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WASHINGTON - A mortgage rescue to help hundreds of thousands of struggling homeowners avoid foreclosure and get more affordable, safer loans passed the Senate overwhelmingly Friday, but it faces a bumpy road amid continuing turmoil in the housing market.
The 63-5 vote reflected a keen interest by Democrats and Republicans to send election-year help to distressed homeowners with economic issues topping voters' concerns.
The plan lets homeowners buckling under mortgage payments they can't afford keep their homes and get more affordable mortgages backed by the Federal Housing Administration. Banks that agreed to take substantial losses on those distressed loans could avoid costly foreclosures and be assured of recovering at least some money.
The new program would let the FHA insure as much as $300 billion in new mortgages, helping an estimated 400,000 homeowners.
It still faces challenges, however, with the House planning to rewrite key details and the White House threatening a veto without major changes.
"It's not the final stop, but it is a major stop in getting this bill done," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. "For those who said this Congress cannot come together in a bipartisan fashion to do something responsible about housing, this bill does that."
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and an architect of the bill, says the few but significant revisions House leaders are seeking could be made in as little as one week.
Dodd said he was expecting minor "tweaks" that could be dealt with quickly.
But key players are bracing for intense negotiations to resolve the differences. They hope to smooth over disputes with the White House at the same time, with an eye toward producing a bill President Bush could sign later this month.
The White House Friday renewed its warning that Bush would veto the Senate-passed bill without revisions, citing $3.9 billion in the measure for buying and rehabilitating foreclosed properties it said would help lenders, not homeowners.
The measure includes a long-sought modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time home buyers.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while House leaders - including Speaker Nancy Pelosi, D-Calif. - want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in the new regulations for Fannie Mae and Freddie Mac over six months.
"We'd have a hard time agreeing to that," Dodd told reporters Friday. He called a Capitol Hill news conference to dispel fears about the financial health of Fannie Mae and Freddie Mac as their stocks plummeted on reports that the government was considering taking over one or both of them.
Another key point of dispute is the funding in the Senate measure for buying and fixing foreclosed properties. The House's band of conservative "Blue Dog" Democrats oppose the money, arguing that it would swell the deficit unless paired with cuts or tax increases to cover the cost.
But many Democrats, particularly members of the Congressional Black Caucus, are fighting to keep the funding, which they say will help prevent the communities hardest hit by the housing crisis from sliding into blight.
"There are people who tell me to ignore" that threat, Frank said in a statement Friday. "But there is too much that is important in this bill, and it has already been too long delayed by procedural problems in the Senate, for us to risk the further delay involved in a veto."
He said he was working to find a way to shift the funds to a must-pass spending bill that would be approved before lawmakers scatter for the year in September.
Dana Perino, Bush's spokeswoman, said the money should be stripped out of the measure "so that they can get a housing bill to the president that he could sign right away."
Sen. Barack Obama, D-Ill., the presumptive presidential nominee, said Bush should drop his opposition to the housing plan and other Democratic efforts to ease economic pain.
"I call on the administration to support this bill along with a second emergency stimulus package to jumpstart the economy and build on this important start to advance more rigorous measures to protect homeowners from foreclosure," he said. Obama was on the campaign trail Friday and did not vote on the measure, which had been expected to pass by a wide margin. He was one of 32 senators not voting.
With the administration scrambling to tamp down on investor fears about Fannie Mae and Freddie Mac, Perino called the new regulations in the measure for the two mortgage giants its "most important feature."
Lawmakers and the Bush administration agree on the central concept behind the housing package: allowing the government to backstop new mortgages for struggling homeowners.
To make it more palatable to Republicans, the Senate measure would take responsibility for any losses away from taxpayers and instead cover them by diverting a newly created affordable housing fund drawn from Fannie Mae and Freddie Mac profits.
The Ever-Changing Mortgage Loan Requirements
NEW YORK (CNNMoney.com) -- Are you ready to buy a house in this crazy market? Better bring a boatload of money to the closing.
In a brutal real estate market where all the players want to hedge against the tremendous risks, down payment requirements and up-front fees have soared, shutting many potential home buyers out of the market.
"I have as many people calling me for financing as ever," said George Hanzimanolis, a Pennsylvania mortgage broker, "but I'm putting less than half of them into loans."
That's happening all over the country, and may slow the housing market's recovery. Indeed, in a Realtor.com survey released today, potential home buyers said high down payments were the second biggest obstacle, after high home prices, to buying a home.
