The Mercury News

More mortgage relief from the White House – but congressional ok doubtful
In his State of the Union Address, President Obama laid out a plan to help responsible borrowers and support a housing market recovery.  Details of that plan were released a few days ago.  However, funding for the proposed program must be approved by Congress, lowering the possibility that it will be implemented quickly. 

Making sense of the story

• Operated by the Federal Housing Administration, the plan would allow underwater homeowners to refinance into cheaper federally insured loans.  Borrowers with good credit who are current on their loan payments are eligible.
   
• The measure also streamlines the process of refinancing an underwater mortgage, eliminating the need for an appraisal or submitting a new tax return.
   
• To qualify, borrowers must be current on their mortgage, have a minimum credit score of 580, and must be refinancing a loan on a single-family owner-occupied principal residence.
  
   
• Lenders only need to confirm that the borrower is employed.  Loans that are more than 140 percent of the home value probably would not qualify until banks wrote down part of the balance.
   
• Congress must approve $5 billion to $10 billion in funding, leading housing experts to praise the plan’s objectives with skepticism of it passing this year.

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IN OTHER NEWS...

CNN Money

Mortgage crimes are focus of new task force
President Obama announced last week that he’s asked the Justice Department to create a special unit of prosecutors and state attorneys general to investigate abusive lending and packaging of risky mortgages that led to the housing crisis.  Read the full story

The Washington Post

Fannie and Freddie don’t deserve blame for bubble
There is plenty of blame to go around for the U.S. housing bubble, but not much of it belongs to Fannie Mae and Freddie Mac. Read the full story

The Mercury News

Fight property tax bill with these tips
Declining house values create great opportunities for homeowners to contest their property tax bills and potentially save big money.  Read the full story

San Diego Union Tribune

Appraisers: Fed rule has hurt our pay, borrowers
The American Guild of Appraisers is digging into a federal rule it says has driven down the quality of home valuations, negatively affecting appraiser wages along with borrowers trying to get mortgages or refinances.  Read the full story

The New York Times

On troubleshooting
Those who have issues with their mortgage lenders now have another place to take them: The Consumer Financial Protection Bureau, which began accepting such complaints and inquiries this month.  Read the full story

HousingWire

Treasury, FHA to let borrowers appeal mortgage servicer action
The Treasury Dept. and the Federal Housing Administration will issue new rules in the coming months allowing borrowers to appeal mortgage servicer decisions under certain modification programs.  Read the full story

What You Should Know About the Housing market

• As the housing market continues to struggle for stabilization, many homeowners are turning to strategic default.  Almost 11 million homes are now underwater, according to Corelogic.  Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to RealtyTrac.
  
   
• Aside from the moral quandary of whether strategic default is a good decision, there also are other factors to consider.
   
• The borrowers’ credit scores will take a hit. According to FICO, someone with a 680 credit score would see their score decline anywhere between 85-100 points after a strategic default, and someone with a 780 credit score could lose 140-160 points.
   
• Borrowers who are considering strategically defaulting on a house should look at it as a last resort, not a first option.  Financial troubles could be eliminated by refinancing, especially if the Obama administration’s program is implemented.
   
• Each state has its own rules and regulations regarding foreclosures, which affect both the length of the process and what the borrower could be liable for in the end.