Yesterday the Senate voted 51 to 45 against a law that would have given bankruptcy judges the ability to rewrite mortgages the same way judges can modify other types of debt, such as personal loans, medical bills and credit card debt.

Currently, bankruptcy judges do not have the ability to modify mortgage terms by reducing the principal, lowering interest rates or extending the term. The law, which had passed in the House of Representatives, would have given judges much greater latitude when dealing with defaults on home loans.

Consumer advocacy groups felt that the mere threat of bankruptcy would have given distressed homeowners greater leverage in negotiations with their lenders.

The defeat of the bill is a serious embarrassment for Obama as well as the democrats in the House who had pushed for the law. Many democrats on the hill were livid to see the same financial institutions that had received bailout funds lobbying to defeat the bill in congress.

WHAT THIS MEANS FOR YOU

Nothing, since you didn’t lose something you already had. However, you lost a great opportunity for picking up a significant weapon to use against your lender.

The defeat of the bill by deeply entrenched financial institutions signals that lenders will not simply roll over and be told what to do despite the fact that these same institutions nearly drove the world into a depression and accepted billions in taxpayer funds.

Emboldened by their success, the financial industry will make future reforms to the mortgage industry more difficult to enact.

Home Loan rates decreased this last week from last week:

*Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.

Home Loan rates decreased this last week from last week:

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.

The list of top states with the highest rate of foreclosure.

1. Nevada: 1in 70 homes, with a total of 15,753

2. Arizona: 1 in 147 homes, with a total of 18,119

3. California: 1 in 165 homes, with a total of 80,775

4. Florida: 1 in 188 homes, with a total of 46,391

5. Idaho: 1 in 358 homes, with a total of 1,764

6. Michigan: 1 in 360 homes, with a total of 12,564

7. Illinois: 1 in 369 homes, with a total of 14,218

8. Georgia: 1 in 389 homes, with a total of 10,185

9. Oregon: 1 in 446 homes, with a total of 3,608

10. Ohio: 1 in 451 homes, with a total of 11,231

On another note, 39% of the foreclosures that are occuring are in 35 countries. Evidently, a small handful of countries that have made horrible decisions have affected the entire global banking system.

Sources:

The Real Estate Bloggers

US News and World Report

The California Association of Realtors reported yesterday that home values fell 41% from February of 2007 to February of 2008. During this time period, the median price of a single-family detached home fell from $418,260 to $247,590.

The 41% collapse is more than twice the national average of 16%. California was particularly hard hit due to the number of foreclosure sales, which push down property values.

What This Means For You

If you didn’t know it already, your home value dropped last year. The national decline was the second highest decline on record. If you own in California, then you were harder hit.

The good news is that home sales are up. First time home buyers and investors have come back into the market to snap up depressed properties. As the glut of foreclosed homes on the market is reduced, prices will eventually stabilize.

Hopefully, we are near the bottom.

Home Loan Rates decreased this last week from last week:

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.

Freddie Mack, which was seized last year by federal regulators, is going back to Uncle Sam for a $30 billion infusion after announcing a staggering loss of $50 billion. This is on top of the $15 billion requested by Fannie Mae a few weeks ago after announcing a loss of more than $60 billion last year.

The two companies combined own or guarantee more than 30 million home loans with an aggregate value north of $5.5 trillion – more than half of all home loans.

LESS THAN ZERO

Freddie was forced to make the request because the company is now worth less than zero.

WHAT DOES THIS MEAN FOR YOU

There’s good news, moderately good news, and some bad news.

First, the good news. My kids’ hamster, which they name “Gerbil,” is now worth more than Freddie Mack because he (or she, we’re not sure) doesn’t own anything, and doesn’t owe anything. As result, Gerbil is worth zero, which is more than we can say for Freddie. Chances are, you too are worth more than Freddie.

Now, the moderately good news. Since Freddie and Fannie are both government owned, the cash infusions will keep them afloat while they attempt to repair the mortgage crisis, and they will be more aggressive about helping homeowners with short sales, forbearance agreements, and loan modifications.

Now, the bad news. First, despite the fact that you are probably more financially stable than Freddie and Fannie combined, you won’t be getting a $30 billion bailout. On top of that, some of your hard earned tax dollars will be going to bailout the ailing giants.

Home Loan Rates increased this last week from last week:

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.