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Experimental pilot program aims to stop foreclosures

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Could it work?

There are two distinct problems that plague the housing sector – unemployment and bureaucracy. High unemployment and massive underemployment has crippled housing by depleting the buyer pool and flooding the market with foreclosures, many due to job loss. Confidence has been shaken and homeownership is looking like a dream to many rather than a reality. Housing agencies do not agree on the way forward and politicians and bureaucrats are pushing for housing policies in such opposing directions, that little is being done, and given that 2012 is an election year, there will be little action but a lot of talk.

This week, in a detailed paper outlining the problems with housing and listing recommendations, the Federal Reserve said, “Looking forward, continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery.” Most of the recommendations surrounded how Fannie Mae and Freddie Mac could make lending loosen up and help homeowners stay in their homes.

Days later, Freddie Mac announced that they would give servicers the authority to give an additional six months of forbearance to their mortgage borrowers, allowing up to a year of forbearance for unemployed homeowners. But given servicers’ track record of failing to implement government programs (like HAMP and HARP) and failure to modify mortgages, even on a temporary basis.

It’s not all bad news

Of course, these are all generalities based on national trends. On a local level, there are examples of programs launching not only with local banks who rarely make headlines for abuses, but with major banks like Bank of America. The same Bank of America that recently settled the largest residential discrimination settlement in U.S. history, $335 for Countrywide Mortgage (acquired by Bank of America in 2008) for steering minorities into costlier loans.

Through non-profit, Boston Community Capital, the Stabilizing Urban Neighborhoods (SUN) program helps Massachusetts homeowners with a steady income that experience hardships to remain in their homes, claiming to have helped over 125 families since their 2009 launch.

Best described by Federal Reserve Board Chairman, Ben Bernanke, this pilot program is “a community development financial institution called Boston Community Capital is pursuing an innovative strategy to prevent occupied homes from becoming vacant and creating a strain on the community. Through special financing entities, it buys foreclosed-upon but still occupied homes from lenders at market value. The initiative, dubbed Stabilizing Urban Neighborhoods, or SUN, is focused on six low-income neighborhoods in Boston that have the city’s highest concentration of foreclosures.”

Bernanke continued,, “Taking advantage of the diminished home values, the group buys the properties and then resells them at affordable prices to existing occupants–both owners and tenants–who can demonstrate that they have suffered hardship. This program prevents properties from becoming vacant and provides families with a sustainable and affordable housing situation; it is designed to start small and expand as needed.”

“It’s refreshing to see the banks use a practical approach with the continuing foreclosure crisis. They actually save money, and their customers keep their homes,” Adam Lowe, Co-Founder of ClearHouse.net told AGBeat.

The takeaway

Various advocacy groups have called for principal write-downs, but the Federal Housing Finance Agency (FHFA) which oversees Fannie Mae and Freddie Mac, has rejected this and similar theories, leaving it to local pilot programs like SUN to innovate and break through the bureaucracy.

This pilot program puts banks in the position to lose millions of dollars, but homes going into foreclosure also put banks in the position to lose millions of dollars, plus, they have the added expense of dumping the home when they could experiment with ways of keeping homeowners in homes without excusing their payments. The banks clear their balance sheets, homeowners stay in their homes, and housing is propped up by slowing the foreclosure rates and glut of inventory of foreclosure homes bringing overall housing prices down.

This is still a pilot program and is highly experimental, but this one move could go a long way for breaking the cycle of foreclosure America is currently experiencing.

Click to learn more about SUN:

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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24 Comments

24 Comments

  1. Thomas Johnson

    January 8, 2012 at 1:47 pm

    The bureaucracy is following the Treasury Dept and their bankster master's orders. Millions of homeowners living in houses without paying is a trillion dollar stimulus package. The Fed makes up the payments to keep the investors quiet. Regulatory forbearance and extend and pretend is the order of the day.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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