Affordable Housing Programs Extended through December 2016

CF Funding is pleased to share that the Obama administration has announced the expansion of its affordable housing program. The program helps to support the construction of rental housing, and provides assistance to underwater homeowners in order to avoid foreclosures. The administration will be tapping into Treasury funds in order to support these programs. The Home Affordable Modification Program was set to expire at the end of 2015, but is now extended for another year. According to the Washington Post, the program has “reduced the payments of about 1.3 million homeowners, far short of its initial 4 million projection.”

The announcement was scheduled to coincide with the Making Home Affordable program’s 5^th anniversary, as the program was introduced in 2009 (after the housing crash) as a means of stimulating the economy and improving the housing industry. As CF Funding has shared previously, the housing industry has come a long way since then. In CF Funding’s April press release “Underwater Homes at Lowest Level in Two Years,” the lender shared news that foreclosures and shadow inventory are continuously decreasing, and that an increase in home values has allowed homeowners to regain equity. Increased equity has allowed many homeowners to refinance or invest in remodeling projects. However, more improvement is needed to reach peak levels of housing activity.

The program is now extended through December 2016, according to US Treasury Secretary Jack Lew. “We need to continue to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater,” Lew said. The program not only helps to construct affordable rental housing, but allows state housing finance agencies to underwrite multifamily FHA loans. In doing so, the finance agencies take on a risk, as they share any losses from those loans.

The new program will receive anywhere from 500 million dollars to 1 billion dollars in annual funds from the Treasury and the FHA, in comparison to 363 million dollars which the FHA provided to the program last year.

The administration also hopes to bring back the private sector in order to reduce the government’s role in the mortgage market. The market is currently dominated by Freddie Mac and Fannie Mae, which are government-owned mortgage firms. Lew said he has directed his team “to bring investors and securitizers together in the months ahead so we can uncover new paths to increase private investment.”

CF Funding will keep readers updated on mortgage and housing news on the lender’s blog at http://cffundingcorporation.blogspot.com .

Underwater Homes at Lowest Level in Two Years

On April 3, CF Funding shared news that foreclosures and shadow inventory continue to decrease, and less than 1.9 million mortgages are in serious delinquency. Today the lender shares more good news, as the U.S. Home Equity & Underwater Report by RealtyTrac revealed that properties which are seriously underwater are at their lowest level in two years. The report covered the first quarter of 2014.

In the first quarter of 2013, 10.9 million properties (26 percent of all properties with a mortgage) were seriously underwater, in comparison to 9.1 million properties in the first quarter of 2014 (17 percent of all properties with a mortgage). The steady increase in home values seen in 2013 played a large part in restoring the equity to American homes over the past year. As CF Funding reported in February, this increase in home equity is “allowing homeowners to refinance and invest in remodeling projects.”

The percentage of homes which are “equity-rich,” meaning the home has 50 percent or more equity, rose 1 percent in the first quarter of 2014 to reach 9.9 million. The percentage of equity-rich homes in the fourth quarter of 2013 was 9.1 million or 18 percent. The states with the highest amount of seriously underwater properties were Nevada at 34 percent, Florida at 31 percent, Illinois at 30 percent, and Michigan at 29 percent.  According to the RealtyTrac website, the Naperville area has a foreclosure rate of 1 in every 1245. As seen in the geographical comparison chart below, the number of foreclosures in percentage of units by area (broken down by type of filing) puts Naperville at almost half the rate of Illinois and .01 percent lower than the national average. CF Funding hopes to see foreclosure rates for Illinois improve as home prices continue to rise.

CF Funding would like to remind homeowners who are underwater that foreclosure may be avoidable by refinancing or selling the home. As Daren Blomquist, vice president of RealtyTrac, said in the April 2014 report, “The relatively high percentage of foreclosures with equity is surprising to many because it would seem homeowners with equity could easily avoid foreclosure…but many distressed homeowners with equity may not realize they have equity and in some cases have vacated the property already, assuming that foreclosure is inevitable.” Those who have questions about refinancing to avoid foreclosure should contact a Loan Specialist at CF Funding Corporation today by calling (888) 344-4080 or visiting http://www.cffunding.com.