Green Options » mortgage

Good News For Homeowners: Obama Mortgage Plan

Reenita Malhotra — Thu, 19 Feb 2009 16:58:23 +0000

Good news for homeowners? Those with loans guaranteed by Fannie Mae or Freddie Mac could be eligible to refinance — even if they owe more than their home is worth.

The newly announced Obama mortgage plan aims to aid as many as 9 million households in fending off foreclosures. Here are its key elements:

Allows 4 million–5 million homeowners to refinance via government-sponsored mortgage giants Fannie Mae and Freddie Mac.
Establishes $75 billion fund to reduce homeowners’ monthly payments.
Develops uniform rules for loan modifications across the mortgage industry.
Bolsters Fannie and Freddie by buying more of their shares.
Allows Fannie and Freddie to hold $900 billion in mortgage-backed securities — a $50 billion increase.

(Source: Marketwatch)

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Can “Cram Downs” Reduce Foreclosures and Improve The Economy?

Fred Etcheverry — Tue, 20 Jan 2009 20:03:55 +0000

Senators Schumer, Durbin, Representative Brad Miller (D-NC) and others are introducing bills as part of the stimulus package to allow homeowners to have their mortgages reduced by a bankruptcy judge. The MBA (Mortgage Bankers Association) oppose such “cram downs” arguing that they will destabilize the housing market!

According to the MBA, cram downs will jeopardize future loans since the lenders will need to ask for a high-risk premium to protect them from bankruptcy modification. Such premiums would be in the form of higher fees, interest and down payments. This argument ignores the fact that low house prices greatly reduce foreclosure rates. The MBA apparently wants a return to escalating house prices.

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Fannie and Freddie, The Rich Grew Richer: A Case for a National Mortgage Bank

Fred Etcheverry — Mon, 29 Dec 2008 08:24:09 +0000

Fannie and Freddie were both conceived as Government Structured Enterprises – part private and part public. Without strict regulations against lobbing, such an arrangement assured that the private side would promote profits for the private side. One solution would be to replace Fannie and Freddie with a national mortgage bank.

The goals of such a bank would be to ensure affordable housing, recognize the real value of property, promote communities, and provide a zero risk mortgage market for investors such as pension funds.

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Madoff Greatest Ponzi Scheme? Real Estate Magnitudes Greater.

Fred Etcheverry — Mon, 22 Dec 2008 21:50:44 +0000

Bernard Madoff was arrested December 12, 2008 for an alleged $50 billion investor fraud and released on $10 million bail. While the press heralds this as the biggest ponzi scheme in history, it’s a pittance compared to the real estate schemes that have created the present financial crisis.

Like Madoff’s scheme, the house market became dependent on a steady price increase. Buyers were willing to pay high prices with the expectation that they could later sell for a profit.

Eventually, without substantial inflation, houses had to become unaffordable. House prices had reached levels that often required most of a household’s income. Subprimes were just a frantic attempt to continue this pyramid. Like every ponzi scheme, some means must be found to get more money from new “investors” to payoff old.

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Bush Plays the Joker in The Dark Knight Bailout (VIDEO)

Jerry James Stone — Thu, 25 Sep 2008 22:48:39 +0000

This post contains additional media. Click here to view the full post.

Thank you getthebigpicture.net. Video source: MBelinkie on YouTube

“Strategies of Abundance” for Green Business Ecopreneurs: First, Stop Paying the Banker

John Ivanko — Wed, 14 May 2008 00:20:24 +0000

This is the first of several posts describing “Strategies of Abundance” for ecopreneurs and green business owners.

Even in financially tough times, these Strategies of Abundance reflect interrelationships between personal finance and business, especially for small business owners. The key for ecopreneurs is how they use their business to make the world a better place. Profits from a green enterprise are the catalyst for ecopreneurs to achieve their Earth Mission, whether to restore ecological integrity or make photovoltaic systems affordable to all.

STRATEGY #1: Stop paying the banker.

The longer you hold a mortgage, the more you work for the bank and the more profitable you make them. For comparison, below is a chart from our book, ECOpreneuring, reflecting how interest can pile up on a $100,000 mortgage at 7 percent interest for terms of 15 and 30 years. While the monthly payment is less for the 30-year mortgage (the primary reason many of us choose it), we end up paying more than double for the use of the same pot of money.

By accelerating our mortgage payments on our 30-year fixed mortgage by paying down the principal when we could, we have the ability to earn less income to pay the bank than if we did otherwise over the long-term. Prepayment on principal is usually acceptable and completely legal. Every time you pay down the principal, the remaining interest and balance is recalculated, meaning that more of your regular monthly payments go to the principal and not interest payments.

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