Housing Market Appears More Positive Five Years After Crisis

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The Federal Savings Bank comments on a recent National Housing Survey from Fannie Mae.

VA and FHA home loans at The Federal Savings Bank

The Federal Savings Bank

In the last five years, homeowners have received $13 billion in savings on their mortgage principals through the Principal Reduction Alternative.

In response to the housing crisis, President Barack Obama along with the Treasury Department and the Department of Housing and Urban Development introduced Making Home Affordable Program in 2009. The Federal Savings Bank reminds readers that the program was intended to provide relief for families and individuals at risk of foreclosure. Five years after the program launched, the Treasury Department has revealed that nearly 2 million struggling homeowners received assistance.

There have been 1.3 million permanent mortgage modifications through the MHA's Home Affordable Modification Program. According to the Treasury Department, homeowners who participate in HAMP save an average of $544 on their monthly mortgage payments. In total, homeowners can save about one-third on their mortgage expenses, greatly reducing the risk they will fall into foreclosure.

Over the years, MHA has introduced new programs in response to how the housing crisis and recession developed. For example, the Home Affordable Unemployment Program provided relief to homeowners who were temporarily unemployed as a result of the recession, until they found another job. Homeowners faced with foreclosure could also participate in the Home Affordable Foreclosure Alternatives Program, which allows access to short sales or deeds in lieu of foreclosure. In the last five years, homeowners have received $13 billion in savings on their mortgage principals through the Principal Reduction Alternative.

The Federal Savings Bank thinks that while the MHA has greatly improved housing conditions for millions of Americans by reducing their risk of falling into foreclosure, there are still many homeowners underwater and facing mortgage default. Fortunately, mortgage standards have changed over the last few years to encourage lenders, like The Federal Savings Bank, to ensure that borrowers are able to afford their home loans.

The changing home buyer perspective

The recession has also led to growth in first-time home buyer programs and a new perspective that the housing market will continue to recover. According to Fannie Mae's February 2014 National Housing Survey, the American outlook on the housing market is still good, despite fluctuation over the past few months.

In February, 50 percent of respondents said they expected home prices to rise in the next year. The positive survey response may be due in part to rising home prices throughout the beginning of the year, even with a slump in national sales. Despite these results, fewer Americans said the economy was on the right track and thought it would be easy to get a mortgage in 2014. Fannie Mae attributes some of the discrepancy to harsh weather.

"Weather may have played a role, as suggested by a 6 percentage point jump over the past two months in the share of consumers who say their household expenses are significantly higher than a year ago," said Duncan. "This response would be consistent with higher home heating costs. Despite the volatile month-to-month changes, we believe that the housing recovery is continuing, but is not yet robust."

The Federal Savings Bank also thinks weather played a role during the winter months, however, the lender believes seasonal home buyers will return to the market this soon this spring. The major problem the lender sees with the market has to do with real estate inventories, which is why The Federal Savings Bank has take a company initiative to help first-time homebuyers.

Contact The Federal Savings Bank, a veteran owned bank, to find out more about first-time home buyer programs.

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Giorgio Urbano Ferrero
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