Something to ponder over your morning coffee this Monday morning: a whopping 45% of all U.S. housing sales in Q4'08 were categorized as "distressed" (foreclosures and short sales).
Clearly the housing situation in the U.S. is serious and getting worse with each passing day as the economy deteriorates. Last week President Obama introduced a comprehensive plan to address the situation. Here are the salient points to understanding President Obama's mortgage bailout plan:
- only owner-occupied homes will be eligible for mortgage assistance (2nd homes and vacation homes are ineligible, as are speculative buys and properties that were bought to "flip")
- purchasers who did "liar loans" will be ineligible (includes no doc loans in which no income or assets were ever verified)
- Part 1: up to $200b in funding will be made available to Freddie Mac and Fannie Mae (they fund 2/3 of all mortgages in the U.S.) in order to keep mortgage rates the lowest they've been in a generation (ie the lowest in about the last 50 years)
- Part 2: funding will be made available to assist homeowners in refinancing homes that are "underwater", ie where a homeowner's property is worth less than they paid due to house values tumbling (note: restricted to 80-105% loan-to-value, meaning that the homeowner cannot owe more than 105% of the value of their home)
- Part 3: $75b will be made available to people who are struggling to make their mortgage payments due to a recent job loss or high medical bills (purpose: to avoid another 6m foreclosures over the next 3 years). Most homeowners who are not even at risk now realize that without these measures their own neighborhood could go down the tubes too if someone in their neighborhood is forced to sell at a loss or winds up losing their home to foreclosure.
With an abundance of help on the way for ailing homeowners, filing bankruptcy should be considered a last resort.
For more information about the market for Madison WI distressed homes or if you are a distressed homeowner who would like to discuss your options, call Lake & City Homes broker/owner Jolenta Averill at (563) BUY-SOLD (563-289-7653).
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Jolenta Averill, Principal
Lake & City Homes Realty