Help for Unemployed Borrowers by Jim Woodard on Creators.com

Recently

Renting Vs. Buying a Home Home sales are on an upward swing in most areas of the country, but the growth is slow. A key reason for the continued sluggishness of the home-buying market is the mindset of many prospective buyers that prices have not yet reached bottom. They are …Read more. Removing Homeowner Benefits Is Counterproductive When candidates for public office support the elimination of modification of certain homeownership benefits as a cost-cutting means, that action could cost them the election. Several recent studies have shown that an overwhelming majority of …Read more. Negotiating Real Estate Commissions As home sales continue to rise, questions about real estate commissions become more frequent and important to buyers and sellers. The most common question: What is the standard rate of commission in today's market? There is no standard rate of …Read more. Demand for Jumbo Mortgages Rising Applications for large mortgages are exceeding the number for modest mortgages in today's market. Mortgage bankers funded $26.6 billion of jumbo loans during the third quarter of last year. That's a 30 percent gain from the same period during the …Read more.

Help for Unemployed Borrowers

Many unemployed mortgage borrowers who are unable to make their monthly payments may soon have a new opportunity to remain in their homes. Proposed by the Mortgage Bankers Association, a new forbearance program would allow qualified unemployed mortgage borrowers to remain in their homes while they seek new employment.

According to the proposed program, loan servicers would reduce the borrower's mortgage payment to an affordable amount for up to nine months, while the homeowner looks for employment.

Under MBA's proposal, loan servicers that participate in this program would reduce monthly payments to an affordable level based on household income. Borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be re-employed within nine months of losing his or her job at 75 percent of the borrower's previous salary. The borrower would be re-evaluated as to employment and income status every three months for a total forbearance of nine months.

Once re-employed, the borrower would be evaluated for a modification under the Obama administration's Home Affordable Modification Program.

Q: What's the current status of interest-only mortgages?

A: A few years ago, the interest-only mortgage was a popular way to finance the purchase of a home — particularly for marginal borrowers who needed to keep their monthly payments to a bare minimum to qualify for needed financing. They were also popular with buyers who were purchasing a home as an investment, with the plan to rent or "flip" the property.

Some plans called for interest-only payments for a specified period of time. It would then revert to a fully amortized loan.

These mortgages met the special needs of many borrowers, but they proved to be high-risk loans for lenders. Freddie Mac, a major government-sponsored buyer of existing home mortgages, recently announced plans to terminate their purchase of interest-only mortgages.

"As of Sept. 1, 2010, Freddie Mac will cease purchasing and securitizing interest-only mortgages, including Freddie Mac Initial Interest fixed-rate and adjustable-rate mortgages.

Additional information will be provided to Freddie Mac Seller/Servicers in an upcoming 'Single-Family Seller/Servicer Guide' bulletin," the announcement stated.

Q: How is commercial real estate faring in today's market?

A: Despite current growth trends in most sectors of the real estate market, the commercial real estate market is lagging behind in its recovery, according to a report from the National Association of Realtors. However, strong growth is predicted for the commercial sector for next year.

The economy has been growing lately, but fallout from the recent recession continues to negatively impact the commercial real estate sector. But there is hope for improvement next year, according to the National Association of Realtors.

"Commercial real estate almost always lags the economy," said Lawrence Yun, NAR's chief economist. "Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions."

"With the job market expected to turn for the better later this year, we'll see rising demand for office and warehouse space, but that isn't likely before 2011," Yun said. "At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market."

Yun notes that commercial vacancy rates remain high in most market areas and are affecting rents.

Q: How long will low mortgage interest rates continue?

A: The current historically low interest rates will continue for some time, reported Federal Reserve Chairman Ben Bernanke to a congressional committee. "The economy still requires support for recovery," he said.

Investors see these low rates as a boon to a recovery of employment and business. It was noted in an Associated Press story that Bernanke's report took the edge off the news that housing sales hit a new low in January.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.