Call for Obama to Speed up Sales of Forclosure Houses

Mortgage lenders and brokers and realtors are calling on the administration of President Obama to expand further his Making Home Affordable initiative to accelerate sales of forclosure houses. President Obama has just expanded his program by providing assistance to homeowners whose mortgages are not qualified for loan modification or loan refinancing.

The lenders and realtors are proposing that the $8,000 Home Affordable tax credit would also be given to all other home buyers and not only to first-time home buyers. This would help eliminate the glut of forclosure houses in foreclosure-battered states such as California and Florida.

Steve O’Connor, vice president for government affairs at the Mortgage Bankers Association, even called for an increase in the amount of the tax credit.

Previously, the mortgage lenders’ group has lauded the Housing and Urban Development Department for launching bridge loans to help first time homebuyers apply the tax credit to their down payment and closing costs. The tax credit is available for Federal Housing Administration mortgage loans originated by FHA-accredited lenders.

HUD Secretary said that he is glad that the Home Affordable tax credit can be immediately used by borrowers with the help of entities already working with FHA.
The lenders and realtors are calling on mortgage finance companies Freddie Mac and Fannie Mae to duplicate what the HUD has done to reach more buyers and speed up sales of forclosure houses.

However, a government official explained that the administration needs to see first the impact of the FHA and HUD initiative before it considers the application of the tax credit in Freddie Mac and Fannie Mae loans.

Besides, Freddie Mac and Fannie Mae do not back mortgage loans, unlike FHA, but buy the loans from secondary markets.

Also, many taxpayers have been complaining about the use of tax money to back the home purchases of groups of people. Many others fear that the generous use of the tax credit would entice financially weak first time buyers to buy and then later allow their homes to become forclosure houses.

Matt Zaborsky, owner of Maryland-based mortgage brokerage Norbeck Olney Rockville Mortgage Co., said the use of the tax credit scheme for the initial home payment is almost 100 percent financing, encouraging home buyers who cannot really afford to buy homes.

Even so, Lawrence Yun, chief economist of the National Association of Realtors, argued for the expansion of the tax credit and loan refinancing schemes to accelerate sales of forclosure houses and rejuvenate the housing market.

Related Posts:

• Obama Cites Government Foreclosures Campaign
• Fannie, Freddie: Roles in Containing Repossessed Houses
• Mortgage Insurers Help Foreclosed House Prevention Program
• Mortgage Defaults Up, Repossessed Houses to Rise
• Maryland Foreclosure Homes – Can Freddie and Frannie Help?