Shelli Dore’s Real Estate Blog

Posts Tagged ‘United States

By Stephanie Armour, USA TODAY

The Obama administration’s initiative to help homeowners obtain modifications of second mortgages is getting off the ground.
Just this month, Bank of America became the first major lender in the program to send letters offering modifications to home-equity loan customers struggling with their loans. Citigroup, JPMorgan Chase and Wells Fargo joined the program in March, when updated guidelines were issued by the government. Those banks hold about half of the USA’s second liens.

The program, originally introduced in August, is aimed at overcoming an impediment to permanent modifications of first mortgages. Holders of first mortgages have been reluctant to take losses unless the holder of the second-lien mortgage does, too. More borrowers are staying current on their second mortgages, however, which has made those lenders less inclined to take losses.

“This is a huge concern for consumers,” says Marietta Rodriguez, national director for homeownership and lending at national non-profit NeighborWorks America. “You have two financial institutions trying to get a payment out of you. How do you respond?” The government’s second-mortgage program, called 2MP, offers incentives to borrowers, mortgage servicers and investors to modify second mortgages. How it works:

•When a borrower’s first loan is modified under the federal program, known as the Home Affordable Modification Program (HAMP), and the servicer of the second loan is also a participant in HAMP, that servicer must offer to modify the borrower’s second lien.

•Servicers can stretch the term of the second loan to 40 years.

•Second-lien lenders must defer the payment of the same proportion of principal that was deferred or forgiven on the first loan.

The second loans also must have originated on or before Jan. 1, 2009, to be eligible for a modification. Modifying a mortgage with a second lien can be more difficult because of the additional parties involved. A second lien may be held by another servicer or investor, and getting all parties to agree on interest rate reductions or other steps to ease borrowers’ monthly payments can be time-consuming or difficult. The government program aims to make the process easier. The number of homeowners who will get assistance is limited.

While the program is expected to reach up to 1.5 million homeowners who are struggling to afford their mortgage payments, there are an estimated 19 million residential junior liens, with an average balance of $57,000 as of January, according to First American CoreLogic. Up to 50% of at-risk mortgages have second liens, according to the Treasury Department. Even with the incentives the government is offering mortgage lenders to modify second mortgages, they could still prove to be an obstacle as pressure grows to reduce borrowers’ loan principal. “First-lien holders become more reluctant to do principal reduction because of the second” lien, says Jack Schakett, loss mitigation strategies executive at Bank of America. “Everyone is calling for doing more principal reduction. Second liens will be a problem.”

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By Aldo Svaldi – The Denver Post

 Homes in Colorado and the U.S. are falling into foreclosure at a much faster pace this year than last, according to a report Thursday from RealtyTrac. But a freeze on foreclosure activity early last year by lenders waiting for new federal guidelines on loan modifications can explain much of that gap. The government had asked lenders to voluntarily halt foreclosures until the new guidelines came out, and many did so. In Colorado, overall foreclosure filings in the first quarter were running 27.1 percent higher than in the first quarter of 2009, according to RealtyTrac. Nationally, they were increasing at a 16 percent pace. Colorado reported one foreclosure filing for every 134 homes during the quarter, ranking it 10th among states. Nationally, the rate was 1 out of 138 homes. Ryan McMaken, author of a separate foreclosure report from the Colorado Division of Housing, said foreclosure activity in the state is running higher this year than last. He attributes that to the voluntary moratorium last year. But the first-quarter state numbers are tracking on par with, and in some cases lower than, other quarters last year. “I haven’t seen anything that indicates why Colorado has accelerated more than the nation,” McMaken said. That isn’t to say that lengthy periods of unemployment and lower incomes aren’t weighing on many home owners despite efforts to help them. Some economists and industry experts expect more borrowers to lose their homes through foreclosure or short sales, in which they sell the property for less than they owe, as government and industry mortgage- relief programs falter. “We’re not surprised to see an influx of (repossessed properties). We thought this would be coming; we just didn’t know when,” said Daren Blomquist, spokesman for RealtyTrac. The Washington Post contributed to this report. Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com

Even before the government put pressure on them to embrace short sales, more banks were starting to take their lumps, do the short-sale deals and move on.

