I had lunch yesterday with a client who is currently enlisted as an officer in the Navy. As an officer, he is doing quite well. Although his occupation takes him and his family around the world, he is able to invest a portion of his wages in real estate. Currently he is being transferred from Coronado Island in San Diego to Japan for two years. He's in Arizona today learning about the trustee auction process, so he can buy a rental home here before he heads to Japan.
Unlike my client, most enlisted men and women are struggling to survive this tumultuous economy. It is troubling to know that many of our servicemen and veterans are facing foreclosure or being denied lower rates after serving both overseas and domestically.
According to Jim Kuhnhenn of the AP:
March 6, 2012
"President Barack Obama is aiming mortgage relief at members of the military as well as homeowners with government-insured loans, the administration's latest efforts to address a persistent housing crisis.
In his first full news conference of the year Tuesday, Obama was to announce plans to let borrowers with mortgages insured by the Federal Housing Administration refinance at lower rates, saving the average homeowner more than $1,000 a year. Obama also was detailing an agreement with major lenders to compensate service members and veterans who were wrongfully foreclosed upon or denied lower interest rates.
The efforts Obama is announcing do not require congressional approval and are limited in comparison with the vast expansion of government assistance to homeowners that he asked Congress to approve last month. That $5 billion to $10 billion plan would make it easier for more borrowers with burdensome mortgages to refinance their loans.
A separate plan, the Home Affordable Refinance Program, which allows borrowers with loans backed by Fannie Mae and Freddie Mac to refinance at lower rates, has helped about 1 million homeowners, well short of the 4 million to 5 million the administration had expected."
"About a quarter of all U.S. homeowners, about 11 million, are underwater on their homes, owing more on their mortgages than their homes are worth, according to CoreLogic, a real estate data firm.
About 30 percent of home loans started last year were through the FHA. Many first-time home buyers use these loans because they only require 3.5 percent of a home's price as a down payment, instead of a typical 10 to 20 percent in the private mortgage market.
For service members and veterans, Obama will announce that major lenders will review foreclosures to determine whether they were done properly. If wrongly foreclosed upon, service members and veterans would be paid their lost equity and also be entitled to an additional $116,785 in compensation. That was a figure reached through an agreement with major lenders by the federal government and 49 state attorneys general.
Under the agreement, the lenders also would compensate service members who lost value in their homes when they were forced to sell them due to a military reassignment."
It is troubling that until now, there has been no effort to assist service members who are struggling with a depressed economy and deflated real estate market. These men and women have devoted their lives to our country, yet lenders are not obligated to work with them in the instance that they have to sell or face foreclosure due to circumstances beyond their control, such as military reassignment. Lets keep our fingers crossed that the President and Legislature will fill in some gaps in this system.
Phil Mahr is a Realtor, real estate investor and trustee auction specialist in Arizona and California. He can be reached at (310) 663.5478 with any questions.
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