Among these major banks are Bank of America, JPMorgan Chase and Citigroup. These banks will be subjected to an assessment called by Obama’s economic planners as stress test. The test will estimate bank losses from 2009 to 2011 and the banks’ abilities to bear losses if the foreclosure crisis continues and the economy worsens.

Financial industry regulators, led by the Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision, will assess the performance of bank assets such as securities, loans and collateralized debt obligations using two different economic scenarios. The scenarios would be based on present economic expectations and on a worse scenario in which the foreclosure problem worsens and housing prices decreased by another 20 percent over a two-year period and unemployment soars to more than 10 percent.

After the assessment, banks that need additional funds will be given 6 months to obtain funds from private investors. The federal government would intervene only if these banks fail to get additional funds. The government will buy preferred shares that would be turned into common stock over time, helping increase the banks’ capital.

One administration official said the assessment is one step to more carefully allocate the remaining $350 billion of the financial bailout funding approved by Congress in October 2008.

Donald Musso, founder of financial consulting firm FinPro, said the bank bailout in 2008 was not carefully planned. This time, he said, the Obama administration has learned from the 2008 experience. Any bank that would accept financial assistance from the government will be required to offer loans that will help solve the foreclosure crisis. In 2008 and early in 2009, lawmakers criticized the banks which received federal money for their failure to offer loans that would have helped slow down home foreclosures.

News of the bank assessment plan helped lift the share prices of major banks such as Citigroup, Bank of America, Wells Fargo and JPMorgan Chase. Despite the continued foreclosure problem, many bank stocks managed to make gains because of the administration’s foreclosure program and assurance from government officials that there are no current plans to take over the troubled financial giants.

That is what New York is currently experiencing. The main fuel line of New York, Wall Street, is going dry. How hard could this affect their high-end lifestyle? Could New York homes be in foreclosure too?

The city’s economy depends on Wall Street. With Lehman Brother’s sudden closure, and Merrill Lynch and Bear Sterns’ crash, city life would be tougher.

The economic slump downed New York home prices down by 40 percent in the fourth quarter of 2008. Average home prices fell 3.6 percent. Even metropolis is scared of repossession.

An 8.6 percent price decline was observed through the S&P Case-Schiller Home Price Index. A 21 percent decline is still expected for the next 4 years. Goldman Sach’s even predicts a 44 percent fall on home prices.

65,000 jobs lost in the last three months of 2008, and the unemployment rate leaping to 7.4 percent. More are rethinking the thought of purchasing a new home. Anyone can lose their job, so anyone can also lose their homes to repossession.

New York’s struggle does not end there for even the city budget will be cut by $1 billion. Mayor Michael Bloomberg decided to cut down the city funds to strengthen its tax bases for it expects a $4.1 billion drop for 2009.

The Miller Samuel firm said that the financial bust may be felt harder in New York than in any other city because it is more exposed to the fall-off.

With all these, New York tries to be optimistic. They are glad they did not have the overbuilding that the Sun Belt has.

There is this urban shift that keeps the housing hope high. Comptroller William Thompson studies show that high income families would still rather live in cities like New York. The rampant repossession seems not to scare them.

Optimistic? Yes. But with billions lost, businesses, real estate and other industries will definitely suffer. Foreclosure is already looming. Hopefully New York can pull through and try to regain the top status.

The 30-year fixed rate loans have not been this low since Freddie Mac initiated the Primary Mortgage Market Survey almost 28 years ago.

The 15-year fixed-rate mortgage also dropped, by 0.3 percent, from 4.65 percent to 4.62 percent. While ARMs or annually re-adjustable mortgages slumped 0.6 percent from 4.95 to 4.89 percent.

But the biggest drop occurred in the 5/1 ARM, or the 5-year fixed rate mortgages then becomes adjustable annually, are now at 5.25 percent. It has the biggest drop of 0.24 from the previous week’s 5.49 percent.

Mortgage rates has been plummeting since the Federal Reserve announced its plans of buying $500 billion worth of mortgage securities supported by Freddie Mac, Fannie Mae and Ginny Mae to give out some foreclosure aid. This wishes to involve buying $100 billion worth of debt by the repossession-risked to Freddie Mac, Fannie Mae and the Federal Home Loan Banks.

For a great side effect, lower mortgage rates must stimulate the housing industry. But unfortunately there is just a minimal impact on home purchase, showing poor signs of recovery. If more homes are taken out from the market, it would have some benefits in mending the effects of foreclosure.

Lower mortgages interest rates made an opportunity to refinance home loans. This would be the perfect time to avail a mortgage at these good rates. More reasonable mortgages are easier to manage, thereby decreasing the homebuyer’s risk to foreclosure.

