The Real Estate Bloggers

Obama To Forgive Mortgage Debt For Those Underwater

Posted: 05 Aug 2010 11:20 AM PDT

A rumor is circulating around Washington that the Obama administration is planning on ordering Fannie Mae and Freddie Mac to forgive all of the debt of underwater mortgages.

If this is the case appraisers are going to be working overtime trying to determine the depth of debt people are in and how the estimated 800 billion dollars will be dispersed to the 15 million homeowners who are upside down on their mortgages.

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

Read the whole article at Reuters.

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Obama To Forgive Mortgage Debt For Those Underwater

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Putle Homes Showed Profit in Second Quarter

Posted: 05 Aug 2010 06:03 AM PDT

Pulte The tax incentive has shown a short term victory for Pulte Homes. They were profitable in the second quarter of 2010. That is the first profitable quarter in the past 3 years.

PulteGroup said net income totaled $76.3 million, or 20 cents a share. That is in contrast to a loss of $189.5 million, or 74 cents a share, a year earlier. Revenue rose 92 percent, to $1.31 billion, from $678.6 million. Revenue benefited from the addition of Centex, which helped double closing volumes. via The NY Times

That was the good news. The bad news is that the tax credit pulled demand forward significantly. The combined Centex – Pulte Homes new home orders is way down going forward. New home orders is the industry indicator for future demand and that looks pretty scary.

The quarterly results also include about $45 million in land and mortgage charges, plus an $82 million benefit from income taxes. Pulte’s new home orders rose 25 percent from the previous year, to 4,218. Factor in Centex’s totals, however, and new orders for the combined company fell 32 percent.

It will be interesting to see if the surge in home sales from the tax credit is going to be enough to make the company profitable for the whole year, or will the lack of demand going forward still lead the company into the red?

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Putle Homes Showed Profit in Second Quarter