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Lender accord gives stressed-out homeowners a breather real estate matters

Retail sales were up more than expected in January. Is it a sign that the great residential real estate slowdown is almost over?

Hardly. The housing industry continues to move along at a glacial pace, with a rising number of homes for sale and home loans in default.

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The news is somewhat grim, with most of the private mortgage insurers announcing their first-ever (and massive) losses, as they are required under their PMI policies to pay out millions of dollars.

Is help on the way? Let's consider what some of the more important pieces of industry news mean to Mr. and Mrs. Average Homeowner.

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Hit the pause button for foreclosures.

The Bush administration and six major mortgage lenders announced that they would hit the pause button for anyone facing (or about to face) foreclosure.

Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo have agreed to participate in the government's Hope Now Alliance.

According to Treasury Secretary Henry M. Paulson Jr., the Project Lifeline program will stay any foreclosure action for 30 days for anyone who is 90 days or more late on a mortgage. The pause will allow homeowners who want and can afford to stay in their homes time to negotiate a loan modification or refinancing.

Lenders will be contacting those homeowners who are 90 days late or more on their mortgage. However, if the homeowner does not return the lender's calls within 30 days, the foreclosure stay will be lifted, according to program details.

The real question is this: After 90 days of ignoring late notices, and avoiding calls from the lender, is a homeowner on the brink of foreclosure really going to pick up the phone?

As Paulson said in prepared remarks: "Of course, there will be homeowners who still take no action, and some will simply walk away from their mortgage - particularly those borrowers who put little or no money down and whose mortgage exceeds their home value. No program can bring every struggling borrower into the counseling and evaluation process, and we cannot help those who choose not to honor their obligations."

The Project Lifeline program is in addition to other programs announced by the Bush administration.

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Big surprise! Homeowners are stressed out about the housing market.

With foreclosures rising and homes taking much longer to sell, it is no wonder that a new survey from the National Foundation for Credit Counseling (NFCC) found that homeowners are stressed out.

More than 4,000 consumers have taken the NFCC's Mortgage Reality Check at its HousingHelp Now.org Web site. The survey asks consumers if they know what kind of mortgage they have, if it is adjusting, and if they're worried about not being able to refinance or pay their new mortgage amount if their payments are about to adjust.

Since the beginning of January, the survey found that 78 percent of respondents say they have trouble sleeping because they're worried about their current financial situation, the possibility of losing their home or car, or their ability to use credit. This is up 16 percent from November and December 2007.

Sixty-nine percent of consumers taking the poll said they don't believe refinancing will solve their current cash crisis, up 8 percent from the end of 2007.

Fifty-nine percent say they owe more on their home than it is worth, up 11 percent from the end of last year.

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Eighty-three percent of those taking the poll fell into the most at-risk group. You can take the survey at www.housinghelpnow.org.

Contact Ilyce Glink through her Web site, www.thinkglink.com, by mail at Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022 or calling her radio show at 800-972-8255 from 11 a.m. to noon Sundays.


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