With mortgage defaults surging and politicians urging the industry to do more, six lenders agreed to widen their effort to help borrowers of all loans - NOT just subprime.The plan, called Project Lifeline, is to be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development.

The plan will allow seriously overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans.

On a pilot basis, the plan will involve six of the largest mortgage lenders, in hopes that more lenders will sign on. The participants are Bank of America Corp. (BAC, Fortune 500), Citigroup Inc. (C, Fortune 500), Countrywide Financial Corp. (CFC, Fortune 500), JPMorgan Chase & Co. (JPM, Fortune 500), Washington Mutual Inc. (WM, Fortune 500) and Wells Fargo & Co. (WFC, Fortune 500)

All six are involved in Hope Now, a Bush administration organized effort to freeze rates on some high-cost subprime mortgages for five years to aid borrowers whose teaser rates are jumping sharply higher. Since then, Treasury Secretary Henry Paulson has urged lenders to expand that effort to cover struggling homeowners with conventional mortgages.

The new plan applies to seriously delinquent homeowners, those whose mortgages are 90 days or more past due.

The Hope Now alliance, which includes lenders, investors and nonprofit groups, said last week that it helped nearly 8% of subprime borrowers in the second half of 2007 - more than its original estimate.

The group said it helped 545,000 subprime borrowers with spotty credit in the second half of last year, compared with its January estimate of 370,000. That works out to 7.7% of 7.1 million subprime loans outstanding as of September 2007.

Among the subprime borrowers aided, 150,000 were helped through permanent-loan modifications, such as lower interest rates, while 395,000 negotiated repayment plans, which often involve a borrower getting back on track even after missing a few payments.

Consumer groups, however, point out that many borrowers still can’t keep up, even after loan workouts. They say many of the borrowers in the Hope Now effort have negotiated short-term loan modifications or repayment plans, which often involve a borrower getting back on track after missing a few payments. A full-fledged refinancing at a lower rate is preferable, they say. 

 Homeowners behind in payments will get 30 days to work out problems

cnnmoney.com

An article from RealtyTimes.com reports that nobody is going to blow a whistle and say, “It’s time to buy!”, so it’s important to pay attention to these signs in your marketplace.  One important sign to notice is when inventories start to decline.  This usually means that the best buys are leaving the market, and best doesn’t necessarily mean cheap.  Another sign is when mortgage applications increase, particularly purchase applications.  This means homes are about to leave the market, so less inventory means firmer prices and sellers will stop dropping their prices.  And finally, pay attention to the reduction in days on the market.  When DOMs are shorter, that could be a sign that a seller’s market is coming.  

Stop paying attention to the national media.  Fear has sidelined buyers even in good markets, and that’s exactly when you need to take advantage — before other buyers wise up.

Second, be ready to pounce when you see the home you want.  Don’t let this opportunity pass you by.  If you are in the market for a new home, now is the time.  Mortgage Rates have dropped and there are lots of homes to choose from.  Waiting for the market to “bottom out” could mean that you miss the opportunity to buy a great home, at a great price, with a great interest rate.

Some homebuyers have asked me how they can be sure if the values have dropped as much as they are going to.  Well, no one has a crystal ball.  Just as no one expected the boom we had in real estate here in the valley a few years ago, and no one expected just how far the values would drop, no one can be 100% certain that they have fallen all they will fall.  But buyers need to look at the overall picture.  If the mortgage rates are good, there are a lot of homes to choose from, and sellers are dealing, then NOW IS THE TIME!  You just might find the home of your dreams!

Give me a call.  Let’s talk.