One of the largest impacts on the economic recovery of states including Ohio are the new stricter rules governing government mortgage agencies like Fannie Mae and Freddie Mac. Many people who would have fit the borrowing criteria 5 years ago to buy a home in Ohio are no longer considered qualified by the much stricter new rules.
This affects both the buyer and the seller in both ends of a deal in selling homes, whether they are Ohio foreclosure homes, or just regular homes for sale. Sellers who are selling homes at a fraction of what they paid for them, are not even able to get a buyer approved to pay for that amount. Buyers who normally would have qualified for a loan through a mortgage lender, are not being approved even if they have good credit. Their circumstances are just not good enough.
This causes a huge delay in the Ohio economic recovery that we all need to get back to better paying jobs and also to get back on the road to a more prosperous future. Many of the government policies, meant to help, are just acting in conflict with each other.
Believe it or not, there are a record number of people who want to buy homes in Ohio. However, more than usual are being turned down for mortgage loans. This is on top of another delay caused by federal, state, and local investigations into “fraudclosure” or mismanaged or criminal neglect and oversight of foreclosure practices in several banks and banking contractors. And no matter who is to blame, the Obama sponsored loan modification program has fallen short of goals.
“Giving out unsupportable mortgages was a disaster, and now the danger is overreacting and making the standards excessively high,” according to Joseph Stiglitz, a Nobel prize winninng economist and professor at Columbia University in New York.
Banks usually follow the standards that are set by Fannie Mae and Freddie Mac because these are loans that the agencies will then purchase and package into bonds. These companies, along with the Federal Housing Authority back about 90% of loan originations.
Government programs like the Home Affordable Modification Program (HAMP) have mostly helped keep existing home owners out of foreclosure, here in Ohio and elsewhere in the U.S., but they have not had the success rate hoped for by the Obama Administration when the program was begun.
Right now the entire fleet of 50 state attorneys are investigating the banking industry foreclosure practices which is holding up the current batch of foreclosures in the works which may work in some homeowners’ favor, allowing them more time to catch up with their bills.
Recently, indictments were brought in Cuyahoga County against 9 employees of Argent Mortgage, Inc.