These days, home buyers almost always have to make a substantial down payment, at least 5%, according to Rich Wordman, president of the Florida Association of Mortgage Brokers. The days of no-down loans are over.
In deeply declining markets, lenders are reluctant to issue loans unless borrowers put at least 10% down, he said.
JP Morgan Chase (JPM, Fortune 500), for instance, now asks for a minimum of 10% down in most markets, according to a spokesman, and for 20% in hard-hit areas. In Reno, Nevada, which has been devastated by the housing crisis, the bank requires 25%.
Even bigger jumbos
For expensive homes, the down payments are disproportionately more. Lenders issuing jumbo loans, which are too pricey to be sold to Fannie Mae (FNM, Fortune 500) or Freddie Mac (FRE, Fortune 500) in the secondary market, are asking for at least 20% down, according to Ed Craine, a San Francisco mortgage broker. In the most expensive markets, where jumbo loans are over $729,000, that means a minimum down payment of $148,500.
Higher interest rates on jumbo loans are also making them more expensive than they normally would be - with interest rates a full point to a point and a half higher than non-jumbo loans, said Mike Tacconi, a mortgage advisor with lender CMG Mortgage Services based in San Ramone, Calif.
And buyers purchasing homes for investment purposes are getting clobbered. Lenders are telling them to come up with at least 25% of the purchase price, according to Tacconi - and sometimes as much as 35%, depending on the kind of loan.
"Rents are high where I am," said Pennsylvania mortgage broker Hanzimanolis, "so people are having trouble saving enough for down payments."
Those high down payments are are being driven in part by the privatemortgage insurance companies, according to Jay Brinkman, chief economist for the Mortgage Bankers Association, which have themselves hiked their down payment requirements. These firms insure loans when borrowers put less than 20% down, making lenders whole when homeowners default.
In the past, these companies, such as MGIC Investment Corp (MTG). and PMI Group (PMI), often guaranteed mortgages when borrowers put no money down. Today they require 5%, 10% in steeply declining markets, according to Jeff Lubar, spokesman for the trade association Mortgage Insurance Companies of America.
In addition, private mortgage insurers are also charging higher insurance rates. Historically, PMI cost about 0.5% of a home's purchase price. Now, a borrower putting 5% down can pay about 0.75% for the first year.
Higher rates
And although interest rates are relatively low, industry experts say that they're higher than they should be, thanks to concerns about the solvency of Freddie and Fannie, which buy about half of all outstanding mortgages in the U.S.
The average 30-year, fixed-rate loan carried a 6.37% interest rate last week, according to Freddie Mac, up nearly a point from the year's low of 5.48% set last January and up from under 6% in late May. At the same time, yields on 10-year treasuries, which mortgage rates usually track, have trended down.
From June 12 to July 10, 10-year treasurys fell from 4.20% to 3.81%, while mortgage rates actually increased, inching up from 6.32% to 6.37%. Borrowers are probably paying at least a half point more than they ordinarily would, according to Keith Gumbinger of HSH Associates, a publisher of loan information.
That's because the questions surrounding the future of Fannie and Freddie have made the investors who buy their loans - hedge funds, pension funds, and banks - wary. They're demanding higher interest rates to take on the added risk they perceive.
Freddie and Fannie have also imposing higher up-front fees for riskier borrowers, based on credit scores.
As of June 1, buyers with scores of less than 620 with less than a 30% downpayment must pay a fee of 2.75% of mortgage principal, up from 2%. Between a 620 and 640 credit score, borrowers pay 2.5% (up from 1.75%); 640 to 660, 1.75% (1.25%); 660 to 680, 1.25% (0.75%); and 680 to 720, 0.5% (0).
"The fees are costing consumers a considerable amount of money," said Mark Savitt, a mortgage broker there and current president of the National Association of Mortgage Brokers.
All these added expenses are slowing an already moribund real estate market. That means it's going to take even longer to get rid of the tremendous inventory of unsold homes, according to the MBA's Brinkman, especially in areas that were overbuilt during the boom.
Cities hard hit by the housing bust, like North Las Vegas, Stockton, Calif. and Tucson, Ariz, may have to suffer through many more months of stagnant prices and increased foreclosures before they return to better times.
And these higher costs are going to stick around long after housing recovers, according to Brinkman. From now on, they'll just be the price of doing business.
