The fifth anniversary of the Making Home Affordable Program has just taken place and the Obama administration in conjunction with the Treasury department announced the extension of the program with additional benefits.
The administration has stated that the program will now be extended to December 31,2016. This program was first initiated to combat the housing and mortgage crisis that caused so many homes to enter into foreclosure. The program, to date, has helped 1.3 million homeowners modify their mortgages and save an average of $540 per month.
The administration wants to keep the program in place to assist homeowners that are still underwater with their mortgage. While the national foreclosure rate has dropped considerably since the initial crash, it is believed that nearly 10 million homeowners are still underwater as of the end of 2013.
During the housing market crash, home values dropped between 25 and 65 percent throughout the country. This left most homeowners “underwater” with their mortgage or in negative equity. Being underwater placed these homeowners at risk of foreclosure and was the cause of many of the foreclosures that occurred.
Lon modification programs are going to remain in place for these underwater homeowners as a way to ensure stability in the housing market and provide assistance to those in need.
Other Important Announcements
During the press conference announcing the continuation of the Home Affordable program, the Treasury department announced that it will be using funds from the Federal Financing Bank to help fund construction of affordable rental housing.
The administration has also asked Congress to allow Ginnie Mae, a government-sponsored entity, to securitize FHA loans. The administration has stated that by allowing Ginnie Mae to securitize these loans, interest rates would drop and homes would become more affordable. Congress, however, has not responded to the request at this time.
In the meantime, the Federal Financing Bank will fund FHA loans for rental properties. This funding will equal $500 million to $1 billion annually.
The administration also stated that it is looking for way to encourage more private capital to enter into the mortgage market. At this time, two government controlled mortgage firms dominate the mortgage market.
The Housing Market
Then 2014 housing market is still steadily improving albeit at a slower rate than hoped. Changes to the mortgage lending rules that went into effect in January have made acquiring mortgages a little more difficult, slowing some sales.
Additionally, the country suffered a very harsh and long winter throughout a majority of the states. The long winter has had an impact on the housing market in both previously owned and newly built home markets.
It is anticipated that the market will continue along slowly throughout the rest of the year. Drops in sales are not forecast and home values are anticipated to continue to increase. Many areas of the country are even experiencing available housing shortages, driving prices even higher on available homes. The most growth is anticipated in rental properties, with multi-family units taking the overall lead in new construction.