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President Bush signed a bill into law yesterday (Dec. 21) to give a little bit of wiggle room for folks facing a foreclosure.  The bill allows the debt forgiven by lenders to be counted as a loss to the lenders and is no longer considered taxable income to the borrower.  The bill is in effort to not pour salt on the wounds of borrowers who are facing rising mortgage costs from resetting ARM interest rates.

If you do end up having your home foreclosed on, at least you wont have the IRS breathing down your neck. Here is a video of the news story from CCTV.

In  a piece of not so nice news, Fannie Mae has begun to raise its fees.  Freddie Mac may follow close behind.  A 0.25% fee has been added to all new mortgages bought or guaranteed, due up front.  This means an extra $1000 fee on a $400,000 home.  Tough luck for those already feeling the credit crunch and looking to refinance before their ARM rates increase.

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So many Adjustable rate loans are on the verge of resetting. The onslaught of foreclosures can send the economy in a downward spiral yet again, but the real story concerns you and me personally. While we care about the economy as a whole, we care even more about keeping our homes and providing shelter for our children.

The fed recently lowered the short term borrowing rates a quarter point this week to help to try and do its part to relieve the subprime crisis. Lowering this rate is good for some, who seek to refinance, but is it good for you?

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In an article by the National Association of Realtors, although slightly biased, they announced the following on December 10, 2007: 

“The National Association of Realtors’ index of pending home sales climbed 0.6%, the second month in a row the number has increased. The latest figure, which measures contracts signed in October, was ahead of economists’ forecasts of a 1.0% fall. September’s reading was revised up to a 1.4% increase as well. “We’re not likely to see any further collapse at this point,” said Richard DeKaser, chief economist at National City Corp, who had actually fore-casted a gain. “I’m not optimistic about the outlook for the housing market, but we’re scraping bottom in the fourth

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Keep in mind that this press release was written by a mortgage company.  I would say it is biased a bit, but contains some good information about buying a home.  Read on to discover the facts about home buying; Then share your thoughts in a comment!

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Source: Hope Now Alliance

The ARM freeze plan presented by the Bush administration today should help some borrowers with their loans. Borrowers can call 1-800-HOPE-NOW (toll free) to receive counseling with mortgage problems. Once you, the borrower make contact the Hope Now Alliance will use a flowchart like the one above to determine if you qualify for the mortgage adjustment.

The plan is not designed to give handouts to folks, but to minimize the damage to the economy. Housing statistics are a major indicator of the health of the economy because the industry is intertwined with so many others. This plan is important to all of us whether or not we hold an adjustable rate mortgage because the “credit crunch” also affects the abilities of banks to lend to other institutions, such as businesses. If you are looking to borrow in the near future, and the bottom of the credit industry falls out, you can bet your bottom dollar higher interest rates will be charged to make up for the lost money in bad credit and foreclosures. Our first article on this issue can be found here, and our first follow up here.

Update:  Seeing as how not everyone who is in a terrible mess with their mortgage will qualify for the rate freeze, there is another option available that would allow your to keep your home from going into foreclosure and save your credit as well.

President Bush is said to be signing a new bill that will allow (force) mortgage companies to freeze arm rates. As discussed in a previous article on this site, this will probably have some ramifications for previous owners that have already foreclosed on their properties. I can imagine that there will be a lot of people looking to cash in on this new bill. This bill will freeze current ARM mortgage rates for a length of up to 5 years so that income can possibly catch up to the interest rate that is being charged.

The way the bills is being signed is such that it will affect those that are currently not defaulting on their loans, but would not be able to survive a future increase in interest rate. Those that are currently defaulting on their loans will not qualify. This should help millions of Americans keep their homes, while we should see a decent amount of foreclosed homes until all the kinks of the system are worked out. Foreclosed homes are expected to increase next year, but should eventually taper off if this bill serves its actual purpose.

 Expect a follow up as the bill is signed and dissected.

It looks like more people are spending more time online. From October 2006 to October 2007, the amount of time an average user spends online has increased by 24.3%.

I would think that this means it is becoming a better idea to advertise your house online.

Chart provided by Complete.com