With the continuing downfall of the economy and the rampant unemployment, the tight-fisted homeowners may feel some relief, especially those with impending foreclosure or are afraid to experience repossession due to unmanageable loans.

Fannie Mae and Freddie Mac temporarily stopped foreclosure eviction late last year in order to give way to the streamlining plan.

Through the loan modification program, foreclosure troubled borrowers who have missed a minimum of three payments can have their loan modified. Servicers would likewise benefit as they get $800 payment for every modification.

However, it is not known to many that a loan modification comes with a waiver of rights to sue. Under the waiver, a borrower is stripped of their right to initiate any legal claim against the lender if any problem related to mortgage and loan modification arises.

This requirement triggered negative reaction among concerned parties. They find the policy outrageous and say that it can be a source of abuse.

According to representatives of the two companies, the waiver is merely a customary legal language. It aims to look after the legal rights of Fannie Mae and Freddie Mac during the entire loan modification process. It permits the loan modifications to take effect without removing the companies of their rights to charge interest fees or other payments. Likewise, it protects them from possible litigation.

Housing advocates say otherwise. According to Julia Gordon, senior policy counsel for the Center for Responsible Lending, the waiver encompasses all requests and defenses regarding the mortgage and that would be unfair on the part of the borrower. She further said that if the two companies only have in mind the litigation with regards to the loan modification, they would have to revise the way the waiver was stated.

If the foreclosure crisis is really intended to be addressed, not only do the rights of mortgage companies be looked after. More importantly, the interest of the borrowers, the real stakeholders in the foreclosure situation, must be protected.

But the Federal Housing Administration is giving out a good offer with only 3.5 percent-down loans. With this opportunity, tons of potential homebuyers applied to qualify for FHA’s offer. Of these, 630,000 were aided to purchase a home in 2008.

So, how to avail an FHA-insured mortgage?

1. Contact an FHA-approved lender.
2. Know if you qualify. Income is a qualification to be eligible for an FHA loan. Mortgage payments must only be 31 percent of your over-all income.
3. Know that credit scores matter but are not the basis of interest rates. But those who have less than 500 points must give a 10 percent down payment not the usual 3.5 percent minimum.
4. Add 1.5 – 2.55 percent of the mortgage value to insurance premiums. This will cover potential defaults that end up in foreclosure.

Know that there are loan limits. The average limit is at $272,500. But in California and New York, the border can reach $625,000 for a single family home and $271,050 in Hawaii.

FHA has a great track record with preventing their borrowers from losing their homes to repossession.

Though they have a high delinquency rate at 12 percent, FHA has a well strategized mitigation process that foreclosure cases are rare. FHA cooperates with their delinquent clients payment postponing and practices onetime payment from insurance funds to prevent foreclosure.

That is why less than 1 percent of FHA loans end up in foreclosure, while subprime loans have 4.5 percent of their loans into repossession.

FHA assistance is ideal for first-time home buyers. These homebuyers will purchase from existing owners who will then buy newer and more expensive houses. This would hopefully re-ignite the housing industry that was put-off by foreclosure.

It is great that during this crisis, there are still some lenders who offer affordable rates. This hopefully shakes up the drowsy housing industry and put foreclosure in deep sleep.

So what are the good reasons to refinance?

• More manageable interest rates
• Shorter term to reach equity
• Reduced monthly payments
• Switching to fixed-rate mortgage

Know how much a new loan cost? Remember: unreasonable mortgage rates usually lead to foreclosure. Refinancing is usually 2 to 3 percent of the total mortgage. Then if it seems sustainable, know how long you will have to reach the break-even point. Divide monthly fees by your monthly funds.

Monthly funds or savings is base from the estimate of your qualifying rate. Ask your broker or a mortgage calculator to know your principal and interest payment for the refinancing. An itemization of monthly principal and interest will be seen on your payment coupon.

The housing industry may rise up in the future, it may take time, but hopefully it will. So, consider is if you want to spend your retirement in your current home. If you are planning to move in 2 to 3 years, acquiring a new loan is ill-advised.

Now, know if you have to pay for prepayment penalty. You may need to add the penalty to your closing cost to estimate your break-even point. But it would be better to settle your prepayment penalty period before considering refinancing.

Foreclosure brought home prices down, making homeowners owe more than their houses’ are worth. If you are in the same scenario, it’s a no to refinancing. No lender would give you a loan at a favorable term.

But never consider leaving your home for foreclosure. If you are already in the early stages of repossession, ask for legal help.

