The Obama administration has not decided whether it should resurrect a popular tax credit for first-time homebuyers, U.S. Housing and Urban Development Secretary Shaun Donovan said on Sunday.

“It’s too early to say whether the tax credit will be revived,” Donovan said in an interview on CNN’s “State of the Union” program. He said the administration would “do everything we can” to stabilize the shaky U.S. housing market.

A federal $8,000 homebuyer tax credit, which expired several months ago, had boosted home sales, helping to revive a flagging housing market that had been a key factor in driving the United States into recession.

It followed a $6,500 credit for those purchasing a new primary residence, which also has expired.

But an unexpectedly large drop in U.S. home sales in July — sales of existing homes in the period fell to their slowest pace in 15 years — has spurred fears that the nation could be on the cusp of another sharp drop in housing.

Full story is available on Reuters

With whole neighborhoods in distress after a tsunami of foreclosures hit South Florida, the federal government’s quarter-billion dollar fix-it program is now beginning to pick up steam, just as crucial deadlines loom around the corner.

The Neighborhood Stabilization Program, originally launched as part of the 2008 Housing and Economic Recovery Act, was designed to combat the side-effects of rampant foreclosures by propping up neighborhoods left in disrepair after the housing market collapse.

The strategy: Buy up foreclosed properties to renovate and resell or rent, hopefully encouraging low- and middle-income residents to settle into areas known for abandonment and blight.

“NSP was kind of like a `stop the bleeding’ [effort] for the foreclosure crisis,” said Matthew Martin, planning specialist for the Kirwan Institute at Ohio State University, and co-author of a recent study on NSP’s impact in Florida. “It wasn’t intended to completely turn things around, but to simply stabilize things.”

Full story is available on Miami Herald

me on Washington Place that she purchased in 2006.

The single mother would still be working three jobs to pay off her mortgage and support her four children if she hadn’t had to evict a tenant who failed to pay rent and fallen behind on her mortgage payments.

Facing foreclosure, Smith turned to the Affordable Housing Centers of America, formerly ACORN Housing, for help. “If I would have known what I know now I wouldn’t be in this situation,” said Smith, who is now pursuing a college education to get a job that will help her keep her home for the long term.

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Since a lot of the homes in the Valley are worth less than what’s owed on them, walking away from the mortgage has become an option for some.

That means your house goes into foreclosure.

The mortgage holder or bank takes it over and sells it for what they can.

A short sale is similar but you have to reach an agreement with the bank to accept less than what is owed.

So which one affects your credit most?

Both will hit your for about 7 years.

Full story is available on abc15.com

Some homeowners underwater on their home loan — meaning they owe more on the mortgage than the home’s current value — are turning to “strategic defaults” in which they simply walk away from mortgage debt.

But financial experts warn that the cost of skipping out on mortgage debt can be high.

The American Bankers Association recently warned homeowners about the consequences of strategic default, including the possibility of the bank obtaining a judgment to pursue the homeowner’s assets, such as bank accounts, cars and investments.

Full story is available on detnews.com

Foreclosure is a losing proposition all the way around.

Families lose homes and injure their ability to borrow money for years to come, if not decades.

Lenders incur legal fees, real estate fees and property management fees as they wait for sales that will only partially recoup their original investments.

Property values drop further in neighborhoods where foreclosures occur. Vacant homes attract vandals and squatters.

Ultimately, the entire community is destabilized.

For these and other reasons, foreclosure should be a last resort and reducing the growing rate of foreclosures is the shared responsibility of homeowners, lenders, real estate professionals, community organizations and government.

The situation is critical and is about to become more so.

Full story is available on Arizona Daily Star

Is the great American dream over?

Is the housing market on the verge of collapse?

These very questions are now being echoed around the nation by financial experts, authorities in Government and the common person alike.

U.S. Federal Reserve Chairman Ben Bernanke recently attended an annual conference of global central bankers in Wyoming. At this meeting of financial minds, he stated that the U.S. economy is not recovering as quickly as it had been expected to.

The Government originally predicted that for the months covering April to June the economy would grow by around 2.4 percent. In reality it only managed a meager 1.6 percent which was slightly better than the dire predictions of some financial economists.

Full story is available on News4US

Tom Hetmanek paid $325,000 in June for an upscale townhome in the Tierra Hermosa subdivision of Palm Springs.

“Four years ago, it would have cost me around $700,000,” said Hetmanek, who rented for a year and a half before deciding it was the right time to buy.

Like many buyers, Hetmanek is taking advantage of the new affordability of homes in the Coachella Valley, where prices in some neighborhoods have tumbled to levels last seen in the early 1990s.

While plummeting home values are a nightmare for those who bought during the boom, they are providing opportunities for those who have been priced out of Southern California’s notoriously expensive housing market.

Full story is available on mydesert.com

The Obama administration plans to set up an emergency loan program for the unemployed and a government mortgage refinancing effort in the next few weeks to help homeowners after home sales dropped in July, Housing and Urban Development Secretary Shaun Donovan said.

“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said on CNN’s “State of the Union” program yesterday. “That’s why we are taking additional steps to move forward.”

The administration will begin a Federal Housing Authority refinancing effort to help borrowers who are struggling to pay their mortgages, and will start an emergency homeowners’ loan program for unemployed borrowers so they can stay in their homes, Donovan said.

“We’re going to continue to make sure folks have access to home ownership,” he said.

Full story is available on Bloomberg

Buying a home is far different today from how it was before the economic collapse. The Federal Reserve has introduced a variety of changes to help ensure that another financial crisis will not occur. Amongst these changes are provisions that require income to be a factor in any home loan approval and, most recently, to ban yield spread premiums, or YSPs.

Yield spread premiums were largely responsible for the housing boom and the subsequent market crash. This controversial lending practice, now banned, allowed lenders to generate additional profits from loans by charging borrowers interest rates that were higher than market. In essence, they are something like a kickback.

Here is how they work:

A mortgage lender issues a loan for a specific interest rate (e.g. 6%); the mortgage broker then attaches an additional percentage to that sum (usually between 0.5% and 2%). For example, an addition of 0.5% will, on average, create a profit of 2% of your loan amount that would be paid to the broker (i.e. $2,000 for every $100,000 financed).

This additional sum was in addition loan origination fees (usually 1%), broker fees, and discount fees. What made them particularly ominous was that many borrowers were unaware this was costing them money; in fact, more than 90% of all loans were closed with a rate at least 0.5% higher than it needed to be prior to the changes introduced by the Federal Reserve. Yield spread premiums had cost consumers an estimated $16 billion every year.

Full story is available on Credit Loan