WASHINGTON – July 30, 2009 – Loans backed by the Federal Housing Administration (FHA) will be eligible for payment reductions similar to the Obama administration’s loan modification program, the government will announce Thursday.

Effective Aug. 15, financially troubled homeowners who have an FHA-insured loan can apply for a modification under a program parallel to “Making Home Affordable” to help lower their payments and avoid foreclosure.

The program, launched in March, is designed to lower monthly payments for 3 million to 4 million borrowers, although only about 200,000 have been helped so far. Lenders agreed this week to adjust 500,000 loans by Nov. 1.

The FHA, which backs about 5 million loans, is a government-run mortgage insurance program. It became the main source of home loans to borrowers with poor credit and low down payments after the collapse of the subprime lending market.

The agency lets borrowers take out home loans with down payments as low as 3.5 percent, compared with 20 percent for a typical loan that doesn’t require mortgage insurance.

By law, FHA cannot offer borrowers interest rates as low as 2 percent, which are available under the Obama plan. Instead, FHA will allow lenders to set aside up to 30 percent of the total principal balance until the house is sold or the property is refinanced. No interest will be charged on that amount.

Government officials did not have an estimate of how many borrowers would qualify.

“We’re bringing another important tool to the table to help struggling families who are desperate to keep their homes,” Housing and Urban Development Secretary Shaun Donovan said in a statement.

Lenders who participate in the FHA program will receive an incentive fee of up to $1,250 and can be reimbursed for $250 in costs.

WASHINGTON – July 30, 2009 – Economic indicators keep saying what investors have known for months: Things are getting better.

The latest government report to reinforce a more positive view of the economy’s health was the Federal Reserve’s “beige book,” released Wednesday, which indicated many parts of the nation are seeing economic stability. Earlier in the day, President Obama told spectators at a town hall meeting in Raleigh, N.C., “We may be seeing the beginning of the end of the recession.”

And the July update of the USA TODAY/IHS Global Insight Economic Outlook Index predicts the economy will grow October through December, the first increase since September 2008.

“The evidence (of recovery) is building every day,” says Jim Paulsen of Wells Capital Management. “It’s settling and gives people more faith in what they’ve seen” from stock and bond markets.

The reports echo what stock prices have been predicting since March. The Standard & Poor’s 500 index has soared 44 percent from its March 9 low, despite falling 0.5 percent Wednesday.

While the latest pieces of economic data provide some comfort, they by no means signal a return to the boom times. Economic experts say they still are on the watch for information about:

• Clues on when a meaningful recovery is firmly underway. The beige book indicated the economy is still far from robust, because five of the Fed’s 12 regions – Boston, Philadelphia, Richmond, Atlanta and Dallas – were “subdued” or “weak” and Minneapolis was faltering.

“There may be a bottom, but where’s the bounce?” says Doug Roberts of Channel Capital Research. “There’s still a significant level of weakness in the economy.”

• Signs of health in the commercial real estate market. The beige book sounded concerns about the demand for office buildings, retail space and manufacturing facilities, says John Canally of LPL Financial. The fact commercial real estate remains soft could be a sign that employment, too, will be weak until early 2010, he says.

• Evidence of the federal stimulus kicking in. Much of the future hinges on how stimulus spending steers the economy, Roberts says, which won’t be known until next year. Some additional clues, though, will be released this week with reports on jobless claims today and GDP on Friday.

“There’s a lot of information that supports the idea we’ve turned a corner,” Paulsen says. “But there’s still a lot of doubt.”

WASHINGTON – July 30, 2009 – A senior House Democrat threatened banks Wednesday that if they don’t volunteer to save more homeowners from foreclosure, Congress will make them.

In a sternly worded statement, Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person’s monthly mortgage payment if the number of loan modifications remains low.

Frank, chairman of the House Financial Services Committee, also said his committee won’t consider legislation to help banks lend unless there is a “significant increase” in mortgage modifications.

Frank’s statement was aimed at adding momentum to a deal struck Tuesday between Treasury Secretary Timothy Geithner and more than two dozen mortgage companies. The two sides agreed to set the goal of adjusting 500,000 loans by Nov. 1.

But it was far from clear whether that would happen.

Loan servicers say they are still trying to play catch up to a deluge of customer requests by hiring and training thousands of new employees. Banks also are trying to sort through which customers face a legitimate financial hardship.

Also, many loans have been bundled and sold to investors as securities, complicating efforts to modify the terms.

Congress tried earlier this spring to pass legislation that would give people a chance to keep their homes by filing for bankruptcy. But while President Barack Obama said he supported the measure, he did little to see it through and it was defeated amid an aggressive lobbying effort by banks.

The measure failed in the Senate by a 45-51 vote, falling 15 votes short of the 60 needed to overcome procedural hurdles.

“People in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different,” Frank said.

Check out these stats. Then ask the queston, has the real estate market in Pinellas County hit the bottom?

6-09_condo_quarterly_median_price_2001-2009

Single family median price 2001-2009

Sure looks that way, wouldn’t you say.. If I was a buyer who had been waiting for the bottom, I’d be getting out into the market to buy me a home. Call me today or visit www.PriceGroupRealtors.com and signup for a free account to access the MLS.