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I’ve already told you my opinion on day trading – it’s just not for me. If you prefer that style of trading, then more power to you (I can even recommend some great day trading Forex courses). But the vast majority of my readers have told me time and time again that day trading is not for them, either. And that’s great news…
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"You're About To Discover The 5 'Recession Proof' Trading 'Attack Plans' That You Can Use To Enhance ANY Trading Method At ANY Time In ANY Market..."
Hopefully you had a chance to read my brand new "Market Mastery Profit Plans" report that I released on Tuesday. Close to 15,000 traders have already gotten their hands on it...
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Good Trading
'Realistic' approach is needed in weak market
by Ellen James Martin-Universal Press Syndicate
Those who sell real estate recall those heady days just a few years ago, when competition over the best homes on the market - known as "showcase properties" - was robust. Multiple bids were common, and eager buyers submitted contract offers stripped of all conditions, such as the right to a home inspection.
Indeed, some buyers were so anxious to beat rival bidders in the race to own an attractive home that they would snap it up without even visiting first, recalls Tom Early, a real-estate broker and former president of the National Association of Exclusive Buyer Agents (www.naeba.org).
Nowadays, the tables are turned. In many neighborhoods, buyers have lots of leverage, and motivated sellers, including the corporate owners of homes taken back through foreclosure, are compelled to bargain with prospects. The sellers of showcase homes, known as "cream puffs," are no exception. "At a time when buyers are incredibly demanding, you must be absolutely realistic about the market," Early says.
Here are pointers for the sellers of homes with exceptional allure:
• Select a listing agent with a good eye.
"If your house is spectacular, you want visuals to show just how good it looks," says Dorcas Helfant, a former president of the National Association of Realtors (www.realtor.org).
Visuals include photos for print advertising and video for online listings, including the "virtual tours" that have become a popular home-marketing tool in cyberspace.
As Helfant notes, more agents are taking classes in digital photography, and more are producing the sort of professional-quality visuals that home sellers need to compete, especially in neighborhoods with many homes for sale.
• Don't expect too much of a pricing premium.
Is the property you're selling decked out with several features that excite buyer interest, such as fine wood cabinets, granite countertops, floor-to-ceiling windows and a fireplace in the master suite? Does it also have 10-foot ceilings throughout? If so, you may be tempted to ask a lot more than your neighbors are asking for similar-size properties that lack such fancy features.
But Helfant cautions against attaching too high a premium when pricing your showcase home, no matter how fancy or well-kept it is.
"Given today's competitive markets, where available properties abound, I wouldn't go more than 3 to 5 percent over other like homes in your community, even the ones that don't show nearly as well," she says.
• Consider a neighborhood open house for the public.
Real-estate experts often downplay the value of public open houses as a means of attracting the interest of serious purchasers. They say most open-house visitors are curious neighbors or "wishful buyers" who lack the means to go through with a purchase. On the other hand, well-qualified buyers are typically guided through homes by their agents.
But Helfant says there's a way to increase the impact of the public open house conducted for your showcase property: Encourage other sellers in the neighborhood to hold open houses on the same day, thereby increasing your potential draw.
"Ask your listing agent to contact the agents representing all the other sellers. The more the merrier when it comes to open houses. With more homes open, the greater the chance that serious prospects will come by, with or without their agents," Helfant says.
A neighborhood open house can be especially beneficial for the sellers of showcase homes because buyers can quickly compare all the places they see.
• Don't second-guess yourself on your plans to sell.
Many owners of showcase homes are ambivalent about letting go of their properties in a market where bargain shoppers have so much clout. Even after they've put their place up for sale, they wonder if they should pull the place off the market until they can get a better price.
Before retreating, Early urges you to take into account the personal and financial implications of postponing your sale.
"Maybe your neighborhood market could stage a huge rebound within one to two years. But you should also consider all the ways you might lose out by waiting," Early says.
"Postponing your hopes and dreams for a better housing situation means you could be missing that once-in-a-lifetime chance to buy your fantasy property at a major discount," he says.
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We conduct regular wiretapping on our networks, to monitor criminal acts.
We are aware of your illegal activities on the internet wich were originating from
You can check the report of your activities in the past 6 month that we have attached. We strongly advise you to stop your activities regarding the illegal downloading of copyrighted material of your internet access will be suspended.
