A report from First American CoreLogic showed that 58.2 percent of home mortgages in Las Vegas have negative equity, in which the loan balance exceeds the home's value. The report said Nevada has the highest percentage of underwater mortgage holders in the nation with more than a quarter of Nevadans, 28 percent, owing more than 125 percent of their home's value.
The Treasury Department last Wednesday throws $75 billion at a problem that some say sparked the economic downturn. The plan aims to help as many as 9 million homeowners who are struggling to stop foreclosure, but industry experts agreed few homeowners in Las Vegas and other hard-hit areas such as Phoenix and much of California, where home prices have tumbled more than 50 percent, are likely to qualify for the program.
Under Obama's plan, homeowners are generally eligible for refinancing or loan modifications if they are the owner-occupant of the home; the home is their primary residence; the home is not investor-owned; and the first-lien loan has an unpaid balance of less than $729,750.
Any stopping foreclosure action will be suspended during the loan modification trial period or while borrowers are considered for other options to prevent foreclosure. If these options fail, the foreclosure action may be resumed.
The plan helps two groups by refinancing up to 5 million homeowners into more affordable fixed-rate loans and by working with lenders to modify the loan terms for up to 4 million homeowners. The Obama plan’s second part is intended to help modify loans for borrowers who have experienced economic hardship.
For the modification program, which runs through 2012, borrowers who are eligible will have to provide their most recent tax return, two pay stubs and an "affidavit of financial hardship" to qualify. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will take steps to verify the information.
Borrowers are allowed to have their loans modified once, and the program applies for loans made on Jan. 1, 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded. Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates then would rise to about 5 percent until the mortgage is repaid. If the plan works as intended, it could be a big plus for some borrowers.
We don't know what that program will do and how other programs are affected. We need to see the guidelines, how the administration is going to handle the rights of investors to have a decision in how to do these workouts, whether investors are forced into this or still have a right of approval."
Simon said the industry favors the "general terms" of the plan's affordability index formula, which sets monthly home payments at 38 percent of household income. The government will share 7 percent of the cost to take mortgages down to 31 percent. Critics of Obama's foreclosure plan say it will reward delinquent borrowers, many of whom should not have received mortgages in the first place, while responsible borrowers who continue to make their monthly home payments gain nothing.
Neil
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