Fannie Mae, Freddie Mac Stopping Foreclosures

Beteween November 26th and January 9th both Fannie Mae and Freddie Mac will temporairly suspend foreclosures.  The change allows for families to stay in thier home for the holidays.  It also gives the two government sponsored entities, time to evaluate if borrowers are able to qualify for the new streamlined loan modification program, that is set to start December 15th.  The change does not apply to vacant homes.

Qualified borrowers may be able to modify thier home mortgage in one of the following ways:

• A reduction in the interest rate for 5 years

• Payments to be stretched out to 40 years

• A temporary reduction of their principle loan amount.  However, the reduction would be due without interest if the home was refinanced or sold.

The goal is to cut monthly payments to 38% of the borrowers monthly pretax income.

Bloomberg.com reports:

“The worst U.S. housing slump since the 1930s is being compounded by a recession that began in the third quarter and may last a year or more, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and of previously owned homes in August were 32 percent below the peak reached in September 2005.”

As these programs start taking place the supply will start coming down and we should see a stabilizing of housing prices in the market.  If you are planning on making a home purchase in the next 6-12 months, now is the time to start doing your due dilligence and educate yourself on the particular market you are interested in.  Start by working with a lender and securing the funds necessary for that purchase.  Market conditions in Milwaukee are particularly good right now for buyers to consider making a move in buying real estate.