Three years into the housing meltdown, short sales have tripled to 40,000 in the first six months of 2009, compared to the same time period a year ago, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Wells Fargo, Bank of America Corp., and JPMorgan Chase & Co. this year have hired and trained more staff to handle short sales and also developed software for expediting them.

“It’s really finally dawning on banks that they’re better off with a short sale,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. “I think banks were in denial.”

Source: Bloomberg, John Gittelsohn and Margaret Collins (12/4/2009)

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Colorado home mortgage rates continue to sink this week, reaching 4.54 percent on a 30-year fixed loan Wednesday, according to Zillow Mortgage Marketplace.

Rates averaged 4.62 percent last week, 4.66 percent the week of Nov. 9 and 4.77 percent the week of Nov. 2, Zillow reported.

Zillow says its figures on mortgage rates are based on borrower credit scores over 680 and a down payment of 20 percent or more.

The average 30-year fixed nationwide rate was 4.57 percent Wednesday, Zillow said.

Separately, Freddie Mac calculated average 30-year fixed mortgage rates nationwide at 4.78 percent with an average 0.7 points for the week ending Wednesday, the lowest rate since April 30. Freddie Mac calculates average rates for a broader range of credit scores and down payments.

The average 30-year fixed rate was 4.83 percent last week. A year ago, it was 5.97 percent, Freddie Mac said.

Low rates and the homebuyer tax credits, continue to get much of the credit for a rebound in housing sales.

The Commerce Department Wednesday reported sales of new homes rose a better-than-expected 6.2 percent in October, although they slipped in the western states, including Colorado.

The National Association of Realtors says sales of existing homes surged 10.1 percent last month.

And a Metrolist Inc. report on Nov. 6 said that in the Denver metro area, home resales increased 2.9 percent in October from September, but were down 7.6 percent from October of last year.

Thursday, November 26, 2009
Denver Business Journal

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Even as the housing market continues to stagger, foreclosure filings in October declined for the third month in a row. Foreclosure filings were reported on 332,292 properties last month, or 3 percent fewer than September’s tally, real estate firm RealtyTrac said today. Even though filings remained 19 percent higher than a year earlier, “[t]hree consecutive monthly declines is unprecedented for our report,” RealtyTrac CEO James Saccacio said in a statement. But with unemployment busting through the 10 percent threshold and a slew of state and federal initiatives against foreclosures in place, foreclosure trends aren’t as optimistic as they may appear in this report. Here are five things you need to know:

1. Obama rescue: The monthly foreclosure decline comes as the Obama administration ramps up its sweeping effort to get as many as 4 million struggling homeowners into more affordable mortgages. On Tuesday, the Treasury Department said it had extended more than 650,000 trial loan modifications through October, putting it on track to meet its ambitious goals. However, mortgage modifications have a checkered history of success, and it remains unclear how many of these borrowers will simply fall behind on their new loans. The concern is that the program may be delaying foreclosures rather than preventing them. “Every loan servicer or lender I have spoken to in the last couple months has basically told me that they have had to slow down foreclosure initiations because they have had to re-evaluate their portfolio of loans to see which ones qualify for [a rescue program],” says Rick Sharga, RealtyTrac’s vice president of marketing. There are about 5.5 million delinquent loans. It just takes an awful lot of time to go through each loan individually.”

[Check out Obama’s Loan Modification Plan: 7 Things You Need to Know.]

2. State rescue efforts: While the Obama administration’s is the most expansive, the foreclosure crisis has prompted a number of state governments to launch housing rescues of their own. But as was the case with the Treasury Department, it’s possible that these state-level initiatives are just postponing reality. Take Nevada, for example. With 1 in every 80 households getting a filing last month, Nevada has the nation’s highest foreclosure rate. However, a new state law requiring foreclosure mediation helped trigger a 26 percent plunge in foreclosure activity from September and a 4 percent drop from a year earlier, Sharga says. Mediation very well may put some troubled borrowers into sustainable home loans, but it’s quite likely that others will just redefault at a later date. “The intention is good,” Sharga says. “But there will be a bill to pay at the end of this.”

