The new year has brought some changes to the process of getting a mortgage. Home buyers may have already noticed as banks and other lenders have tightened standards since the recession, but new regulatory changes are going into effect. To hear how those changes will impact borrowers and the housing market in general, we’ve called Barbara Cunningham. She is with the Greater Manchester/Nashua Board of Realtors and also a member of the Board of Directors of the Mortgage Bankers and Brokers of New Hampshire.
Bank of America is offering about 200,000 homeowners a chance to wipe out a big chunk of their mortgage debt. The offers are part of the settlement Bank of America and other major banks reached with state and federal regulators earlier this year, and it's one of the biggest principal forgiveness opportunities so far.
A pre-foreclosure sign is seen in front of a home in Miami. Supporters of a plan to reduce the principals owed by many homeowners facing foreclosure say it would prevent larger losses and keep people in their homes.
Credit Joe Raedle / Getty Images
Edward DeMarco, the acting director of the Federal Housing Finance Agency, says principal reductions would save Fannie Mae and Freddie Mac an estimated $1.7 billion.
Hundreds of thousands of homeowners facing foreclosure might get help by having the amount they owe reduced by Fannie Mae and Freddie Mac.
This is a hot topic in Washington, D.C., with many Democrats pushing for these so-called "principal reductions" to try to help the housing market. On Tuesday, a top federal regulator came a step closer to allowing the move.
Many experts say reducing mortgage principal can help troubled homeowners stay in their homes. But two of the nation's largest mortgage holders, Fannie Mae and Freddie Mac, have not signed on to the idea.
Despite some green shoots in the economy, the housing sector remains weak. With 11 million Americans still underwater on their mortgages, some housing experts believe it's time for more dramatic solutions.
The idea of reducing the principal on the loans of underwater homeowners used to be a fringe concept, embraced by a few outliers. Today, many policymakers believe principal reduction is necessary to keep some troubled homeowners afloat.
But so far, the nation's biggest mortgage holders, Fannie Mae and Freddie Mac, haven't embraced the idea.
An agreement involving national banks and state attorneys general penalizes banks for improper mortgage and foreclosure practices and offers relief for homeowners. Yet some say it leaves far too many without recourse. Meanwhile, the Obama administration has another plan to offer further help. We’ll see how these initiatives might affect New Hampshire.