further by suing Bank of America, J.P. Morgan Chase, and Wells Fargo.  His lawsuit accuses the three big banks of deceit and fraud over their use of MERS, the Mortgage Electronic Registration Systems.

He has a few claims here.  (1) That the banks submitted court documents that appeared to provide authorization for foreclosures with false and misleading information. (2) The system stores inaccurate data.  (3) It prevents homeowners from being able to track property transfer information from public records.

Schneiderman said, “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”

He’s claiming that over 70 million loans were affected and that the banks saved over $2 billion.  Of course, none of the banks had any comments in response to the lawsuit when it was filed Friday.  More information can be found in this USA Today article.

So the question is, will this affect the mortgage industry and homeowners in the long run?  If anything, I can see a possible settlement by the banks rather than fighting it in court.  It seems to be something that will continuously happen throughout the next few years, banks being sued because of inaccuracies that led to false foreclosures.  Do you see this as something that can drastically change how banks loan money to future homeowners?  To me, it seems like another check mark on a checklist but nothing that would change lending terms as a whole.  Please leave me your comments.  I’d love to hear from you!

New homeowners’ fees to increase

Let’s start with the good news first.  If you are in a home, paying a regular mortgage, nothing’s changed, you don’t have to worry.  No added fees for you.  

However, those that are purchasing a new home at the beginning of this year or planning to refinance, you’ll be paying an additional fee in your mortgage to help fund the payroll tax cut bill that the Senate passed over the weekend.

A quick review.  Originally planning to expire on January 1 (Sunday), a payroll tax cut and long-term unemployment benefits were extended two months when the Senate voted this weekend.  It should go through the House this week.  With this extension comes a $33 billion price tag.  So who pays for it?  Yep, you guessed it.  New homeowners and those refinancing.  That fee rises about a tenth of 1 percentage point and, therefore, increases the fee that Freddie Mac and Fannie Mae charge to insure home mortgages.  It will also increase if your loan is backed by the Federal Housing Administration.

So on a $200,000 mortgage, your rate will increase approximately $17 a month.  Nothing huge but still considerable in the scheme of things.  Obviously, for a higher mortgage it goes up and a lower mortgage will have a smaller fee.  About 9 in 10 mortgages are backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration.

So my question is, is this fair?  Is it the homeowners’ responsibility to pay for this?  Looking at the large picture, I’m sure many people are thrilled that these benefits have been extended, given the state of the current economy.  And if it’s not covered this way, I would think Congress would tax us higher on something else, such as gasoline, income tax, or property tax.  They’ll get their money some way.  I’m curious to hear if you think this is right or if you have a better solution.  Please leave me a comment!  You can also reach me via my Web site.

New HARP guidelines will help

I love hearing good news for homeowners having trouble paying their mortgage.  I keep having to remind my friends and clients that “You’re not the only one dealing with this.”  For those of you who don’t know, HARP (Homeowner Affordability Refinance Program) is a government program that was designed to help homeowners refinance.  Great news just announced last week:  Even if you’re underwater on your mortgage, you can still refinance!

Here’s the status on what you need to know.  Below is a list of those eligible to possibly refinance with HARP funds under this program:

1. Your loan must be owned by Freddie Mac or Fannie Mae.  You can contact your lender to find out.  Or you can look this up online by clicking here for Freddie Mac and here for Fannie Mae.

2. You currently owe more than the house is worth.  For those of you that this doesn’t apply to, you’ll be able to regularly refinance by contacting a mortgage lender.

3. Currently have an interest rate higher than prevailing rates.  However, if your interest rate is 4.5% right now, you wouldn’t qualify because rates aren’t that low.  Be thankful that your rate is so low. 🙂

4. Would have to pay mortgage insurance by refinancing.  There is no PMI or mortgage insurance through the HARP program.

5. Have a decreased monthly income due to job loss or job change and couldn’t refinance.  You will still need to show that you can afford the new monthly payments.

As a reminder, you do not need to meet all five of the above criteria.  Just one is acceptable.  The only thing  that is required is that the loan is currently owned by Freddie Mac or Fannie Mae.  Lenders through HARP are currently refinancing for up to 105% of the home’s current value.  

Aside from having no mortgage insurance with these HARP loans, oftentimes it’s not required that an appraisal be done on the home.  Plus closing costs are generally lower with more lenient underwriting.

If you want to find out if you qualify to take advantage of this program and need the name of a great lender, please e-mail me at noah.seidenberg@cbexchange.com or visit me online.

Help on the way for unemployed homeowners

With talks still ongoing this weekend about the debt ceiling and if lawmakers will reach an agreement, there is good news to come from Washington, at least for those unemployed homeowners.

The Obama administration has announced that they will extend unemployed homeowners a few months’ forbearance on paying their mortgages to 12 months.  This is another action by Washington to put a halt to foreclosures and keep people in their homes.  Obama has been quoted as saying the housing market has been a terrible issue to solve and that “The continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected, and so that’s continued to be a big drag on the economy.”

He also mentioned that they will be communicating with banks in the hopes that they will work more efficiently to help modify loans for those in need.  And in order to qualify for the 12 months’ relief, homeowners must be in the process of looking for a job.  And for those that can afford to pay a portion of the loan, they must do that, as well.  You wouldn’t be mortgage-free the entire time.

Comments to this USA article suggest that programs like I’ve described just drag this crisis out longer and makes it tougher for those not struggling to make money on their home.   What are your thoughts on this?  By offering relief to some, is it negatively impacting others?  Will this keep the housing market at an all-time low for too long?  I’d love to hear your thoughts.  Please leave me a comment or visit me online.