3. Seriously delinquent: To get a sense of where foreclosures may head from here, economist Patrick Newport of IHS Global Insight points to Fannie Mae’s serious delinquency rates, which track loans mostly made to well-qualified borrowers. The serious delinquency rate hit 4.45 percent for single-family-home loans in August, up sharply from 4.17 percent in July and just 1.57 a year earlier. “That number keeps on growing, and the monthly increments keep getting bigger,” Newport says. “I am almost sure that the foreclosure rate is going to continue to rise.”

4. Unemployment problem: These days, the primary driver of home foreclosures isn’t exotic mortgage products but the nation’s dismal labor market. As more people lose jobs, a growing number of borrowers—even those with sound credit histories—can no longer pay their mortgage. And with the unemployment rate hitting 10.2 percent last month, job losses will continue sending homeowners into foreclosure. “I don’t think that foreclosures are going to peak until the unemployment rate does,” Newport says. Newport projects the unemployment rate will peak at around 10.5 percent sometime in the middle of next year.

5. Hole in the rescue: Rising unemployment also highlights a gaping hole in the Obama administration’s housing rescue. Homeowners need an income stream in order to qualify for a modification, which makes anyone who can’t pay their mortgage because of a job loss ineligible. But borrowers facing foreclosure after losing a job are increasingly at the heart of today’s housing crisis. The administration’s initiative “was not designed to address foreclosures caused by unemployment, which now appears to be a central cause of nonpayment,” a congressional oversight panel said in an October 9 report. “It increasingly appears that [the Obama administration’s housing rescue] is targeted at the housing crisis as it existed six months ago, rather than as it exists right now.”

By Luke Mullins
Posted: November 12, 2009
USNews

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By Elizabeth Razzi | Washington Post

Normally, when borrowers flood lenders with calls asking about refinancing, that extra demand helps nudge interest rates up a bit, cooling the refinance rush. With lenders swamped with calls from borrowers hoping to get in on the government-backed no-equity refinance program launched last week, should you be concerned that rates will shoot up before you apply?

In a word, no. Rates on 30-year fixed mortgages should remain around 5 percent, where they’ve lingered for weeks, because the Federal Reserve is laboring hard to keep them there.

Orawin Velz, an economic forecaster with the Mortgage Bankers Association, pointed out that the Fed is committing $500 billion to the purchase of mortgage bonds from Fannie Mae and Freddie Mac. The idea is to keep demand for these securities up so interest rates stay low.

Fed action is not the only thing that affects interest rates–demand from foreign investors for these bonds is influential as well. But for the first half of this year, at least, the Fed’s overwhelming influence should be able to keep rates around that 5 percent mark. Just don’t try to hold out for rates to go to 4 percent. There’s no indication that anyone in government wants to drive them that low.

http://voices.washingtonpost.com/local-address/2009/03/refinance_opportunities_should.html

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…Remember! The next time you are in a conversation with someone who is thinking about a move – IN ANY CITY OR STATE IN THE US OR CANADA – call me first! I can help make sure your friends, family members and work associates are very well taken care of.

Fannie Mae will loosen rules for homeowners seeking to lower their mortgage payments by refinancing. The District company, which accounts for more than 40 percent of the $12 trillion in U.S. residential mortgage debt, is seeking to break a "logjam" in refinancing and allow more homeowners to take advantage of near-record low interest rates, according to Brian Faith, a spokesman for Fannie Mae, which like its rival, Freddie Mac, is under government control. 

More:  http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020503157.html

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Shelli Dore

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…Remember! The next time you are in a conversation with someone who is thinking about a move – IN ANY CITY OR STATE IN THE US OR CANADA – call me first! I can help make sure your friends, family members and work associates are very well taken care of.


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