Sincerely
ICS Monitoring Team
The emails, which say they come from the “ICS Monitoring Team”, claim that a report of the user’s activities in the past six months is attached in a file called user-EA49943X-activities.zip.
However, if you open the contents of the user-EA49943X-activities.zip file you risk being infected by a malicious Trojan horse designed to communicate with remote hackers. Criminals can then break into your computer and use it for their own money-making purposes.
Sophos is identifying the malicious files seen being used in the campaign so far as Troj/Meredrop-A and Troj/Agent-HQK. Users of other anti-virus products would be wise to check their vendor to see if an update is available.
With so many people suffering from internet addiction (also known as ‘discomgoogolation’), it’s not hard to imagine how many people would react to receiving an email like this.
Not only would many people be prone to clicking before thinking at the accusation that they have been engaged in illegal activities, but also a disturbing proportion would be alarmed about the prospect of not being able to surf the internet.
Remember, THIS IS SPAM. Never open an attachment unless you know the sender
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96
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'Realistic' approach is needed in weak market
by Ellen James Martin-Universal Press Syndicate
Those who sell real estate recall those heady days just a few years ago, when competition over the best homes on the market - known as "showcase properties" - was robust. Multiple bids were common, and eager buyers submitted contract offers stripped of all conditions, such as the right to a home inspection.
Indeed, some buyers were so anxious to beat rival bidders in the race to own an attractive home that they would snap it up without even visiting first, recalls Tom Early, a real-estate broker and former president of the National Association of Exclusive Buyer Agents (www.naeba.org).
Nowadays, the tables are turned. In many neighborhoods, buyers have lots of leverage, and motivated sellers, including the corporate owners of homes taken back through foreclosure, are compelled to bargain with prospects. The sellers of showcase homes, known as "cream puffs," are no exception. "At a time when buyers are incredibly demanding, you must be absolutely realistic about the market," Early says.
Here are pointers for the sellers of homes with exceptional allure:
• Select a listing agent with a good eye.
"If your house is spectacular, you want visuals to show just how good it looks," says Dorcas Helfant, a former president of the National Association of Realtors (www.realtor.org).
Visuals include photos for print advertising and video for online listings, including the "virtual tours" that have become a popular home-marketing tool in cyberspace.
As Helfant notes, more agents are taking classes in digital photography, and more are producing the sort of professional-quality visuals that home sellers need to compete, especially in neighborhoods with many homes for sale.
• Don't expect too much of a pricing premium.
Is the property you're selling decked out with several features that excite buyer interest, such as fine wood cabinets, granite countertops, floor-to-ceiling windows and a fireplace in the master suite? Does it also have 10-foot ceilings throughout? If so, you may be tempted to ask a lot more than your neighbors are asking for similar-size properties that lack such fancy features.
But Helfant cautions against attaching too high a premium when pricing your showcase home, no matter how fancy or well-kept it is.
"Given today's competitive markets, where available properties abound, I wouldn't go more than 3 to 5 percent over other like homes in your community, even the ones that don't show nearly as well," she says.
• Consider a neighborhood open house for the public.
Real-estate experts often downplay the value of public open houses as a means of attracting the interest of serious purchasers. They say most open-house visitors are curious neighbors or "wishful buyers" who lack the means to go through with a purchase. On the other hand, well-qualified buyers are typically guided through homes by their agents.
But Helfant says there's a way to increase the impact of the public open house conducted for your showcase property: Encourage other sellers in the neighborhood to hold open houses on the same day, thereby increasing your potential draw.
"Ask your listing agent to contact the agents representing all the other sellers. The more the merrier when it comes to open houses. With more homes open, the greater the chance that serious prospects will come by, with or without their agents," Helfant says.
A neighborhood open house can be especially beneficial for the sellers of showcase homes because buyers can quickly compare all the places they see.
• Don't second-guess yourself on your plans to sell.
Many owners of showcase homes are ambivalent about letting go of their properties in a market where bargain shoppers have so much clout. Even after they've put their place up for sale, they wonder if they should pull the place off the market until they can get a better price.
Before retreating, Early urges you to take into account the personal and financial implications of postponing your sale.
"Maybe your neighborhood market could stage a huge rebound within one to two years. But you should also consider all the ways you might lose out by waiting," Early says.
"Postponing your hopes and dreams for a better housing situation means you could be missing that once-in-a-lifetime chance to buy your fantasy property at a major discount," he says.