mortgage
States offer foreclosure rescue loans
"The national foreclosure numbers continue to be driven by the hardest hit states continuing to get much worse. The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland," Mortgage Bankers Association Chief Economist Jay Brinkmann said in a statement.
Federal government gives states go-ahead for refinancing programs
So far, neither California nor Florida has introduced a home loan refinancing program specifically for homeowners who are facing foreclosure. But more states are expected to set up such programs due to the Housing and Economic Recovery Act of 2008, according to Rieman.
What the new law does
- Adds an extra $11 billion to the national "bond cap," which refers to the total dollar-value of mortgage revenue bonds, or "MRBs," that housing agencies can issue each year.
- Allows housing agencies to use MRBs for refinancing programs, which previously weren't a permissible activity for MRBs.
The federal government authorizes housing agencies to issue MRBs, which are tax-exempt bonds, and uses the proceeds to finance housing programs in their locality. Two examples of such programs are home mortgages for low- and moderate-income first-time homebuyers and construction of affordable rental housing.
"More states are now considering how they can use the new refinancing authority granted in the housing stimulus bill to provide refinancing through the MRB program," Rieman says.
The increase in the bond cap will be divided among the states on a per capita basis, will be available for three years and can be used for any allowable housing purpose, not just refinancing, Rieman explains. That means states can choose whether to use their additional allocation for foreclosure-rescue loans or other purposes.
Marcie Geffner is a freelance real estate reporter in Los Angeles.