Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

March 17, 2009-Freddie Mac (NYSE: FRE) launched its new REO Rental Initiative giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. The REO Rental Initiative will be managed by HomeSteps®, Freddie Mac’s national real estate unit, and implemented through several national property management firms.

Freddie Mac also announced it will continue to suspend all eviction actions until April 1, 2009 to ensure there is ample time for current occupants to learn about the options available to them under the new initiative.

“Freddie Mac’s REO Rental Initiative can help ease a foreclosure’s impact by giving renters and former owners more time to determine what options are best for them and their families. At the same time, the REO Rental Initiative helps stabilize property values and local communities by keeping homes occupied and less vulnerable to vandalism,” said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac.

Property management firms will begin the process of contacting occupants of foreclosed properties to determine their interest in staying in the home and their eligibility for a month-to-month lease. Occupants will be contacted only after the foreclosure gives Freddie Mac the legal authority to offer a lease.

To qualify for a lease, the tenant or former owner must occupy the property and show they have adequate income to pay the monthly rental amount established by the property management company based on market rents for the area in which the home is located. Occupants must agree to allow HomeSteps to show the home to potential buyers as it will be marketed for sale during the lease period.

Additionally, the home must be in safe, habitable condition and meet all local codes for rental properties to qualify for the REO Rental Initiative.

If an occupant does not wish to lease the property, Freddie Mac will continue its current practice of offering relocation assistance. In addition, Freddie Mac will also explore available workout options with owner-occupants after Freddie Mac gains title to the property through foreclosure.

Have you heard?  Mortgage rates are again dropping to near-record lows – below 5% – in the wake of the Federal Reserve’s decision to buy up Treasury bonds and mortgage securities. Lower rates may help spur home sales, but analysts expect much of the action to come from homeowners who are looking to refinance, but mortgage experts caution that many homeowners are bound to be disappointed.

The problems that created the mortgage meltdown mess mean that tighter rules and regulations have been put in place for home buyers and those seeking to refinance, and tight lending standards make it much harder for all but the most creditworthy borrowers to qualify.

Here I have added some quotes for you…

“A lot of people could not requalify for the loan they have now,” said Alex Stenback with Residential Mortgage Group in Minnetonka. “There are tougher credit standards in place and you have to have a certain amount of equity in the property in addition to meeting the now-tighter debt-to-income ratio requirements.”

Keith Gumbinger of HSH Associates, a publisher of mortgage information, said “good interest rates were available to all kinds of borrowers in all kinds of credit circumstances when the market was running flat out five years ago. That’s not the case today.”

“You must be a much better borrower than you had to be before,” he said. “For some borrowers, you might have to get used to hearing ‘no.’”

Maybe I should educate you a bit about the what the BIG GUYS are doing.

By snapping up Treasury securities, the Fed boosts their prices, and that drives down the yield, or interest rate. The 10-year Treasury bond dropped by the biggest one-day amount since 1981 this past Wednesday and rebounded slightly on Thursday.

Analysts expected mortgage rates to follow suit, and they did come down on both Wednesday and Thursday.

The national average rate on a 30-year, fixed-rate mortgage fell to 4.94%, down nearly a quarter of a percentage point from a day earlier, according to HSH Associates.
Stenback said that rates on a 30-year fixed rate mortgage were 4.5% to 4.625% for a best-case scenario borrower.

Will they stay that low? Probably not.

“When we see these really dramatic drops, there’s a little bit of a snap-back effect,” said Stenback. “But they probably won’t go back up to where they were before.”

Paul Schuster, vice president of Marketplace Home Mortgage and head of the Minnesota Mortgage Association, called the downward trend positive but said it won’t solve the housing problem alone. “It’s a key to affordability, and low rates are critical to helping the housing market recover, and it was a commitment by the Federal Reserve to support that in a big way.”

Home buyers and owners who want to refinance should be prepared for a longer process, Schuster said, and for different rates or costs, depending on their credit scores and loan-to-value ratios. “Now, there might three or four different levels for transactions that previously would have been priced equally,” he said.

Stenback said he expected a “huge” number of people to try to refinance but urged patience as the underwriters, closers and others scramble to keep up with demand.

Seems like we never get exactly what we expect!!!!!   Now we have to wait OUR turn.    PPFFFFT!   I am an “I want it now person” too often…lol.   This should not stop you from starting the application process and getting prepared!