Refinancing can save you from foreclosure if you make the right choices.

These hoaxers volunteer to help distressed homeowners in saving their property from foreclosure. They collect substantial amount of cash and say that they would bargain a lower interest rate with the involved mortgage company. However, they do not deliver any service at all.

Illegitimate companies are hard to distinguish from the real ones. Usually, these companies collect an amount of around $3000 before delivering service and claim that the money will be used in negotiating with the mortgage company.

Homeowners dole out an amount they can hardly afford, they do not get any form of service or help, and even worse, because considerable time has already been put to waste, they lose the opportunity to discuss with their bank or to apply for bankruptcy protection and end up in foreclosure.

Although there are rightful companies that indeed help homeowners facing foreclosure, it becomes difficult to distinguish those who can really provide help from those who are only making money because service companies are not regulated.

Scheming companies can be found both in the local and national housing market. They even have Internet sites that mislead viewers into thinking that they are affiliated with the government.

Charges against these companies have been rising in number. Several homeowners all over the country have already fallen victim to the scheme.

Not many people know that in some states, foreclosure service companies are not allowed to collect any amount unless the service has been completely delivered.

In hard times like the present, one cannot afford to fall victim to frauds. Distressed homeowners in particular must be discerning in choosing which parties to trust and to avoid in order to save themselves from being part of the foreclosure turmoil.

The process involved in buying a government tax foreclosure property differs from the process you would have to go through in buying a bank owned or lender owned foreclosure property. Therefore getting some understanding about the process before hand is vital.

Since the sale of these properties require the buyers to submit ‘sealed bids’ through HUD certified real estate agents, it becomes necessary for you to contact one. Lists of these agents can be found over the internet, or you can alternatively call a few real estate agents and ask them if they have HUD certification.

Apart from putting your bid through, you can also take your agent’s help in looking for tax foreclosure properties. The internet is also a good source for finding these properties. Once you have a list of property you would be interested in, it is essential that you take the time to inspect them.

While most of these properties do have reports which describe the condition of the property, it is always suggested that you undertake an inspection on your own. If unsure about the process, do not shy away from employing the services of a professional.

With there being a number of options in the real estate market, it would be best if you maintained some restrain and go through all possible options prior to finalizing any deal.

The prices of homes across the country have also been adversely affected owing to the foreclosure problem, with there being an average decline in the indexes of house prices by 4%. While different parts of different States are affected to different degrees, the negative effects, however minimal, are visible throughout the country’s entire real estate market.

For instance, while the decline in Indiana’s housing price index stands at 0.02%, North Carolina has witnessed an increase in 9% when it comes to foreclosures in 2008. Florida, on the other hand, has reported an increase of 82% in its 2008 figures for filing of foreclosures in November 2008 as compared with November 2007.

While the figures read differently for different States, there is no escaping the fact that the ongoing foreclosure / housing fiasco is a problem that has affected all the States. While measures taken by the Bush administration might not seem enough, there has been help. More hopes are now pinned on the country’s new president, Barack Obama. Since he has reiterated time and again that this issue needs to be addressed immediately, many people are hopeful of some positive change in the nation’s real estate sector.

With some form of relief in sight, many probable homebuyers across the country are looking at options within the real estate market, and foreclosure affected properties are being looked upon as viable opportunities by many.

Isabel and Juan Muneton, a couple who lived in a foreclosure-threatened apartment in Lawrence, was helped by a neighbourhood lawyer to stay in their home.

Unfortunately, not everyone has access to these lawyers. Unlike in criminal cases where everyone has a right to a lawyer, in civil cases like foreclosures, only those who can afford a lawyer have a right to one.

Most families facing foreclosure problems are middle to low income earners who really struggle in paying their dues, let alone paying a lawyer for legal help. Though the state provides legal aid to these families, the help available is outnumbered by the caseload. Majority of low-income families do not get the help they need.

Evicting families from their neighborhood has its downside not only to the evicted families themselves but to the community as well. These families are potentially active members of the society but because of eviction, they are not able to serve their purpose in the community.

In Pine Tree state, foreclosure cases have doubled yearly since 2006. According to Nan Heald of the Pine Tree Legal Assistance, despite the increase in the number of cases, budget has remained the same. Her staff has helped but a meager ten percent of the total cases.

In terms of national statistics, half of those who visit legal offices to seek for help walk home with no help at all, not to mention those who do not even get to the legal offices.

Banks and investors have lawyers, which is why foreclosure battles are tough for homeowners who cannot afford the same legal help. Free legal aid attorneys can definitely help troubled families keep their properties, if only there are enough of them.